CEO Raises Minimum Wage to $70,000

[Exophase]

2. His brother is using him for reasons.

He owns 30% of the company and deserves a significant vote in its operation, at least in securing its financial interests. While the CEO says his brother agreed to his $1.1m salary it sounds like the brother was getting heavily short changed, and the move to increase payroll even more on all the employees only made that worse.

 

[davmat787]

It certainly should be if you're planning on giving raises that will be perceived as grossly unfair.

I don't think there's any reason compensation can't be a public matter if it's grounded in fairness and merit.

And mutual consent from all parties. I don't think there's any reason compensation should be a public matter anyway. Very low payoff if any for tons of potential and even likely headaches.

 

[werepossum]

I do think compensation should be a matter between employer and employee. That said, if an employee or employer want to discuss it in public, that's their business. Whatever happens because of that public discussion is the issue, rather than the actual amount of a wage/salary, though.

In this particular case, the only thing that is newsworthy in an objective way is that income inequality has become a very political topic over the past few years.

Or, to put it another way, there are already businesses that operate with the CEO paying him/herself less than he/she has to, while paying employees very nice wages. These businesses exist and function just fine. The difference between those businesses and the one discussed in this thread is that those businesses aren't made into political statements with all of the resulting fallout from making a political statement.

Had this CEO enacted the same exact policies without informing employees and people who didn't need to know (everyone else on the planet), this business wouldn't have the problems it has now, nor would the CEO have the problems he has now.

In essence, the CEO screwed up his business by making it into a political statement. Which shouldn't be a surprise. This happens all the time.

You miss the point of this move. Had he simply made the changes, all he would get is less money. By making it public, he greatly increased the flow of new clients. This is marketing masquerading as social justice. After the new clients (which require new personnel to service them) begin turning a positive cash flow, it might even be smart marketing.

And mutual consent from all parties. I don't think there's any reason compensation should be a public matter anyway. Very low payoff if any for tons of potential and even likely headaches.

This is true. Not everyone is ever going to agree on any pay structure, and making it public just ensures hurt feelings and time spent bitching about it.

 

[JockoJohnson]

I don't think there's any reason compensation can't be a public matter if it's grounded in fairness and merit.

Most, if not all, HR departments would disagree with this statement.

 

[nickqt]

You miss the point of this move. Had he simply made the changes, all he would get is less money. By making it public, he greatly increased the flow of new clients. This is marketing masquerading as social justice. After the new clients (which require new personnel to service them) begin turning a positive cash flow, it might even be smart marketing.


This is true. Not everyone is ever going to agree on any pay structure, and making it public just ensures hurt feelings and time spent bitching about it.

Not necessarily a smart move if his company fails before he gets new clients.

I'm fairly certain it's all still up in the air, in regards to how it's going to work out.

 

[JSt0rm]

He owns 30% of the company and deserves a significant vote in its operation, at least in securing its financial interests. While the CEO says his brother agreed to his $1.1m salary it sounds like the brother was getting heavily short changed, and the move to increase payroll even more on all the employees only made that worse.

But the CEO lowered his salery to 70k and then dispersed the rest. Its not like he kept his 1.1mill and then gave everyone 70k shortchanging his brother.

Also 30% is as significant a vote as 30% which is to say its not the majority.

 

[werepossum]

Not necessarily a smart move if his company fails before he gets new clients.

I'm fairly certain it's all still up in the air, in regards to how it's going to work out.

Yup, it's all up in the air. He also lost some important clients and some important employees. At this point, no one knows whether it was foolish or smart. Or whether it was only clever marketing that perhaps backfired or it was a heartfelt move that, um, also backfired. At least temporarily.

But the CEO lowered his salery to 70k and then dispersed the rest. Its not like he kept his 1.1mill and then gave everyone 70k shortchanging his brother.

Also 30% is as significant a vote as 30% which is to say its not the majority.

I don't see how the brother has any legal options. If I own some share of a corporation less than the controlling share, I can vote my preferences but I have no right to necessarily get my way unless I can build a controlling coalition. If dude was spending that money on a banana slug sanctuary, he could make a case for mismanagement. As it is, he'd have to make a case that a CEO's responsibility is to manage a corporation for investors' short term gains. Given the growth in client base, I doubt he could make that case.

 

[stlc8tr]

Yup, it's all up in the air. He also lost some important clients and some important employees. At this point, no one knows whether it was foolish or smart. Or whether it was only clever marketing that perhaps backfired or it was a heartfelt move that, um, also backfired. At least temporarily.

Which important employees? That article only cited two people. An "financial manager" and a web developer. It's unclear what duties the "financial manager" had but the web developer was only being paid $41K. So what was his reaction to getting a bump to $50K (with a future raise to $70K)? He quit!

"Mr. Moran also fretted that the extra money could over time become too enticing to give up, keeping him from his primary goal of further developing his web skills and moving to a digital company."

I dunno what the job market is in Seattle but in the Valley, $41K is less than what they pay interns so how important could he be?

 

[JSt0rm]

Mr. Moran also frette...

 

[zinfamous]

Most, if not all, HR departments would disagree with this statement.

certainly not all HR departments--work for a public institution, then everyone's salary is completely open.

 

[Zorkorist]

CEO goes bankrupt.

Can CEO borrow 18 trillion?

Stay tuned! More at 9PM.

-John

 

[realibrad]

Yup, it's all up in the air. He also lost some important clients and some important employees. At this point, no one knows whether it was foolish or smart. Or whether it was only clever marketing that perhaps backfired or it was a heartfelt move that, um, also backfired. At least temporarily.


I don't see how the brother has any legal options. If I own some share of a corporation less than the controlling share, I can vote my preferences but I have no right to necessarily get my way unless I can build a controlling coalition. If dude was spending that money on a banana slug sanctuary, he could make a case for mismanagement. As it is, he'd have to make a case that a CEO's responsibility is to manage a corporation for investors' short term gains. Given the growth in client base, I doubt he could make that case.

Looks like there was an agreement that the brother entered into.


http://www.seattletimes.com/business/gravity-payments-ceo-sued-by-brother/

During the restructuring, Lucas Price agreed to a minority interest and a reduced employee role, which let Dan Price continue as CEO. In the process, the brothers entered into several contracts, which limited Dan’s compensation as a CEO and protected Lucas’ minority-shareholder rights, court records show.

and


http://www.entrepreneur.com/article/248666

While the complaints were signed exactly one month before Dan’s headline-grabbing announcement, papers were officially filed 11 days afterward.

Looks like this whole thing was a ploy.

 

[werepossum]

Looks like there was an agreement that the brother entered into.


http://www.seattletimes.com/business/gravity-payments-ceo-sued-by-brother/


and


http://www.entrepreneur.com/article/248666


Looks like this whole thing was a ploy.

Jeez, now I just feel stupid for defending him.

 

[realibrad]

Jeez, now I just feel stupid for defending him.

It is a weird agreement, but it does seem pretty clear. The fact that the papers were signed before this whole thing happened gives the brother pretty good clout.

 

[ivwshane]

Just a small update:

http://www.inc.com/magazine/201511/paul-keegan/does-more-pay-mean-more-growth.html

Six months after Price's announcement, Gravity has defied doubters. Revenue is growing at double the previous rate. Profits have also doubled. Gravity did lose a few customers: Some objected to what seemed like a political statement that put pressure on them to raise their own wages; others feared price hikes or service cutbacks. But media reports suggesting that panicked customers were fleeing have proved false. In fact, Gravity's customer retention rate rose from 91 to 95 percent in the second quarter. Only two employees quit -- a nonevent. Jason Haley isn't one of them. He is still an employee, and a better paid one.

 

[Victorian Gray]

Just a small update:

http://www.inc.com/magazine/201511/paul-keegan/does-more-pay-mean-more-growth.html

But, $20 hamburgers at Burger King!

Actually, good for him, his company and his employees. Sounds likes it's working well for all concerned.

 

[Sonikku]

I wonder how much the two that quit are making now. Would they take a pay cut with someone else just to send a "message" to their boss for raising everyone's pay?

 

[Jaskalas]

After a lot of consideration, this is the sort of wage needed to try and match the purchasing power your parents enjoyed. That employee wages are not already at this value tells you just how much our generation has been royally screwed.

 

[zinfamous]

After a lot of consideration, this is the sort of wage needed to try and match the purchasing power your parents enjoyed. That employee wages are not already at this value tells you just how much our generation has been royally screwed.

Why isn't the rest of P&N able to say such a thing: "After a lot of consideration" ...and then follow that up with a response based on actual data?

wow

:thumbsup:

 

[norseamd]

Jaskalas is one of those who I consider as more of a conservative mindset, than reactionary. Fern and werepossum are like this also. Still not sure if that is the word I am looking for, but for now it is what I use for tribalistic fascist mobs. Turns out that I am not the only one who has been thinking about this conceptual thinking, but that David Brooks has been also.

Sorry about any potential misunderstandings, as I mean no hard feelings at all, but I think this might serve as a metaphor explanation as the difference between conservatives and reactionaries.

https://www.youtube.com/watch?v=f3PJF0YE-x4

 

[Newell Steamer]

Just a small update:

http://www.inc.com/magazine/201511/paul-keegan/does-more-pay-mean-more-growth.html

B-b-but my brother's neighbor's sister's mailman's friend's daughter's husband's sister once heard about a guy who heard another guy talk about how wage increases are bad, while on a crowded bus last year!!!shift+!!!!

WHY WON'T YOU LIBERALS LISTEN TO THE "FACTS"?!?!?!

Minimum Wage Increase Horror Stories: The Right's NEW Death Panels.

 

[s0me0nesmind1]

So has anyone confirmed if he ACTUALLY pays everyone $70k+?

I'm talking Bob the janitor and Betty the cafeteria worker. They both make $70k too? Or do they just do like Costco and simply outsource the jobs to a 3rd party company to pay them shit wages so they can continue to say "Ohhh yeah! We totally pay everyone $70k+!"

Also, how much of their additional business can be attributed to all the publicity? I'm sure he got business simply on being mentioned nationally over and over - and people that could use his business said "Oh he looks like a good guy, let's do business with him since we need to buy widgets anyways".

I'm just saying, if everyone started doing this, it would no longer be special, and would no longer get the media attention.

 

[Fanatical Meat]

So has anyone confirmed if he ACTUALLY pays everyone $70k+?

I'm talking Bob the janitor and Betty the cafeteria worker. They both make $70k too? Or do they just do like Costco and simply outsource the jobs to a 3rd party company to pay them shit wages so they can continue to say "Ohhh yeah! We totally pay everyone $70k+!"

Also, how much of their additional business can be attributed to all the publicity? I'm sure he got business simply on being mentioned nationally over and over - and people that could use his business said "Oh he looks like a good guy, let's do business with him since we need to buy widgets anyways".

I'm just saying, if everyone started doing this, it would no longer be special, and would no longer get the media attention.

Its been a while but I believe he has around 150 employees and the are all getting bumped up to 70k over a few years. I don't believe he has janitors & cafeteria workers in his organization.

 

[DigDog]

derp!

LIDL (the discount supermarket chain) has the minimum wage set at $13 (8.50 pounds) for floor-moppers and such. Plus all the free stuff we get here.

 

[waggy]

seems more to the story then we thought..

http://www.bloomberg.com/features/2015-gravity-ceo-dan-price/

It's a long article and goes in depth. seems the CEO was ripping off his brother who owns part of the company he filled the lawsuit BEFORE (its documented) the pay raise.

also seems like he beat the shit out of his ex wife...


hmm