Dan Price, CEO of Gravity Payments (Photo : Facebook)
Gravity Payments CEO Dan Price's uber generous act of slashing his $1 million pay drastically and paying a minimum $70,000 a year salary to his 120 employees seemed like a win-win situation when he announced it in April.
Workers would surely be overjoyed to have a compensation package higher than what other employers would be willing to pay, while groups pushing for a cut in executive pay to reduce the income inequality gap would laud the giant step made by Price in going beyond motherhood statements and setting an example.
But Price is said to be paying the price for his extreme generosity which earned him the distinction of being called a thought leader and invitations to TV talk shows as well as being the subject of case studies by Harvard business professors, reports The New York Times.
That stiff price includes having difficulty making ends meet that he had his house rented out and losing some senior staff who felt cheated that they got a smaller increase compared to newer employees. One of them is Maisey McMaster, financial manager, who rues, "He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn't get much of a bump," quotes Times.
Another dissatisfied employee, web developer Grant Moran, said it tied high performers with less-motivated team members. It was not just some workers who quit but also customers who felt Price made a political statement that could lead to higher charges on them to shoulder the bigger paycheck of employees of Gravity. But the firm also gained new customers, although it would take some months before they would help boost Gravity's revenue and profit.
The bulk of his $1 million salary and 2014's $2.2 million profits are used to fund the pay hike which angered Price's brother Lucas, owner of a 30 percent stake in the firm. Lucas filed a lawsuit against his younger sibling who admits Gravity does not have funds to pay the legal fees arising from the lawsuit.
But Price believes he made the right decision, pointing out, "Income inequality has been racing in the wrong direction. I want to fight for the idea that if someone is intelligent, hard-working and does a good job, then they are entitled to live a middle-class lifestyle," quotes the New York Times.
