CEO took a massive S$1.2m pay cut to give lower-paid staff a raise
The CEO of a start-up company in the United States thought that his lower-paid employees were in need of a raise.
Mr Dan Price took a 90 per cent pay cut to bring his US$1 million (S$1.36 million) a year salary down to just $70,000 - similar to what his lowest paid staff will get.
In 2004, Mr Price, then only 19, founded Gravity Payments, a credit card payment processing company in Seattle. It now employs 120 people.
Mr Price, 30, announced this shocking move to his staff in a weekly meeting on Monday (April 13).
He told his employees: "You might be making $35,000 a year right now, but everyone in here will definitely be making $70,000 a year and I'm super excited about that."
The average salary of an employee at Gravity is currently $48,000
The national minimum wage in the US is $17,000 a year.
With this new plan, more than 30 employees will see their salaries double over the next three years. A total of 70 employees will see a higher paycheck.
"Is anyone else freaking out right now?" Mr Price asked after the clapping and whooping died down into a few moments of stunned silence. "I'm kind of freaking out."
Mr Price said he came to this decision after reading a study about happiness in the workplace.
The research found that emotional well-being rises with income. However, this relationship only applies to income below $75,000 a year.
From his friends, he heard stories of how tough it was to make ends meet even on salaries that were still well above the US minimum.
"They were walking me through the math of making 40 grand a year," he said, then describing a surprise rent increase or nagging credit card debt.
"I hear that every single week," he added. "That just eats at me inside."
Mr Price said: "The market rate for me as a CEO compared to a regular person is ridiculous."
He also added that he did not think it was right that he should earn up to 100 times more than most of the rest of his staff.
"My salary wasn't $1 million because I need that much to live, but that's what it would cost to replace me as a CEO," Mr Price told ABC News.
"I think CEO pay is way out of whack. It ended up impacting me, because I want the company to be sustainable even if something happens to me. Temporarily, I’m going down to the minimum until the company gets back to where it was."
Gravity processed $US6.5 billion in transactions for more than 12,000 businesses last year
He said: "I may have to scale back a little bit, but nothing I'm not willing to do. I'm single. I just have a dog."
He now has a three-bedroom house and a 12-year-old Audi and is confident he will still be able to live comfortably.
Mr Price said: "I’m a big believer in less: The more you have, sometimes the more complicated your life gets."
Sources: Telegraph, ABC News, New York Times