In April of 2015, Dan Price, the CEO of Gravity Payments, did something that just about everyone but especially his fellow CEOs considered completely crazy: he cut his own salary from $1 million a year down to a much more modest $70,000. While reviled by Wall Street for this act, his motives earned him numerous fans when it was revealed he did so in order to raise the minimum yearly wage his employees received to the same amount.
The reactions to Price’s dramatic restructuring of pay scales came flying in immediately. Criticism was leveled on him from above and below, primarily from conservative media outlets declaring he was trying to buy love and good publicity from the populace. Fellow CEOs and other business-minded individuals publicly called him out for endangering his company. Some employees, unsure of Price’s direction, quit the company, and numerous clients canceled their service plans. Price’s own brother, Lucas, a co-founder of Gravity Payments and a major shareholder, filed a lawsuit claiming that he’d breached company policy, an unfortunate situation that has left the CEO seeking the services of a family therapist. The lawsuit is still ongoing, and Price is committed to finding a settlement that appeases his brother but keeps his new policies intact.
It was a risky move, but has Price’s gambit paid off? From the looks of Gravity Payments finances, absolutely. The surge of good will that he received for his altruism was accompanied by a flood of new applicants and new clients, and dramatically increased productivity from employees having received such extreme raises has sent the company’s profits surging, with growth and overall revenue doubling over six months. By all accounts, doomsayer claims that Price’s actions would sink his company have been completely unfounded, much to the bitter anger of Wall Street and conservative pundits like Rush Limbaugh.
But, why did he do this in the first place? To answer that question, a deeper look into Dan Price’s beliefs and philosophy is needed. An idealist at heart, Price is a devout Christian and an ardent believer in following Christ’s teachings of generosity and helping the downtrodden. Studies indicate that money-related stress leads to a deterioration of mental and emotional health until someone is earning in the $70,000 range, he read, and after determining that his company could afford to boost minimum wages to that level if he lowered his own salary to match, he put the plan into action to make it happen. That’s still not enough for Price, however, and he’s reinvested profits, sold stocks, emptied bank accounts, and mortgaged properties to pour money back into the company and keep those wages high.
The story of Price and Gravity Payments has shaken the economic world up, if only just a little bit. His belief that people shouldn’t have to live paycheck to paycheck seems alien to some, and many disagree in thinking that it’s unfair that executives can have several years’ worth of savings but workers cannot, but Price believes he’s doing the right thing. By keeping his own income modest, he can keep himself focused on keeping his company going strong and serving his employees for their work, and it is his wholehearted belief that his views will make his company stronger than ever before in the coming years.