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"Is anyone else freaking out right now? I'm kind of freaking out." said Dan Price, the CEO of Seattle-based Gravity Payments, as he announced that the new minimum salary for current employees will be raised to $70,000 a year. Price is taking a pay cut from $1 million to $70,000 and spending an appreciable amount of the company's profit to raise annual salaries from the current average of $48,000.
From the article:
The United States has one of the world's largest pay gaps, with chief executives earning nearly 300 times what the average worker makes, according to some economists' estimates. That is much higher than the 20-to-1 ratio recommended by Gilded Age magnates like J. Pierpont Morgan and the 20th century management visionary Peter Drucker.
[...] Under a financial overhaul passed by Congress in 2010, the Securities and Exchange Commission was supposed to require all publicly held companies to disclose the ratio of C.E.O. pay to the median pay of all other employees, but it has so far failed to put it in effect. Corporate executives have vigorously opposed the idea, complaining it would be cumbersome and costly to implement.
[...] The happiness research behind Mr. Price's announcement on Monday came from Angus Deaton and Daniel Kahneman, a Nobel Prize-winning psychologist. They found that what they called emotional well-being — defined as "the emotional quality of an individual's everyday experience, the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one's life pleasant or unpleasant" — rises with income, but only to a point. And that point turns out to be about $75,000 a year.
(Score: 1) by Pherenikos on Friday April 17 2015, @06:03AM
Considering McDonalds has >1 million employees, if the CEO can improve their productivity by >1 dollar a year they will have earned their salary and then some. For the Gravity Payments, even with the new salary, considering their ~200 employees this corresponds to a value improvement of $350 per employee year.
(Score: 3, Insightful) by sjames on Friday April 17 2015, @06:28AM
So what happens when he destroys their productivity?
(Score: 5, Insightful) by Anonymous Coward on Friday April 17 2015, @06:35AM
He gets a raise of course, just like the last CEO.
(Score: 0) by Anonymous Coward on Friday April 17 2015, @08:59AM
Maybe, but if you take the poorest lowest payed Mcdonalds staff and put him in place of the CEO, what would the difference be for that productivity raise?
If you pay someone much more than normal salaries, they should be able to perform much better than others. Just because the function in the company means you have more influence over how much money it makes, doesn't necessarily mean you are any good at it.
(Score: 0) by Anonymous Coward on Friday April 17 2015, @12:29PM
Not quite. There's a floor of 0 dollars in the CEO's salary. An instrument like that is worth more than one without such floor.