The CEO of a US company drastically cut his own salary so that all his employees can live carefree. MeinMMO reveals how this worked out for the company.
The title image is a symbolic picture via Pexels, not Dan Price.
What was that action about? Dan Price, the co-founder of a credit card processing company, Gravity Payments, had a radical idea in 2015: Over the next 3 years, he wanted to raise the salary of his 120 employees to at least $70,000 per year, which is approximately €62,500 at today’s exchange rate.
The minimum wage for all employees was increased immediately to $50,000, followed by annual raises to reach $70,000.
To implement this measure, Price, who had previously taken a payout of $1 million, also cut his own salary to $70,000. The goal of this action was to provide employees with financial security and make them happier.
CEO declared a modern Robin Hood
This is how it went for the company: The reaction to Price’s announcement was turbulent: His employees cheered for him, and the story spread rapidly on social media. While some celebrated Price as a “modern Robin Hood,” others derogatorily referred to him as a “socialist.”
The bold strategy initially worked: Although two senior employees left the company, Price received thousands of new applications. Among them was Tammi Kroll, a senior executive at Yahoo, who was so inspired by Price that she stated she sacrificed 80-85% of her previous income.
Throughout the year, Gravity achieved an employee retention rate of 91%, far above the industry average of 68%. Customer retention even increased from 91% to 95%. Additionally, the company doubled its profits.
For some employees, the salary increase was life-changing: One was able to fly his mother from Puerto Rico to Seattle, while others could start a family.
In 2020, when Gravity suffered from the COVID-19 pandemic, employees accepted pay cuts to avoid layoffs, although some later said the decision was not entirely voluntary. Later, employee salaries were raised again, and they received a repayment of withheld wages.
However, in 2022, Dan Price left the company after being accused of, among other things, bodily harm with sexual motivation. The charges were dropped, and Price returned as CEO to Gravity in May 2024.
How is the company doing today? In 2024, Price no longer seems to be the “modern Robin Hood” he once became famous for. Former employees spoke in interviews in 2022 of a culture of fear due to the boss’s frequent outbursts.
After Gravity suffered a financial setback from Price’s departure, his return in 2024 was labeled a strategic move to get the company back on track. However, one employee said: “Gravity, as it currently is, is no longer for the people… It looks very much like they are just there for profit.” (via Seattle Times)
At least the employees with an annual income of $70,000 probably no longer had to rely on alleged “hacks.” Because what recently looked like a cheat for the real life to a bank’s customers turned out to be an over 100-year-old scam: People thought they found a “limitless money cheat” for real life – But it was just a scam
