The CEO of a credit-card payments company in Seattle said executive pay is "out of whack," so he's cutting his own pay and creating a minimum salary for his workers. Now, he will be earning $70,000 like many of them, and he's OK with it.
Dan Price, 30, announced this week that any employee at his company, Gravity Payments, making less than $70,000 annually will receive a $5,000-per-year raise or be paid a minimum of $50,000, whichever is greater. The aim: By December 2017, everyone will earn $70,000 or more.
To facilitate this change, Price said his salary will decrease to $70,000 from about $1 million until or unless the company's profits are greater than last year's approximately $2.2 million.'Shark Tank' Judge Lori Greiner Reveals Her Mentor, Most Bizarre QV...
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"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," 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."
Price started the company in 2004 when he was only 19 years old, and when he said the cost of living in Seattle was much lower than it is today. When asked what life will be like for him at a lower pay, he said, "I haven’t even thought about that at all, too much. My life started pretty simple, in a lot of ways. I don’t have a lot of financial obligations or debts."
Price grew up in rural southwestern Idaho with four brothers and later studied music at the Christian Seattle Pacific University. When Gravity launched, the company paid $24,000 per year even for senior positions. Price said he was paid less than that for the first five years in business.
Today, the company, which pays an average salary of $48,000, has 120 employees -- and 70 of their paychecks will grow with this plan. Of those, 30 will double their salaries, Price 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," Price said.
He owns a three-bedroom home, where he likes to host guests and is admittedly "a nice place for sure," he said. He's been driving the same car for the last 12 years: an Audi that he bartered for at a local car dealership in return for credit card processing from his company --- "so, basically, for free," he said.
Price chose the $70,000 figure based on a 2010 Princeton University study that showed happiness, or "life evaluation," is positively impacted up to $70,000 or $75,000 per year; but increases above that figure did not have a significant positive effect on happiness.The Thinking Behind CEO's Move to Pay His Workers $70,000 a Year
He said his friends include the super-rich, who invite him on their private planes and expensive yachts.
"I have an incredibly luxurious life, for some reason, but I don’t end up paying for a lot of it," he said.
He also has friends who earn $40,000 a year. Hearing of their difficulties and those of others struggling to make ends meet inspired him to make a dent in the country's growing income inequality.
Plus, after all, he said, he'll live comfortably at $70,000.
"I’m a big believer in less: The more you have, sometimes the more complicated your life gets," he said.