There are too many stories of CEOs dropping their salary to $1 just to find out later they got huge bonus, stock, and option grants.
I don't care how much CEOs make. I do care about the bogus self congratulatory PR stunts meant to dupe the heard into thinking this company is inline with their thoughts on "social justice".
Well he owns the entire company, so theoretically he could take a disbursement of 100% of profits if he wanted to. Realistically a large portion of that is almost always reinvested in the business. Besides, which one is "more fair" of the two options (from this story specifically):
- A CEO makes $1MM and owns 100% of a company making $2MM in profits every year.
- A CEO makes $1.00 and owns 100% of a company making $500K in profits every year.
Regardless of how large his profits disbursement is, he's intentionally putting himself in a worse financial position so that the majority of his employees get a massive pay increase in an expensive urban part of the country.
Just because it's a good PR move doesn't mean it isn't also a good move in general and a good move as a human being.
Giving people more of what they want is not automatically the correct move. It may sometimes be the correct move. You can cause a lot of harm by giving people what they want when they shouldn't have it. Look up info on how most people handle lottery winnings if you doubt this.
There are many less optimistic ways to interpret this change, and there may be some fallout down the road. I wouldn't jump straight to "a good move in general and a good move as a human being".
Then just ignore his reduced salary and focus on the raises he's giving the lowest paid staff. His salary reduction is "just" part of how he's paying for this in the short term.
The team as a whole becomes less sustainable. Profit margins went from 2m to 500k. That's a lawsuit away from being in the red. Is the entire team going to take pay cuts if profits aren't coming in? Does someone get fired?
I think those lauding this as a morally virtuous move aren't basing this on principle. Hiring 1 employee for 100k isn't better than hiring 2 employees for 50k assuming equal qualifications. The team with two employees will be more productive and stay in business longer than the competitor (who spends twice as much on everything and won't stay in business).
If the gambit is that, in the recent future, they expect new business from the publicity to increase profits and cover part of the loss, I think the hit is not so large. And ultimately if it doesn't pan out, he can sell the company to a larger processor and cash his 100% stake out.
And ultimately if it doesn't pan out, he can sell the company to a larger processor and cash his 100% stake out.
Do you honestly think that isn't plan A? He's going to flip the company, pocket the cash, and all those employees who experienced a temporary rise in salary will be unemployed. When Mr.CEO doles out equity instead of cash I'll give into the warm fuzzy feelings.
I think its worth noting that he owns the entire company so the increase in pay will directly affect his bottom line.
From the article:
> The company made $2 million in profit last year, and that will drop to about $500,000 with the new pay increases, according to company figures.
Comments
Pay? Do thy mean total compensation or salary?
There are too many stories of CEOs dropping their salary to $1 just to find out later they got huge bonus, stock, and option grants.
I don't care how much CEOs make. I do care about the bogus self congratulatory PR stunts meant to dupe the heard into thinking this company is inline with their thoughts on "social justice".
Well he owns the entire company, so theoretically he could take a disbursement of 100% of profits if he wanted to. Realistically a large portion of that is almost always reinvested in the business. Besides, which one is "more fair" of the two options (from this story specifically):
- A CEO makes $1MM and owns 100% of a company making $2MM in profits every year.
- A CEO makes $1.00 and owns 100% of a company making $500K in profits every year.
Regardless of how large his profits disbursement is, he's intentionally putting himself in a worse financial position so that the majority of his employees get a massive pay increase in an expensive urban part of the country.
Just because it's a good PR move doesn't mean it isn't also a good move in general and a good move as a human being.
Giving people more of what they want is not automatically the correct move. It may sometimes be the correct move. You can cause a lot of harm by giving people what they want when they shouldn't have it. Look up info on how most people handle lottery winnings if you doubt this.
There are many less optimistic ways to interpret this change, and there may be some fallout down the road. I wouldn't jump straight to "a good move in general and a good move as a human being".
Then just ignore his reduced salary and focus on the raises he's giving the lowest paid staff. His salary reduction is "just" part of how he's paying for this in the short term.
The team as a whole becomes less sustainable. Profit margins went from 2m to 500k. That's a lawsuit away from being in the red. Is the entire team going to take pay cuts if profits aren't coming in? Does someone get fired?
I think those lauding this as a morally virtuous move aren't basing this on principle. Hiring 1 employee for 100k isn't better than hiring 2 employees for 50k assuming equal qualifications. The team with two employees will be more productive and stay in business longer than the competitor (who spends twice as much on everything and won't stay in business).
If the gambit is that, in the recent future, they expect new business from the publicity to increase profits and cover part of the loss, I think the hit is not so large. And ultimately if it doesn't pan out, he can sell the company to a larger processor and cash his 100% stake out.
Do you honestly think that isn't plan A? He's going to flip the company, pocket the cash, and all those employees who experienced a temporary rise in salary will be unemployed. When Mr.CEO doles out equity instead of cash I'll give into the warm fuzzy feelings.
I think its worth noting that he owns the entire company so the increase in pay will directly affect his bottom line.
From the article: > The company made $2 million in profit last year, and that will drop to about $500,000 with the new pay increases, according to company figures.