CEO of US company takes US$930,000 paycut to raise employees' minimum wages

SEATTLE - Chancing upon an article on happiness and how earning just that little bit more could change a person's life has prompted a major rethink in one American CEO's philosophy.

So major, in fact, that Mr Dan Price took the drastic step of taking a whopping paycut of US$930,000 (S$1.26 million) from his US$1-million annual salary in order to elevate his employees' pay to a minimum of US$70,000.

The founder of Seattle-based credit card payment processing firm Gravity Payments now earns the same as the rest of his 120 staff members, reported The New York Times earlier this week.

Gravity Payment's average salary was previously US$48,000. About 70 employees are expected to have their wages increase, with 30 doubling their salaries.

Mr Price, who started his company in 2004 when he was just 19, has had to balance the books after making the shocking, but welcome, announcement on April 13 - up to 80 per cent of its projected profits of US$2.2 million this year will go into making this unprecendented move a reality.

The man himself appears unfazed at the sizeable decrease of his paycheck, having been prudent in saving money and sticking to his 12-year-old Audi. "It'll still allow me to pick up tab at the bar," he said.

In a country where economists estimate that chief executives take home almost 300 times of what an average worker earns, Mr Price's initiative is one man's attempt to close the inequality gap.

"The market rate for me as a CEO compared to a regular person is ridiculous, it's absurd," he said, adding that he was regarding this as an investment rather than a "charity" move.

Pointing to the fact that it would translate to better workplace morale and motivate his employees, he said: "This is a capitalist solution to a social problem."

His employees are still coming to terms with their boss' early Christmas present.

Said 24-year-old Hayley Vogt, who earns US$45,000 as a communications co-ordinator at the firm and constantly frets about her ability to cope with rent increases: "I'm completely blown away right now."