Is he divesting himself of his holdings until they equal the average workers savings? Is he moving into a $200,000 house with a $150,000 mortgage? No? Then he's not making it like his average worker. It may look good to his employees, but it is mostly bullpoop. A good ploy, I guess, but, I'd rather see him reward his people based on individual achievement, which will illustrate that those who work hard and apply themselves are more rewarded than those who just show up every day.

Sound business choice put forward for great PR....BRILLIANT!

"...The experience that was had in this common course and condition, tried sundry years, and that amongst the Godly and sober men, may well convince of the vanity and conceit of Plato’s and other ancients; — that the taking away of property, and bringing into a common wealth, would make them happy and flourishing; as if they were wiser than God. For this community (so far as it was) was found to breed confusion and discontent, and retard much employment that would have been to their benefit and comfort." William Bradford 1620

I would liken this to Ford's 40 hour work week, which saved him money by way of fewer days lost work, happier and more productive employees and fewer accidents.

I started my career job in 91. Till about 94 every employee had profit sharing and some stock options. Then the grunt jobs lost these, then it creaped up and by 2000 only management had stock and bonus plans. Everyone can thank Jack Welch (CEO and author of Winning) for that BTW.

I see this as someone taking a shift back the other way. Its a good direction and I hope it is hugely successful for him and then mimicked by others after he proves it helps with success.

I'll just add in my observations about a fairly well-known company: Hewlett-Packard. My father worked in the Disc Memory Division back when HP still researched, developed, and manufactured the best hard disk drives on the market. They had an astounding 5 year warranty nobody else could even touch and their employees - from engineers to assembly line workers - were proud of their products.

What should also be noted was that during those years, the employees were rewarded for their successes with quarterly profit-sharing checks that were frequently as large as a paycheck in and of themselves. As a result, there was no lack of people who would volunteer to get a last-minute shipment out the door and no lack of those who would volunteer to work weekends or overtime to help debug a problem because they were vested in the outcome!

That changed after a couple of years of Lou Platt. He did away with the Division carnivals (massive affairs hosting thousands of families with food, games, and entertainment all paid for by HP) and limited profit sharing to managers. Between Platt and Fiorina, they also did away with the employee purchase program which enabled HP employees to get HP gear at cost, and then further limited profit sharing to just executive management. Then they started charging for office supplies, outsourced all their maintenance and cafeteria workers, and then finally their manufacturing divisions altogether. And as each employee benefit dwindled, so did the quality of the products.

The first massive layoff under Fiorina (which claimed my father as a casualty) was all about benefits - healthcare to be specific. You see HP was liable for the healthcare costs of any employee who had retired with >20 years of service until they died. They didn't want to be saddled with this cost, so they laid off their best and most knowledgeable employees in one fell swoop. Future layoffs similarly claimed their victims from the ranks of the best, leaving an entirely new crew of employees who knew nothing of the HP Way - nothing of the values of Hewlett and Packard.

To me, it is an instructional tale of how to build and then destroy one of the most creative legacies of industry in modern times.

HP used to be owned and run by the Hewlett and Packard Families who sat on and selected other members of the Board. My father worked for them for >20 years, so he started out with them when they were the #1 company in the business. The Packard family was the first to sell off their interests, with Walter Hewlett staying on until the Compaq merger was forced through by Carly (and I can tell you about the underhanded tricks if you want). After that, there was no one in the Board to keep them interested in the long-term profitability of the business. To no one's surprise, that is when the revolving door started turning and HP's churn at the top became endemic and systemic due to corruption and insider deals. Upper Management began focusing solely on short-term profit margins, squeezing out R&D (and future product lines) in favor of short-term fad products (see Kittyhawk).

What is just staggering to me is that in doing so they totally ignored the fact that up until this policy was put into place, HP had been enjoying frequent stock splits and profound profitability for both employees and investors. I worked there as a summer intern and as a full employee (even though I was just there for the summer) I was eligible for quarterly profit-sharing. I knew of a lot of people in our city who bought cars, swimming pools, boats, etc. off those quarterly profit-sharing checks. It is no coincidence that under Lou Platt eligibility for those got restricted to managers and under Carly they were eliminated all together. It is also no coincidence that during that time HP stopped being a manufacturer and became a designer and marketer. There is something about putting out a quality product with your own two hands that can not be duplicated.

Everyone's needs are different. If he was married and had a few kids, I'm not sure $70K/year would be comfortable in Seattle anymore. As a single guy, perhaps. I'd be curious to know what he's got socked away and already invested for his future. Personally I like his idea, but I would not go quite that far, I'm just too greedy. I feel someone that starts a business takes the big chances, subjects themselves to all kinds of problems, legal implications, physical and mental disorders, etc. It is not an easy thing to own and run a company today. They deserve whatever they can make out of their own company and the market will determine their success or failure.

Perhaps he is contemplating taking his business public? Perhaps this will get it recognized enough to make the public offering quite successful.

Actually, she was a History major (you're off the hook ;), but I completely agree with your point.

Yes, it was a crony decision - she was groomed for the position by Lou Platt - former HP CEO, though how that happened when she wasn't even an employee of HP is beyond me.

He sounds like the nit wits that inherited metropolitan motors and ran it in to the ground! He is not as stupid as that though. The thing everybody in the liberal intelligentsia that is salivating over this story is missing is that he's the owner of the company. Every nickel he doesn't pay himself and salary comes to him in profit. he is actually doing nothing really more than raising his base salaries. Quite frankly his industry is a mega profit industry anyway so he can afford such largesse.

well, been, I'm here all day-even when RL (as mimi calls it) intrudes

I don't have an opinion on his ultimate motive, but as a liberal experiment of wealth distribution it seems to smack of the "moocher' philosophy that Ayn so vehemently abhorred. To me, Ayn says that a worker should be paid according to his contribution to society. A hard worker who continually strives to improve his abilities should expect to become more valuable and should reasonably expect to earn more than his counterpart who does the minimum to keep his job. To pay the building maintenance employee the same as the president of the company may, on the surface, seem a honorable, almost heroic thing to do. Nothing could be further from the truth. The lesson of the 20th Century Motor Factory should not be lost on us since it exemplifies the liberal view of the world today.

I'm sure that many of us believe that helping the poor and disadvantaged is the christian thing to do. At the same time we need to recognize that there in lies the slippery slope of welfare. Many of us believe that helping educate the disadvantaged, providing training or tools that they can use to improve their lot in life is the more realistic approach. Granted, this approach requires each person to become responsible for improving his/her situation. Fortunately we live in a country where we still have the freedom (for now) where we can be the masters of our own destiny. We can strive to become more, to learn more and to do more. Welfare handouts do nothing to solve the fundamental problem and research has shown that these handouts perpetuate the dependency on government to solve their problems. Our future is in our own hands and we are free to do with it as we please.

"... no idea how to create wealth.Take Jeffrey Immelt or a Carly Fiorini for example."

Ain't that the truth!!!!!!!!!!!!!

+ Many for this post..............thanks, kh

I think if you are going to pay more, it needs to be tied to actual performance, not given in advance as a "living wage". I let our people know I watch production and performance pretty carefully and arrange bonuses to bring actual pay up to what they have earned through performance. BTW, people adjust their living expenses to match salaried or hourly income in my experiences in business, so the higher the base pay is, the less production you actually get.

The problem is not CEO wages, the problem is over-regulation, government compliance, excessive corporate taxation, cronyism....

mama-it's just the truth, but too often truth must be uncovered-not revealed. Db spent the majority of this past year writing a book on point which will be available soon-on the source of economic growth. yes. the gulch is creating scholarship. there's more....

We've been debating this around our personal Gulch. She says it's wonderful thing, the employees will be more loyal and work harder to produce more. I say some may, others will soon be living month to month again and wonder what the boss has done for them lately.

I wonder about "humanities studies". Is there a pecking order for humans? Will the CEO by surrendering pay differential also lose the respect of many in the work force? Maybe. In most human organizations there is order, chain of command, or white and blue collars. If he surrenders the apparent differences, what will the micro social outcome be? What happens when a General takes off his stars?

I hope the media reports the outcome as certainly as they have the headline.

AMEN. I completely agree. and what the heck an english major was running an engineering company? really? that was the best person they could find? no it was a crony decision. (full disclosure: I was an english major)

$70,000 is a worker wage?!---Shows what a peas-
and I have apparently always been.--Never mind,
a man should be paid what he's worth, and accord-
ing to what he produces. If he produces more than
that and is worth more, it seems kind of foolish
to me. But I didn't hear the story, so if the com-
pany is in trouble, and he is doing it to save it,
maybe there is some reason for it.

This sounds great, as does full blown socialism. BUT, people arent going to work harder for a larger salary that is just given to them. Commission programs perhaps might make them work harder, but once you "get your raise that you deserved anyway"- theres no need to increases in work output.

I agree totally. This guy is from Seattle- home of the ridiculous $15 minimum wage. He will either be bankrupt soon, or he will sell out to someone with more business sense.

The problem with this idea is that the salaries he is quoting are unrealistic in todays economy. Competitors will come in and cut prices using less grandiose salaries if they can. I dont have a problem cutting the $1M salary. Salary is a stupid way to take compensation. Take the $930k and cut prices and expand your business and then sell out and take the cash then at lower tax rates.

That's a good strategy to avoid looters.

Regardless if you think this guy is a socialist paying out unearned benefits or a capitalist executing a tax strategy, one thing I can guarantee:

The mainscream press will use this example for why the minimum wage should be raised to $25/hour. "See, this guy pays his floor sweepers $35/hour. And he's glad to do it." If the company goes bankrupt or is sold for a bundle 2 months after the story airs doesn't matter to them. They never go back to close the loop on their stories. It's all about creating false perception long enough to get voters to go along with another bad idea.

He is founder and the company is privately held -- I went looking for info. He's got a really good growth rate and with this publicity he should be able to build up and cash out relatively soon.

I did misread it the first time, his managers can make more than 70K, that's just what he's going to take and what he's going to establish at the low end.

And, I agree with you, he's going to really mess with their lives.

As CEO he can take any pay he wants of course and, as you point out, he has other means of cashing in on his company.

The people at the clerical level will do well -- as long as he doesn't sell the company or otherwise end the game which will leave them in an awkward place looking for work with an expectation that they should be paid 70K. I know a couple of people who were really messed up in the dot com era by getting salaries that they couldn't get again when people weren't willing to pay high dollar for anyone who could turn on a computer.

And, of course, it will feel really good for people to be working hard and watching others screw around -- knowing everyone gets paid the same.