CEO cuts own salary to pay staff $70,000 a year

Dan Price, founder of Seattle-based company Gravity Payments, has announced he will be taking a whopping US$930,000 pay cut from his annual income.

The reason? To be able to finance a massive pay raise for his 120-member company.

According to an article published by the New York Times, Price read a study which concluded that people who make less than $70,000 can truly become happier by earning more money.

Price then decided to simply raise everyone’s salary to a minimum of $70,000, even for those employees lowest on the corporate ladder.

The average salary at Gravity, according to the New York Times, is $48,000 year.

"Price, who started the Seattle-based credit-card payment processing firm in 2004 at the age of 19, said he would pay for the wage increases by cutting his own salary from nearly $1 million to $70,000 and using 75 to 80% of the company’s anticipated $2.2 million in profit this year," the article stated.

The paychecks of about 70 employees will grow, with 30 ultimately doubling their salaries, it added.

“Is anyone else freaking out right now?,” the article quoted Price as saying after he made his announcement to his company.