Gravity Payments sets a $70,000 pay floor and cuts the CEO's salary to match

Gravity Payments, a Seattle credit-card processing firm, announced on April 13, 2015 that every employee would eventually earn at least $70,000 a year. Founder and CEO Dan Price stunned his 100-plus staff at the quarterly meeting by cutting his own roughly $1m salary to the same $70,000 and saying company profit — not higher client fees — would fund the raises over three years.

For some workers the increase more than doubled pay, and the firm already offered unlimited paid vacation after a first year. Price acknowledged the cost: the raises would eat into at least half of the company's profits, and he had no plan to pass the expense to merchants. A customer-relations manager told the AP that the firm had already gained new customers in the first days after the news.

The move was read as a direct answer to the national argument over executive pay. Stanford corporate-governance professor David Larcker called it 'an alternative way to think about a tough problem' while doubting it would scale. Within thirteen months, according to GeekWire, Gravity's profits had nearly doubled to about $6.5m and the average salary had climbed 50% to $72,000.

The experiment became a reference point in minimum-wage debates and turned the founder into a national figure — but the mechanism that made it work was internal: pay set as a company-wide floor, executive compensation attached to the same number, and the cost absorbed by profit rather than customers.