CEO Explains Why She Pays Herself Less Than Some Of Her Other Employees — 'I Earn The Fifth Most At The Company I Co-founded'
Her way of thinking is what CEOs should aspire to.
Gorodenkoff / Shutterstock The CEO of a startup company is being praised for how she chooses to run her company after revealing how much she pays herself compared to everyone else who works for her.
In a TikTok video, Chelsea Fagan, a 34-year-old influencer and co-founder of the media startup company, The Financial Diet, shared why she chose to have the same base salary for the last five years and refuses to be the number-one paid employee at her company.
Fagan said she has a $90k salary and earns the 'fifth most' at the company she co-founded.
In Fagan's video, she received a comment from one of her followers about how intrigued they were that she wasn't the highest-paid person at the company she helped found. In response, Fagan explained her reasonings for choosing to keep the same salary for the last several years.
"For context, I earn the fifth most at the company I co-founded. My base salary is $90,000. Like everyone else, I engage in some kind of profit sharing, depending on the quarter, and I haven't changed my salary in five years," Fagan said. "But the reason that I generally don't like talking about it is because it paints me as either this really altruistic person or a bit of a martyr, and I am definitely neither."
She acknowledged that her decision was a selfish choice, but more executives should make it too. On an ethical level, Fagan feels that executives don't deserve to make more money than the majority of employees who work for the company. On top of that, the idea that an average executive works harder than a person being paid minimum wage at that company is something Fagan doesn't agree with.
"On a practical level having really inflated executive salaries puts a lot of pressure financially on the company," she explained.
At Fagan's company, all of the employees have a four-day workweek and six weeks of PTO.
"We have a pretty good work-life balance and part of that is not having financial pressure to maintain these super-inflated compensation packages," Fagan said, adding that it was around three years ago that The Financial Diet decided to implement the change in workweek and PTO.
In February 2023, a report conducted by the UK profit 4 Day Week Global and the think tank Autonomy was released, which consisted of a six-month trial of results from nearly 3,000 workers at 61 companies and ran from June 2022 to December 2022. It was the biggest four-day workweek experiment to date.
Companies who participated in the trial rated their overall experience well, saying business performance and productivity remained high, revenue increased and turnover dropped. On the employee side, 90% said they want to continue with a four-day week, 55% reported an increase in their ability at work, and 15% said no amount of money would make them go back to a five-day schedule.
For Fagan, she admitted to already having enough money from her salary, commissions, and profit sharing. She also has a novel that has brought her tens of thousands in revenue. "I sometimes do speaking engagements, consulting, and I'm in a dual income, no kid household. My husband works in tech, how much money do I need?"
Fagan also pointed out that even within her own company, they've done stories about how a person's mental health can be negatively affected by how wealthy they are. It makes people more isolated from others, and less empathetic to issues that maybe don't directly concern them.
"You can't relate to people, you can't understand people. I'm already pretty different than a lot of family, friends, and people in my life. How much more removed from normal life do I wanna be?" she questioned. "Anything I want, I can have, and the idea that you should always be striving for more money is one of the reasons why Americans are often so unhappy, even when they do have money."
Instead of Fagan hoarding her wealth and causing her employees to be involved in a miserable workplace environment, she's instead choosing to prioritize the well-being of everyone involved. Not only is she promoting the need for a healthy work-life balance, but she is also building trust with her employees and slowly debunking the myth that people need to live to work.
Nia Tipton is a Chicago-based entertainment, news, and lifestyle writer whose work delves into modern-day issues and experiences.