Business managers and directors have a fiduciary mandate to apply the same care in the administration of the company’s business as a sensible person would apply under the same circumstances. Corporate managers and executives must, therefore, use their unadulterated business judgment for the advantage of the company. The fiduciary mandate is to apply the same care as prudent person typically applies in the management of their affairs. In this regard, the CEO of Gravity payments is obligated to use fair judgment when coming up with various policies. According to Dan Price increasing the salaries of employees was a prudent move that could improve the employee’s output and eventually, catapult the organization to realize more profits. Since the company could not afford the salary increase, the CEO decided to take a pay cut to finance the pay rise. Such an argument seems to be prudent and justifiable. However, shareholders did not receive the news positives as the employees did.
Any business has corporate responsibilities to its stakeholders. Among the organizational obligations of the business include; informing the shareholders on vital decisions that affect the company; this means that the Dan Price should have discussed this issue with shareholders first for alternative solutions before coming up with a conclusion. The fact that that he increased the annual minimum salary, will prompt managers to ask for a salary increase. Since the CEO made it clear that the company cannot sustain the increase thereby opting to take a pay cut, means that a pay increase for other managers is not sustainable. This will probably affect the morale of his middle and departmental managers. Lastly, Dan Price could have explained the strategies, criteria, and frameworks he used to arrive at the $70,000 figure and why he believed that this figure would improve the morale of his employees.
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