Seattle CEO Who Set Minimum Salaries to $70,000 Sued By Brother for Allegedly Overpaying Himself
Dan Price, the Gravity Payments CEO who became a symbol of good corporate behavior for his generosity toward employees, is being sued by his brother for cutting him out of profits while inflating his own salary.
Dan, who made headlines in April when he raised the minimum salary to $70,000 for all 120 employees at his credit-card processing startup and slashed his own $1 million salary to $70,000, is being sued by his brother and business partner, Lucas Price.
Lucas co-founded Seattle-based Price & Price (which would eventually become Gravity Payments) with Dan in 2004, but agreed to a minority interest and reduced employee role at the company after conflicts precipitated a 2008 restructuring.
Now, Lucas alleges that Dan improperly paid himself a $1 million salary and deprived Lucas of minority-shareholder benefits, The Seattle Times reports.
While the complaints were signed exactly one month before Dan’s headline-grabbing announcement, papers were officially filed 11 days afterward. Lucas’ lawyer, Greg Hollon, said the conflict between the brothers has been brewing for some time. He called an “interesting question” the notion whether Dan's decision to set a minimum salary for his workers -- and lower his own pay to $70,000 -- was a response to the pending lawsuit.
Dan told The Seattle Times that the suit was the result of his “controversial” decision to raise salaries last spring. “I deeply regret the rift this has caused in my relationship with my brother, who I love,” he said.
Dan, who was named Entrepreneur Media's Established Entrepreneur of 2014, said the lawsuit threatens to put a financial strain on the company. “With this lawsuit, our backs are up against the wall and we are dependent on those who believe in our idea. Our financial resources are going to be spread even more thin,” he wrote in an email. “We need the support of our clients, but also the support of our community to help us identify more businesses that we can help so that we can make this idea of fair pay a success, and show that we can continue to lower costs and improve service for our clients along the way."
Lucas is seeking unspecified damages and asking Gravity Payments to provide a complete account of its financial affairs. He is also demanding that the company repurchases his shares.
Dan denied the allegations in a separate filing, which noted that Lucas, who currently serves as a director at Gravity Payments, never raised concerns about compensation or shareholder benefits. Lucas' lawyer says his client did raise concerns and was unable to get a resolution.
A trial is set for May 3.