Employee turnover and customer attrition at Gravity Payments reached record lows in the past year. Annual profits at the company nearly doubled to $6.5 million. The average salary rose 50 percent to $72,000 a year. Many employees have been able to move closer to work, cutting hours out of their daily commutes. The company has received more than 30,000 resumes and added 50 new employees. Employee contributions to 401(k) plans have increased by 130 percent.
And in a baby boom credited to a “new sense of financial stability,” 10 members of the Gravity Payments team are expecting children.
Those are among the statistics released publicly by the Seattle-based credit card processing company this week, detailing the impact of CEO Dan Price’s announcement last year that Gravity Payments would boost employee salaries to a minimum of $70,000 a year in phases over three years, and immediately reduce his own annual compensation, previously more than $1 million, to $70,000, as well.
The Gravity of 70k from Gravity Payments on Vimeo.
Gravity Payments released the results on its website, along with the video above. Gravity also provided details to USA Today for an article that was published Thursday on the cover of the newspaper’s Money section.
The publicity came five days before the start of a trial in King County Superior Court in a civil suit filed against Dan Price by his brother, Lucas Price, the Gravity Payments co-founder, board member and minority shareholder, who alleges that Dan Price has used his majority control of the company to compensate himself excessively.
On Thursday, after the USA Today article was published, a lawyer for Lucas Price filed a copy of the story with the court, citing a quote from a company spokesman who told the newspaper, “We want a chance to tell the story rather than having it come out as bullet points” during the trial.
“Defendant’s ongoing efforts to litigate this case in the national and local press on the eve of trial raise serious concerns about Plaintiff’s ability to obtain a fair trial,” wrote Gregory Hollon, the lawyer for Lucas Price, who has a prior motion pending before the court to order Dan Price “to refrain from litigating this case in the news media and through public statements.”
Also this week, Dan Price started taking pre-orders for his new book, called “The Force of Gravity,” due out next year, promising the “exclusive, uncensored story behind the man with a history of breaking rules and making bold moves, on his mission to change the way business is done.” Bonus offers available with the book include a copy of the book “The Complete Leader” by Ron Price, the father of Lucas and Dan; and a one-year subscription to Inc. magazine with a signed copy of an Inc. magazine with a cover featuring Dan Price.
Lucas Price originally served his brother with the lawsuit in March 2015, prior to Dan Price’s $70,000 salary announcement, alleging that the Gravity Payments CEO “improperly used his majority control of the company to pay himself excessive compensation and to deprive Lucas of the benefits of ownership in Gravity Payments.” The suit was officially filed with the court after the subsequent announcement of the $70,000 minimum salary in April 2015.
In the USA Today story this week, Dan Price said the $70,000 minimum salary announcement wasn’t an effort to deflect the lawsuit. “I think the facts and sworn testimony flatly contradict that,” he told the newspaper, which reports that Price “began writing online of his concerns about income inequality well before the announcement and doled out 16% average annual raises from 2012 to 2014 after a conversation with a disgruntled employee.”
The disagreement between the Price brothers also dates back several years, according to court filings.
Lucas Price’s suit challenges expenses charged by Dan Price to the company, in addition to Dan Price’s overall compensation. In an earlier court hearing, Hollon alleged that Dan Price overpaid himself by $4 million to $4.5 million over the past five years — money that “he just took out of the company” through excessive compensation, the lawyer alleged.
Dan Price denies the allegations, saying he has acted properly and in accordance with their shareholder agreement. Gravity Payments is a privately held company. Dan Price owns about 67.5 percent, and Lucas Price about 32.5 percent, according to corporate records disclosed in the case.
In court papers filed in advance of the trial, lawyers for Dan Price say a 2008 renegotiation of Gravity Payments’ ownership structure “worked out spectacularly well,” giving Dan Price “broad authority to run the business,” leading to a rapid increase in its valuation, while giving Lucas Price “an income stream, benefits for his family, and the opportunity to stop working and travel.”
“This lawsuit was filed because Lucas Price now wants to cash out,” the filing says.
The trial between the brothers and Gravity Payments business partners is scheduled to begin Tuesday, May 31, in King County Superior Court, before Judge Theresa B. Doyle.
