Dan Price, the Seattle tech leader who made headlines this year for boosting his employees’ minimum annual salary to $70,000 and cutting his own to the same, has been sued by his brother and business partner, Lucas Price — who alleges that the Gravity Payments CEO “improperly used his majority control of the company to pay himself excessive compensation” prior to the change.
The disagreement between the brothers dates back several years, to long before Dan Price made international news with his announcement of Gravity Payments’ new salary structure, according to the timeline laid out in Lucas Price’s complaint.
Court records indicate that the discord over Dan Price’s salary and control of the company was coming to a head in the weeks prior to the announcement, with lawyers for Lucas Price having already drafted the complaint at the time.
A New York Times article on April 13, by a reporter invited to witness the announcement, brought widespread attention to Dan Price’s decision to surprise the 120-person company with the across-the-board $70,000 minimum salary. The company’s previous average salary was $48,000, according to the story.
At the same time, Price told the New York Times that he would be reducing his own salary from nearly $1 million a year to the new $70,000 minimum, until the credit-card processing company’s profits rebound from the extra compensation expenses.
“The market rate for me as a C.E.O. compared to a regular person is ridiculous, it’s absurd,” Price told the newspaper, which noted that he “drives a 12-year-old Audi, which he received in a barter for service from the local dealer.”
The complaint against Dan Price was signed by Lucas Price’s lawyer on March 12, about a month before Dan Price announced his plan. However, the suit wasn’t officially filed in King County Superior Court until April 24, about 12 days after Price made the announcement.
The complaint from Lucas Price doesn’t reference the plan to boost employee salaries, or Dan Price’s pledge to dramatically cut his own pay.
Lucas Price started the company with Dan Price in 2004, according to the complaint. The suit describes a long-running disagreement between the brothers — dating back to 2008 or earlier — over their respective roles in the company and its success.
Through a 2008 restructuring, Lucas Price became a minority shareholder, the complaint says.
The complaint continues, “Since gaining majority control, Daniel has engaged in a campaign designed to enrich himself and favor his majority interest in Gravity Payments to the detriment of Lucas and his minority interest. Among other wrongdoing, he has 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.”
Lucas Price is seeking unspecified financial damages, an accounting of the company’s finances and a requirement that his brother buy his interest in the company “at fair value.”
Dan Price, who was named Entrepreneur magazine’s 2014 Entrepreneur of the Year and GeekWire’s Young Entrepreneur of the Year in 2013, denies the allegations in court filings.
One filing by Dan Price says his brother “failed to perform his duty as a member of the Board of Directors to raise any concerns regarding executive compensation and reasonable expectations regarding allocation of benefits of ownership in Gravity Payments.”
Asked for a comment on the suit, Dan Price said this via email Monday night:
I am totally committed to our vision of making credit card processing fair for businesses. Each individual at Gravity has inspired me to see them as important business leaders and decision makers. Paying a living wage wasn’t done totally for business reasons, but I do believe it will pay off in economic terms in addition to honoring the folks who sacrifice for merchants we serve every day. Hoping to dream up a creative resolution that allows us to continue with our mission while also doing the best we can to meet Lucas’ financial goals.
News of the suit was first reported by the Seattle Times on Monday evening. Dan Price told the newspaper, “I deeply regret the rift this has caused in my relationship with my brother, who I love, and I’m hoping and praying for a quick resolution that’s positive for everybody.”
Here’s a copy of the complaint, and Dan Price’s response.
