New Report Says Gravity CEO May Have Raised Salaries To Deflect From Lawsuit

New Report Says Gravity CEO May Have Raised Salaries To Deflect From Lawsuit

When Gravity Payments CEO Dan Price announced back in April that he was cutting his own $1.1 million salary and raising all of his employees’ salaries to $70,000, the media flipped out. Local media in Seattle especially sang his praises. He was fawned over, interviewed, and put on magazine covers.
The media was later surprised when Price’s brother Lucas, a co-owner of Gravity Payments, filed a lawsuit against him.

Lucas Price claims his brother excessively paid himself and deprived Lucas Price of his minority-shareholder benefits. According to media reports, Dan Price was paying himself nearly $1 million a year before announcing he would cut his pay to $70,000 to help Gravity raise the pay of its employees to $70,000 over the next three years.

Court documents show that among other remedies, Lucas Price is asking the court to order Gravity to repurchase his shares and to provide a complete accounting of its transactions, financial affairs and financial records.

And what no one in the media seemed to be able to put together, until Bloomberg’s Karen Weise uncovered it, is that Dan Price knew full well that he was being sued by his brother Lucas BEFORE he announced the pay raises, and that he may have done this in order to create good PR for himself before knowledge of the suit became public.

Lucas did file the case two weeks after Price’s announcement, but according to court records, Price was served with the suit at his house on the afternoon of March 16—about two weeks before the fabled hike with his friend and almost a month before the wage increase announcement. Washington state allows litigants to serve a defendant before a suit is filed with the court. Hollon, Lucas’s attorney, says Price informed his brother of the pay hike through an e-mail on April 9, only four days before the New York Times and NBC descended on Seattle. (Pirkle said that in a later document, Lucas “specifically referenced” the wage hike as grounds for the case. Hollon responded that the May document added the pay increase as “one of the potential factual bases supporting the claims in the lawsuit” since “the wage program appeared to be a reaction by Dan to the lawsuit.”)

And when asked about it, Price is evasive at best, weaselly at worst.

In a follow-up interview in mid-November, I pressed Price about the inconsistency. How could what he told me about being served two weeks after announcing the raise be true when the court records indicated otherwise?

“Umm, I’m not, I have to look,” he said.

The court document, I said, definitely says March 16.

“I am only aware of the suit being initiated after the raise,” he replied.

“The court record shows you being served on March 16 … at 1:25 p.m.,” I said. “And actually, your answer to it was dated April 3,” also before the pay hike.

“I am only aware of the suit being initiated after the raise,” he repeated.

I asked again how that could be, saying the declaration of service shows Price was served with the complaint, the summons, and other documents, “that you are a male, who is white, age 30, 5-feet-8-inches, medium height, dark hair.”

He paused for 20 seconds. “Are you there?” he asked, then twice repeated his statement that he was only aware of the suit being initiated in late April. “I’d be happy to answer any other questions you may have,” he added.

Price has problems other than this lawsuit. Two long-time employees quit the company over the summer, pointing out that the “equal” pay made their contributions undervalued. And now, Price’s ex-wife’s TEDx talk that she gave back in October is about to be publicly released, in which she accuses him of domestic abuse. Price denied that accusation in the Bloomberg piece.

The lawsuit goes to trial next May. This Bloomberg article, and all the other ones following up on the revelations in it, are sure to put a few dents into Price’s carefully crafted “World’s Best Boss” image. Maybe if the media had done their homework instead of doing their best fangirl squees, the myth of Dan Price would have been stopped before it snowballed.

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