Who is Dan Price, and what is Gravity Payments?
Price is an Idaho native and SPU grad, and Gravity is the company he and his brother Lucas founded under another name in 2004 to serve as a middleman between merchants and credit card companies.
Did Price really raise the company’s starting salary to $70,000?
Sort of. Just like Seattle’s $15 minimum wage, Gravity is phasing in that big bump over a number of years. But the full amount certainly made for an eye-catching number when Price made the announcement to his staff—and to media members he’d invited to the event—on April 13, 2015.
That’s one way to drum up publicity for yourself.
No kidding. Throughout the summer Price’s face was everywhere: magazine and newspaper covers (including Seattle Weekly’s Best Of issue), morning talk shows like Today, and speaking engagements. But not all of the attention was good. While he had to hire a dozen new employees to handle new business from companies who wanted to work with him, Gravity claims it became the target of “harassing coverage by independent bloggers.”
Price says he picked that number based on a 2010 study by two Princeton professors that showed happiness increases as salary does, up to about $75,000.
So what’s this lawsuit all about?
In July The Seattle Times broke the news that Lucas was suing his brother Dan for, among other things, paying himself an exorbitant salary, allegedly blowing company money on personal expenses, and refusing to let Lucas liquidate his interest in the company for fair market value. Gravity turned over 591,999 pages of documents to Lucas's attorneys.
Wait, his brother is suing him?
Yup. Just another example of why you should never mix family and business.
Is it possible that Lucas is just bitter because he disagrees with the $70,000 thing?
Maybe? But Lucas hasn’t been involved with Gravity since ’08, when he and Dan restructured the company and put the latter in control. And though the suit didn’t come to light until last summer, Dan was served a month prior to his buzzy minimum wage move—a fact that caused Bloomberg Businessweek to float the idea that Dan fattened his employees’ wallets to cut Lucas’s claims off at the knees before the public became aware of them.
Does Lucas have a case?
Judge for yourself: Based on an analysis of CEO pay among similar companies, Dan paid himself $1.1 million in 2014, accounting for 31% of the company’s net income. By comparison, the CEOs of Global Payment Systems and Vantiv earned 1.6% and 2.2% of net income, respectively.