Gravity Payments CEO Dan Price, the Nampa native who gained fame last year after raising the minimum salary at his company to $70,000, underwent courtroom questioning in Seattle by his brother’s lawyers on issues ranging from alleged personal charges to corporate accounts to “overstatements” he made to the news media.
Lucas Price, who owns 32.5 percent of the Seattle company, is suing brother Dan in a civil trial that began last week. Lucas Price contends that Dan, who owns 67.5 percent, paid himself excessively and violated Lucas’ minority shareholder rights. Dan Price has denied these claims.
The Prices are sons of Ron Price, a Nampa business consultant.
During Dan Price’s testimony, Lucas’ lawyer, Greg Hollon, cited multiple pieces of evidence that Dan worked to write Lucas out of the narrative of the company, that Dan Price used a company credit card for personal purposes and that he once asked for compensation that totaled more than half the company’s revenue.
Dan Price, 32, announced he would pay every employee at the credit-card payment-processing company a minimum $70,000 a year. The New York Times and NBC News recorded the moment Price announced the raise to Gravity’s employees, which then numbered about 120 people.
“The market rate for me as a CEO compared to a regular person is ridiculous. It’s absurd,” he told The New York Times then.
The move was heralded by many, but the story was quickly shadowed by reports of the lawsuit.
This is an unfortunate and troubling story of ego, resentment and an unwillingness of Dan Price to live with a deal he and his brother struck in 2008.
Greg Hollon, lawyer representing Lucas Price
In 2008, the brothers restructured the ownership of the company, deciding that Dan Price would be the majority shareholder. The deal set out shareholder rights and said Lucas Price, 37, would step away from day-to-day operations.
Anne-Marie Sargent, lawyer for Dan Price, said he followed the shareholders agreement with Lucas Price “to the letter.” The two brothers are angry with each other, she said, but the contract has not been breached.
The value of Lucas Price’s investment, according to Sargent, has increased 3,500 percent in seven years — from $800,000 to $26 million. Gravity Payments was worth $2 million in 2008 and is now worth $81 million, she said.
Dan Price said he would pay for the minimum-wage move, in part, by reducing his own salary from about $1.1 million to $70,000. He said he made the decision after talking with a friend who made less than him about the importance of being paid a living wage.
Under oath, Dan Price said he recalled being served with the lawsuit March 16, about a week and a half before he said he solidified the $70,000 idea on a hike with a friend. Dan Price had previously said he was unaware of the lawsuit when he came up with the minimum-wage plan. He said Tuesday his earlier statement was incorrect.
Hollon pressed Dan Price for the date when Lucas Price was informed of the pay raises. Dan agreed with Hollon’s statements that he had told Lucas on April 9, about two weeks before employees were notified.
Hollon asked Dan Price if he had been fair and transparent in his dealings with his brother. “’I’ve been imperfect, but if you look at things as a whole I think I have been transparent and fair in many ways,” Dan Price said.
Hollon also pressed Dan Price on various statements he had made in the news media and in public speeches, including telling TV personality Tyra Banks in an email that the company had achieved profit of $5 million.
Profit numbers actually were closer to $2 million, Dan Price testified.
Hollon also brought up statements concerning the timeline of Lucas’ lawsuit. He referred to an interview Dan Price gave in which he discussed mortgaging properties and taking money from his retirement account to support the company.
Tech-news site Geekwire found shortly after the interview that Dan Price had not mortgaged his properties at the time of the interview. Dan Price said in a recorded deposition that he was doing so at the time of the meeting.
Hollon asked Dan Price if he believed he had a habit of overstating things. “I’d say it’s something that I would like to work on improving, but there are very many times when I don’t overstate things,” Dan Price said.
Hollon went on to discuss emails between the brothers about compensation negotiations. At one point, emails show Dan Price asked for his compensation to be raised to $5 million per year, including base pay, bonuses and other sources. At that time in 2012, Gravity Payments was bringing in just about twice that in revenue — about $9.9 million, Hollon said.
On the issue of personal charges on corporate accounts, Dan Price said in an earlier deposition shown at the trial that he occasionally made such charges but paid the company back or had his pay deducted by the proper amount.
Lucas Price is seeking unspecified damages and wants the court to force Gravity Payments to buy his shares and buy him out.
The trial continues in King County Superior Court.
The Idaho Statesman contributed.