The cut, which will see his $1m salary fall to $70,000, is part of a new strategy in which his lower-paid staff will make at least $70,000 a year. For a quarter of Gravity’s workforce, the move will nearly double their salaries.
Price apparently made the move after reading a study on happiness and is hoping that it will provide an “emotional well-being boost” to his staff.
“Initially, the idea was just to pay people at Gravity what they deserve,” he said about the announcement having gone viral. “We didn’t expect it to become a larger conversation, but since it has, it’s motivated us to find other ways for us to think bigger and have an impact. It’s inspiring to be part of a dialogue to help other CEOs think these types of issues through.”
However, he also alleged the new plan would eat up to 80 per cent of the company’s expected $2.2m profit this year. This has led co-founder Lucas Price to file a lawsuit against his brother. He accused the CEO of violating his rights as a minority shareholder in the company.
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The complaints were signed 13 March and filed 12 April, 11 days after Dan Price announced the pay raises. Attorney Greg Hollon, who will be representing Lucas Price, said that while the announcement may play a role in the proceedings, it does not relate directly to the lawsuit.
“It was an aggregation of events over the course of years,” said Hollon.
According to the filed documents, the brothers founded Price & Price in 2004. Dan Price became CEO in 2006, and amid disagreements in 2008, they restructured the company into Gravity Payments.
Lucas Price claims his brother “excessively” paid himself. He 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.
In a separate filing, Dan Price denied all complaints brought against him.
“I know the decision to pay everyone a living wage is controversial,” he said. “Although the decision was not entirely made for business reasons, my team and I are committed to making my vision a business success. 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.”
A trial date for the lawsuit is set for the beginning of May 2016.
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