Dan Price, CEO Gravity Payments, became an instant sensation when he decided to cut down his $1 million salary so all of his 120 employees can receive a minimum salary of $70,000 last April. However, there's more story behind his philanthropic act.
Bloomberg Business reports the young chief executive of Gravity Payments, a Seattle-based credit card company, announced in April that he will be raising their minimum salary to $70,000 a year and even planned to cut down his own salary of $1.1 million to cover the cost. Some of the employees would receive twice as much as they were used to.
According to Dan, the idea came to him after hiking with a friend, Valerie Molina, who was earning less than he did. He added that he came across a study by Nobel Prize winners Daniel Kahneman and Angus Deaton that states, people are happier as their earning rise until it reaches $75,000 a year. In an interview with Today Show, Dan stated that "It's not about making money; it's about making a difference."
He received an overwhelming response for his altruism, mostly impressed with it, some felt skeptical and others thought it was just a PR stunt. Well, it may have been too good to be true.
Karen Weise from Bloomberg further reports that his motives which he described as altruistic are actually a counter action to avoid an expensive lawsuit served to him by his older brother, Lucas Price, who owns 30 percent of Gravity Payments. His older brother claims that Dan has overpaid himself for several years now.
In previous reports, Dan has suggested that his older brother may have brought in the lawsuit in response after the wage increase. However, Weise has uncovered the lawsuit and it showed that it was filed before the wage increase was announced.
According to Weise, court record shows that Dan was served with the suit at his house on March 16, that's about two weeks prior the idea came about and almost a month before the wage increase was formally announced. According to Lucas' attorney, their client was not aware of the wage hike until Dan emailed him on April 9, that's five days before the announcement.
When he was confronted with this discovery, Dan denied knowing the suit after the raise was made. When Business Insider contacted him, they got this response:
I have never once given myself a raise without a unanimous board vote. My pay was set based on what we thought it would take to replace me. We wanted the company to be able to continue to thrive with or without me as CEO."
Lowering his own pay could give Dan negotiating leverage in the case and will put him on a good light according to Weise.
Do you believe in the good motives behind Dan's price hike? Or this is this just his cover up story to win points against his brother? Let us know your thoughts by leaving your comments below.
