
Seattle C.E.O. Who Promised $70,000 Salaries Wins Suit Filed by Brother - peterkshultz
http://www.nytimes.com/2016/07/11/business/seattle-ceo-who-promised-70000-salaries-wins-suit-filed-by-brother.html
======
tptacek
Remember, the lawsuit isn't over the plan to pay all employees $70,000. It's a
dispute between two cofounders, one long-departed, over executive compensation
and profit sharing. There's also a dispute over the timing: Gravity claims the
suit was filed after the minimum-salary announcement, but Lucas claims the
suit was known by all parties to be in the works before the plan was known.

~~~
ufmace
I didn't think this was necessary at first, but looking at the rest of the
comment threads, apparently it is. I don't see any indication that anybody on
either side of this suit ever claimed or even implied that the employee salary
policy and the wisdom thereof has anything to do with the suit.

~~~
ZoeZoeBee
That's because the suit was filed before Dan Price decided to raise employee
salaries to $70,000. It is concerning so few people commenting on here are
aware of this.

Edit: Dan Price made his announcement of the $70,000 pay plan a month after he
was served, making matters even more troubling is his denial about the timing.

[http://www.bloomberg.com/features/2015-gravity-ceo-dan-
price...](http://www.bloomberg.com/features/2015-gravity-ceo-dan-
price/pdf/gravity_price_certofservice.pdf)

~~~
morley
Sorry if I'm misunderstanding you, but are you implying that (a) the CEO
announced this salary increase to deflect any negative reaction to this suit,
and (b) that denying any ulterior motive supports that theory? Both points
seem shaky to me, unless there's more compelling evidence than the
circumstantial timing.

~~~
ZoeZoeBee
No you're not misunderstanding, aside from the puff pieces what do you know
about Dan Price?

>When Lucas left the company, Dan raised his own salary (from $50,000 to $1
million in one year), causing a rift between the two. And so on March 16, one
month before the famous $70,000 announcement was made, Dan was officially
served a notice that Lucas was suing him. Court documents prove that Dan
signed the papers and knew of the lawsuit. However, Dan claimed that he was
being sued after the wage announcement because Lucas was jealous of the press.

>Price raised his employees’ wages to $70,000 so his brother wouldn’t receive
his fair share of Gravity Payment’s dividends, not because he want to improve
his employees’ lives

[http://thehustle.co/dan-price-the-ceo-paying-
everyone-70000-...](http://thehustle.co/dan-price-the-ceo-paying-
everyone-70000-dollars-is-lying)

------
kragen
It seems strange that nobody has mentioned Dodge v. Ford Motor Company in this
thread yet (except implicitly, by way of popular misconceptions about what the
law does or doesn't require of executives.)

This lawsuit, even though it isn't explicitly about the well-above-market
wages paid to the employees, seems like a century-later version of Dodge v.
Ford, given that context.

[https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co](https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co).

~~~
wutbrodo
It's not that strange. The lawsuit is about alleged abuse of corporate credit
cards for personal expenses and overpaying (by whatever definition) oneself as
the CEO. It's a basic good-of-the-company vs personal-enrichment-of-the-CEO
lawsuit. The nuances of shareholders vs other stakeholders in cases like Dodge
vs Ford couldn't be less relevant. Did you read the article?

------
gwern
"The judge also ordered Lucas to pay Dan’s legal fees."

Ouch.

~~~
dogma1138
That's common, and it's usually capped the ruling would have the amount of
legal fees to be paid this doesn't mean that it covers the legal costs of the
winning party, it hardly comes close in most cases unless it was really a
uneven match to begin with (e.g. huge corporation vs an individual).

~~~
vessenes
In washington state fee shifting is very uncommon, actually. Unless the
shareholder agreement provided for it, this should be interpreted as a real
slap on the wrist -- essentially a sign the judge thought the suit was
frivolous.

~~~
phonon
The shareholder agreement provided for it.
[https://www.scribd.com/document/317832018/Price-v-Price-
Ruli...](https://www.scribd.com/document/317832018/Price-v-Price-
Ruling#from_embed)

------
phonon
Copy of the ruling [https://www.scribd.com/document/317832018/Price-v-Price-
Ruli...](https://www.scribd.com/document/317832018/Price-v-Price-
Ruling#from_embed)

------
rm_-rf_slash
The only true tragedy here is that the relationship between two financially-
sound brothers was soured by a dispute about how to get more money.

Sometimes I think to myself that if I got into business with members of my
family, things would somehow be different for us. Stories like this at least
have the silver lining of an unambiguous answer: no.

~~~
unit91
Depends on what everybody loves most. If it's money, forget about it. If it's
something higher (other people, God, etc.) then I think it can really work
well. I previously worked at a startup with my brother. We both had roughly
10% equity stakes and it never jeopardized our relationship, even when the
company went through some tough times.

~~~
usefulcat
True, but the trick is accurately determining up front "what everybody loves
most". Oftentimes people don't really know the answer to that for themselves,
let alone for anyone else.

~~~
unit91
Totally agree. However, in the context of whether you can do business with
your family members, you probably already know them well enough to make that
assessment.

------
JackPoach
So, what's the news, really? Other than it's cool to offer $70K minimum to
everybody (which is probably ain't much for Seattle)

~~~
ForHackernews
> (which is probably ain't much for Seattle)

In 2014, the median per capita income in Seattle was $36,854[0] meaning that
half those represented in this data earned less than that.

[0]
[http://www.deptofnumbers.com/income/washington/seattle/](http://www.deptofnumbers.com/income/washington/seattle/)

~~~
JackPoach
Wow, I was sure that proximity to Redmond made it more SF-like

~~~
ForHackernews
In San Francisco, it's still only $43,924:
[http://www.deptofnumbers.com/income/california/san-
francisco...](http://www.deptofnumbers.com/income/california/san-
francisco/#percap)

I think we're in kind of a bubble on HN where we don't realize how much richer
we are than the average person.

------
notadoc
Business and close personal relationships, whether friends or family, tend to
not mix well

------
univalent
It will surely be appealed. The 'feel good' story aside, this seems
problematic. The brother owns 40% of the company and as such he can contest
that the price (wages) that the majority shareholder is paying is greater than
what the market commands.

~~~
yannyu
The suit has nothing to do with employee wages.

From the article:

On Friday, Judge Theresa B. Doyle of Superior Court in King County, in
Washington State, ruled that Dan’s brother, Lucas, had failed to prove his
claims that Dan had overpaid himself and inappropriately used a corporate
credit card for personal expenses. The judge also ordered Lucas to pay Dan’s
legal fees.

------
whack
I'm all in favor for workers getting paid more, but I can understand the
brother's perspective. Shareholders, especially ones who own 40% of the
company, have a reasonable expectation that the company CEO will be acting in
their financial interests. In this case, the CEO was acting in a way that is
favorable to his employees' interests, but detrimental to the interests of the
shareholders. Given that the CEO legally has a Fiduciary duty to the
shareholders to protect their best interests, I can understand the brother
filing suit.

If the CEO also owned 100% of the company, or if the CEO was helping the
employees with his own personal money, and not the company's money, there's no
problem of course. But that isn't what he's doing. A cynical interpretation
would be that the CEO is giving up 60% of the profits, in return for national
fame and glory, while the brother is forced to give up 40% of the profits and
gets nothing at all.

~~~
bwilliams18
CEOs have way more latitude than most think. There is an incredibly easy
argument to make in this case: paying employees more means you get better
employees, and more productive employees, thus you drive more shareholder
value.

~~~
Alupis
> paying employees more means you get better employees, and more productive
> employees, thus you drive more shareholder value

Except in this case, quite the opposite happened. All of the company's best
employees quit and walked away within a few month's time.

This left only the newest hires running the ship - collecting, in some cases,
more salary than the seasoned crew that had been there from the start and had
to work their way up the pay ladder.

[1] [http://www.businessinsider.com/dan-price-gravity-payments-
em...](http://www.businessinsider.com/dan-price-gravity-payments-employees-
leave-2015-7)

~~~
__jal
An employee that quits is clearly not the best employee. They were incapable
of changing directions with the company.

If "the best" employee in a company quit because they were philosophically
opposed to a new client's business, most would cock an eyebrow, think they
were inflexible or committed, and move on. I find it extremely interesting
that instead, a philosophical disagreement about cow-orkers' salaries is
apparently considered very differently by some.

~~~
lbn
I would imagine the best employees quit because they thought it was unfair to
be paid the same or almost the same as people who know and contribute a lot
less. It would have been better to just pay everyone above the market by some
percentage but this would not make for a sexy headline.

~~~
yardie
The best employees wouldn't give a shit what someone else is getting paid as
long as they are being fairly compensated. You can always ask for more money,
if you're as good as you claim you are you will definitely get it. I'm going
to go with my gut and say this is just crabby, bitter griping from a few ex-
employees.

------
edw519
MAJOR FAIL!

Losing brother: “I am shocked and disappointed with the decision and I will be
considering my options.”

Winning brother: “My love for my brother is unconditional...I’m thankful for
the opportunity to put this challenging time behind us,”.

One of my biggest concerns the past 10 years or so has been the difficult of
technology's distinguishing between "building stuff to make the world better"
and "chasing nickels". This is clearly an example of the latter. Brothers in
court? Disgusting.

I have always been a big proponent of free markets and sure, everyone has a
right (and responsibilty) to earn for their good work, but this is just beyond
any of that. Stories like this one demonstrate the worst behavior in a world
full of blessings.

Frankly, I would sooner give it all up and do volunteer work before I would go
to court against my own brother. Obviously, not everyone feels this way. What
a pity some of us have lost our way and in the name of "something else",
forgot what's really important.

~~~
nkrisc
I don't see what's any more wrong about brothers facing off in court than two
strangers. There's not some otherworldly, mystical bond between brothers that
doesn't or can't exist between any two people.

~~~
themartorana
I'd say it's pretty tough to approximate a sibling relationship. Now, I'm very
close to my siblings, and we were raised extremely family-first, and my
experience is entirely my own and not someone else's, but no, even my best
life-long friendships that I cherish dearly cannot approximate my relationship
and shared growing up with my siblings.

YMMV I'm sure.

~~~
nkrisc
YMMV, I think that's the point. Sure, many siblings share very close
relationships because they grew up together in a positive home environment.
That's not always true. I'm not saying these two brothers must hate each
other, but there's nothing inherently mystical about sibling relationships.
Some people have truly terrible people as siblings.

