36
Mr. Brennan concluded in his report that the highest maximum
amount of total compensation that the top executive of Pertinax
should have received was $213,470. This figure was derived from
the data reported by Executive Compensation Service for Industry
Sector: Services (Bonus Paying Companies) for 1988 and took into
account Pertinax's reported revenues. Since the value of Mr.
Munro's and Pertinax's services depended on the extent to which
they helped corporate petitioners' businesses, and not on the
gross revenues of Pertinax from the corporate partners, it was a
clear error for Mr. Brennan to use Pertinax's revenues. In his
testimony at trial Mr. Brennan used the revenues of Alondra,
UCIC, and Edco to reach the conclusion that maximum reasonable
compensation for Mr. Munro should have been $400,000 if he was
"the best of the best" among chief executive officers and
$300,00016 if he was merely average.
As in previous cases, we have difficulty accepting
Mr. Brennan's methods and conclusions. Guy Schoenecker, Inc. v.
Commissioner, T.C. Memo. 1995-539; Mad Auto Wrecking, Inc. v.
Commissioner, supra; BOCA Constr., Inc. v. Commissioner, T.C.
Memo. 1995-5; L & B Pipe & Supply, Inc. v. Commissioner, supra;
Mortex Manufacturing Co., Inc. v. Commissioner, T.C. Memo. 1994-
110; Curtis v. Commissioner, supra; Automotive Inv. Dev., Inc. v.
16Mr. Brennan spoke of one standard deviation's distance
from the mean, but respondent rightly uses Mr. Brennan's
equations and data to interpret this to mean $300,000.
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