PMT, INC. - Page 25

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          to the direct terms of the bonus plan.  The bonus plan provided             
          that the officers were to be paid a bonus equal to 10 percent of            
          the gross increase in sales of petitioner for the fiscal year               
          1990 over its gross sales for its fiscal year 1989.  Under the              
          bonus plan, the total bonuses paid to all officers from the bonus           
          pool would have been $1,068,858.  The bonus plan clearly provided           
          that the bonuses were to be paid in an amount equal to the ratio            
          of an officer's annual compensation to that of all officers                 
          applied to the gross bonus pool.  The record is unclear as to the           
          amount the Penalbas received in base salary for petitioner's                
          fiscal year 1990.  However, the evidence indicates that the                 
          Penalbas' base salaries were approximately equal if not                     
          identical.  Mrs. Penalba testified that her salary, which was the           
          same as Mr. Penalba's for the year here in issue, was                       
          approximately $125,000.  Mr. Blumberg implied that the Penalbas'            
          base compensation in petitioner's fiscal year 1990 was $682,000.            
          Since under the bonus plan Mr. and Mrs. Penalba were to have been           
          paid in the same proportion as their base salary, we conclude               
          that the bonuses paid for the year at issue were not paid                   
          pursuant to a structured, formal, and consistently applied                  
          program.  Also, the total amount of the bonuses appears to have             
          been improperly computed.                                                   
               Respondent contends that neither Mr. nor Mrs. Penalba needed           
          an incentive to work harder since they owned the business.  Both            
          Mr. and Mrs. Penalba testified that they gave their full efforts            




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