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Mr. Woll was to form petitioner, giving Mr. Woll a larger
ownership interest. Mr. Woll continued to try to negotiate a
higher salary after petitioner's formation. Mr. Laviano, on the
other hand, wanted to limit the amount Mr. Woll was paid.
Mr. Woll never threatened to leave the employment of petitioner
if his compensation was not increased, but he constantly tried to
convince Mr. Laviano to increase his compensation. One of the
ways Mr. Woll attempted to convince Mr. Laviano to increase his
compensation was to report to Mr. Laviano his estimate of what
executives in other firms in petitioner's industry were making.
Most of the information upon which Mr. Woll based his estimate
was obtained from the owners of companies that competed with
petitioner.
After much discussion among themselves, the Officers agreed
to set their salaries at $650,000 a year for 3 years, beginning
on November 5, 1982. In doing so, the Officers considered what
they understood other people in petitioner's industry were
making. They considered that they would be acting as chief
traders, as well as managers and executives. They discussed
whether they should receive commissions, but decided to work
strictly on a salary basis. In agreeing to set their
compensation at a fixed annual rate, the Officers did so with the
understanding that it might not be possible for petitioner to pay
them $650,000 each year due to the cyclical nature of its
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