Pulsar Components International, Inc. - Page 10

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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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