- 28 -
independent investor would undoubtedly be satisfied with such a
return. This factor favors petitioner.
7. Prevailing Rates of Compensation for Comparable
Positions in Comparable Concerns
Respondent's regulations provide that "It is, in general,
just to assume that reasonable and true compensation is only such
amount as would ordinarily be paid for like services by like
enterprises under like circumstances." Sec. 1.162-7(b)(3),
Income Tax Regs.
Petitioner relied on its expert witnesses' testimony and
reports for evidence on this factor. Petitioner submitted a
report written by Joe T. Fisher (Fisher), in addition to the one
coauthored by Hughes and Benesh.
Petitioner's Experts' Reports
Although Fisher does not specialize in executive
compensation, he is a member of the American College of Health
Care Executives and has held various executive positions in the
health care industry since 1977. In his professional capacity
Fisher has become familiar with the various incentive plans that
have been administered through various health care companies, he
has conducted studies and surveys of executive compensation, and
he has participated in the design of executive compensation
plans. In his report, Fisher concluded that the amount of
compensation paid Rogers in 1990 was reasonable. Fisher's
report, however, contains several inaccuracies that cause this
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011