- 34 -
Commissioner, 73 T.C. at 1159. We look to this factor to
determine whether Rogers was compensated differently than
petitioner's other employees solely because of his status as a
shareholder.
Petitioner deducted total compensation of $6,075,444 in
1990. As a percentage of total compensation paid, Rogers
received 73 percent, even though he constituted less than 2
percent of petitioner's employees.11 Furthermore, of the total
compensation paid to petitioner's seven key employees (including
Rogers), $5,162,018, or 85.99 percent, was paid to Rogers.12
Moreover, the compensation of the highest paid nonshareholder,
Worley, was 5.1 percent of the amount paid to Rogers. The
disparity between the compensation paid to the nonshareholders
and that paid to the shareholder--Rogers--is patent. Further
exploration of this situation is required.
Contingent compensation paid under a longstanding arm's-
length agreement will usually be upheld even if an incentive
formula results in greater compensation than the parties
anticipated at the time they entered into the contract. Owensby
& Kritikos, Inc. v. Commissioner, 819 F.2d at 1327, 1328;
11 Thus, Rogers' compensation was almost three times
greater than the total compensation paid to all of the other
employees.
12 Thus, Rogers' compensation was more than six times the
total amount paid the other key employees.
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