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10. Prevailing Rates of Compensation for Comparable
Positions in Comparable Companies
In deciding whether pay is reasonable, we compare it to
compensation paid to persons holding comparable positions in
comparable companies. Rutter v. Commissioner, 853 F.2d 1267 (5th
Cir. 1988); Mayson Manufacturing Co. v. Commissioner, supra at
119.
Both parties produced expert testimony regarding this
factor. Petitioner's expert was Stephen D. Kirkland (Kirkland),
and respondent's was Emmet James Brennan III (Brennan).
Brennan testified that Choate's compensation was 4.5 percent
of petitioner's revenues while "top performing companies" paid
their officers 2.6 percent of revenues. Brennan stated that
"high average" compensation to CEO's of similar-sized
construction companies was $265,550. Brennan stated that no
Atlanta construction company similar in size to petitioner that
answered his survey paid its CEO more than $500,000 in 1992.
Brennan did not show that the performance of the CEO's of
the companies he considered was comparable to Choate's
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