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5.75 percent of the bonuses was paid to Dudley, Freese, and
Barrett and 82.75 percent was paid to Choate, which is about in
proportion to their stock ownership.
We disagree. We think a more likely view of this is that
Choate's sale of his stock in petitioner to Dudley, Freese, and
Barrett reflects Choate's assessment of their contribution to
petitioner. Likewise, petitioner probably paid them about that
portion of the bonuses because Choate continued to have the same
assessment of them. We believe Choate set their bonuses based on
his assessment of their work, not based on their stock ownership.
Choate credibly testified that the bonuses were for services
rendered and were not based on stock ownership.3 He rejected a
plan which Dudley, Freese, and Barrett suggested to him to split
profits based on stock ownership and split the excess equally
four ways after a certain target was achieved.
Although Dudley and Freese testified that they believed that
the bonuses were based on stock ownership, they also testified
3 Choate decided how much stock he would allow Dudley,
Freese, and Barrett to buy from him.
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