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Brennan then attempted to justify the undercompensation by
referring to Ms. Burton’s limited relevant experience and lack of
formal credentials. He opined:
If Petitioner’s top financial and sales executives (who
worked only part-time * * *) were similarly credited
with half the highest average rates for experienced
full-time executives in same-size enterprises, that
would create approximately $45K in undercompensation in
FY88, and approximately $40K in FY89. Such amounts are
more than made up by granting them the highest averages
in FY90, when they were still part-time executives with
minimal objective credentials.
We agree that the executives’ limited experience and lack of
formal credentials could be factors to be taken into account.
There is, however, no evidence in the record of the experience or
credentials of those persons earning the salaries that the
experts used for comparison, and petitioner’s business is not of
the character requiring formal education. Thus perceived
deficiencies in formal training of the employees should not be
used as a direct offset from compensation determined by the use
of comparables.
Petitioner’s expert, Tracy A. Bean (Bean) of Arthur Andersen
LLP, did not address the limited experience and credentials of
the executives. Nor did she consider the lack of complexity of
the business operations of petitioner. She added $257,665 for
long-term incentives and $16,623 for retirement benefits to the
cash compensation averages of the comparable companies. We
believe that these additions are unwarranted without proof that
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Last modified: May 25, 2011