- 22 -
percent for 1990; 65.48 percent for 1991; and 65.95 percent for
1992.
In addition to the fact that the increase in petitioner's
retained earnings most likely increased the value of its stock,
we believe that a hypothetical investor would have considered
petitioner's performance for this period impressive.5
7. Prevailing Rates of Compensation for Comparable Positions
in Comparable Companies
Both petitioner and respondent rely on expert testimony with
respect to this factor. We weigh an expert's testimony in light
of his or her qualifications and considering all credible
evidence in the record. Depending on what we believe is
appropriate under the facts and circumstances of the case, we may
either reject or accept an expert's opinion in its entirety, or
accept selective portions of it. Helvering v. National Grocery
Co., 304 U.S. 282, 294-295 (1938); Seagate Technology, Inc. v.
5These return-on-equity (ROE) figures are calculated by
dividing net income by the shareholder equity at the beginning of
the year. Respondent argues that the petitioner's ROE should be
calculated using the average of the beginning and ending
shareholder equity, rather than beginning equity as petitioner
suggests. Respondent contends that under the average equity
method, petitioner's ROE during the years in issue was actually:
58.21 percent for 1990, 49.41 percent for 1991, and 34.80 percent
for 1992. While respondent's ROE is lower, we still find the
figures impressive. Thus, even if we were to adopt the average
equity method in calculating petitioner's ROE, the results
obtained would not change our conclusion.
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011