- 9 -9
In addition to salaries, petitioner paid bonuses to its
executives. Petitioner had no formal program for awarding
bonuses. Petitioner's management team would meet with Kassouf in
August, the month that petitioner's fiscal year closed, to
determine the bonuses to be paid. After considering petitioner's
performance and the effort put forth by the various employees,
Kassouf would recommend what he felt were reasonable bonuses for
the various employees. In 1990 and 1991, Kassouf recommended a
bonus for Ferguson slightly larger than the bonus that petitioner
paid Ferguson. The bonus that Ferguson received during the
fiscal year ending 1992 was for services rendered during that
year.
Ferguson received the following fringe benefits:3
Item 1990 1991 1992
Contributions to
profit sharing plan $11,352 $5,064 $8,849
Medical insurance 222 247 275
Life insurance 13,915 13,915 22,063
Disability insurance 1,056 1,056 1,056
Automobile 10,206 9,091 5,856
Club dues 3,282 3,462 3,462
Total 40,033 32,835 41,561
Ferguson's compensation (salary, sales commission, and
bonus) was as follows:
3 For purposes of this opinion, we use the term
"compensation" to refer to Ferguson's salary, sales commission,
and bonus. We take the fringe benefits into account as a factor
in determining whether that compensation was reasonable.
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