William J. and Sandra D. Heitz - Page 8

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                             Heitz          Greene         Quillen                   
               FY Ended       Compensation   Compensation   Compensation              
               May 31, 1988   $300,000       $300,000       $300,000                  
               May 31, 1989   350,000        450,000        100,000                   
               May 31, 1990   1,300,000      300,000             ---                  
               May 31, 1991  1,200,000 ---      ---                                   
               May 31, 1992  1,400,000 --- ---                                        
               May 31, 1993  1,300,000      --- ---                                   
               May 31, 1994    1,000,000      ---      ---                            
          In FY’s 1993 and 1994, Mr. Heitz’ compensation as a percentage of           
          Exacto's gross receipts was approximately 11 percent and 6                  
          percent, respectively.                                                      
               Exacto did not have a written employment contract with Mr.             
          Heitz or a stated formula for determining his compensation.                 
          During the years in issue, Exacto's board of directors comprised            
          Mr. Heitz, Mr. Quillen, Mr. Greene, and Mr. Linsley.  The board             
          of directors approved the level of compensation paid to Mr. Heitz           
          on the basis of his performance.  Exacto determined and paid                
          Mr. Heitz' compensation in December, just over halfway through              
          its fiscal year.  Mr. Heitz' compensation was reduced in FY 1994            
          from $1,300,000 to $1 million to reflect the fact that he would             
          be taking time off recuperating from surgery, which took place in           
          December 1993.  Respondent determined $380,952 and $400,000 as              
          reasonable compensation for Mr. Heitz for taxable years ended               
          May 31, 1993 and 1994, respectively, and disallowed Exacto's                
          claimed deductions for the excess.                                          








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