- 7 -
based on a history that shows that Lynn's compensation for fiscal
years ended from 1982 through 1990 equaled 10, 11, or 12 percent
of sales. There was no testimony, however, indicating when and
how the alleged formula was established. In response to leading
questions, Lynn testified as follows:
Q And over the years has your compensation, and
in particular in '89 and '90, borne any relationship to
the sales and, if so, approximately what?
A Approximately about 11 or 12 percent, something
like that.
Q Has that been fairly consistent over the years?
A Very consistent.
Q And in terms of salary -- your total
compensation, in terms of salary and bonus, how is that
broken down and why do you do it that way?
A We met with the -- at the end of every year,
after the financial statement was audited and prepared,
we would sit down and determine a compensation. It was
kind of an informal thing. We would set a compensation
plan for the next year based on the sales.
My salary didn't increase very much, but it was
mostly on performance, how we performed, how the sales
came in and whether we needed cash or what our cash
needs were, but the actual paying of the bonus at the
time was determined by the cash flow.
Petitioner's certified public accountant testified as follows:
Q Okay, during these years, could you tell the
Court what participation, if any, you had in setting
the compensation for Ted Lynn?
A Well, during the audit and after audit, Ted and
I would get together and we would discuss what salaries
were and we would try to project what salaries should
be in the coming year.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011