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During '89 we looked at past salary history.
Actually prior to '89 we had set up a performance-based
type salary. We were salarying based on a percentage
of sales. We came up with a percentage of around
11 percent back in the earlier years when the
corporation started to become profitable and we just
kept it going.
This testimony was vague and had the earmarks of
retrospective argument. During the first year that the relevant
comparison can be made between Lynn's compensation and sales, the
company suffered a loss and Lynn was paid $10,000. There is no
evidence from which we can determine whether that compensation
was reasonable at that time. There is no explanation of why the
alleged 11 percent formula would have been 10 percent in 5 years,
11 percent in 2 years, and 12 percent in 2 years out of the 9
years over which the relationship between Lynn's compensation and
gross sales is observable. No other witness corroborated this
alleged formula. We were not persuaded and are not persuaded
that the formula existed or was consistently applied.
Lynn's Many Roles
On remand, petitioner contends that we should add the
compensation paid by Daedalus Enterprises, Inc. (Daedalus), to
its chief executive officer (CEO) ($158,962) and to its chief
financial officer ($78,375), and then double it ($474,674), as we
doubled in our prior opinion the compensation paid to the CEO of
Daedalus. This computation, according to petitioner, supports the
$488,000 paid to Lynn in 1990.
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