- 39 -
In calculating the value of the operating business, CFC
found the compensation paid to Nikita Maggos to be reasonable and
therefore made no adjustment to the company’s cash-flows in that
regard. Respondent’s expert noted that a new owner of 56.7
percent of PCAB would be entitled to review and set the
compensation of the executives. We agree with that proposition.
Respondent’s expert estimated that an appropriate level of
compensation for the position held by Nikita Maggos would be in
the vicinity of $100,000 per year.26 Based on PCAB’s size,
revenue, profits, and dividend history, we agree that this amount
is more reasonable than Nikita Maggos’ salary of over $250,000.
A majority owner of PCAB stock, other than Nikita’s mother, would
not likely approve of Nikita’s salary level. As a consequence,
we have adjusted the cash-flow in CFC’s calculation to account
for this fact.
Additionally, we have adjusted the CFC’s calculation of the
value of the nonoperating assets in the same manner as was done
in the discounted cash-flow analysis of respondent’s expert and
for the same reasons. The result of the adjustments yields a
value for 100 percent of PCAB of approximately $8,600,000 and of
$4,900,000 for 56.7 percent.
26Petitioner’s amended complaint in the District Court
litigation alleged that Nikita Maggos, an officer and director of
PCAB, caused PCAB to pay to him a salary which was excessive and
not reasonable.
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