- 34 -
The Study’s data also reflects that companies in the
75th percentile paid officers’ compensation of 8.5
percent of revenues. Although the Company paid
officers’ compensation of 24.4 percent (including the
bonus paid for 1995 performance; 20.4 percent excluding
the 1995 bonus) of revenues in the tax year ended July
31, 1996, consideration must be given to the fact that
the Company performed far superior (as noted in the
previous paragraph) to the companies included in the
Study’s 75th percentile data.
In addition, the Study does not indicate how many
officers are included in the “officers’ compensation as
a percentage of revenues” calculation. Given that the
Myers collectively perform the duties including but not
limited to, chief executive officer; chief financial
officer; chief operating officer; bookkeeper; personnel
manager; and office manager, a percentage of the Myers’
compensation should be allocated, and compared to the
Study’s “Operating Expenses” category. This
appropriate allocation would decrease the Company’s
officers’ salaries as a percentage of revenues, and
would be a more appropriate and consistent manner of
comparing the Company’s figures to the Study’s data.
(As the Study does not offer detail with respect to
accounting and office administration salaries as a
percentage of revenues, GHP [Mr. Gelfond’s consulting
firm] is unable to make this more appropriate and
consistent comparison.)
Of additional importance for purposes of ascertaining
the relevance of the Study’s information to the case at
hand is the fact that the Study’s data is not organized
by type of entity (e.g., subchapter S or C
corporations). Officers/shareholders of subchapter S
corporations often minimize officers’ compensation in
lieu of cash distributions. As such, officers’
compensation as a percent of revenues will generally be
less for a subchapter S corporation than a C
corporation. Over 85 percent of the companies included
in the Study had annual revenues less than $10 million,
which could indicate the majority of the companies
included in the Study are subchapter S corporations.
Therefore, officers’ compensation as a percentage of
revenues, as reflected in the Study, is likely to be
artificially low.
Mr. Gelfond offered no details concerning the specific
Page: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 NextLast modified: May 25, 2011