- 42 -
This factor is neutral because neither petitioner’s expert
Mr. Gelfond nor respondent’s expert Mr. Packard proffered
persuasive comparable pay data.
H. Petitioner’s Salary Policy to All Its Employees
Courts have considered salaries paid to other employees of a
business in deciding whether compensation is reasonable. Home
Interiors & Gifts, Inc. v. Commissioner, 73 T.C. at 1159. We
look to this factor to determine whether Mr. and Mrs. Myers were
compensated differently from petitioner’s other employees solely
because of their status as shareholders.
Petitioner’s other employees (its construction workers) were
compensated on a totally different basis from Mr. Myers and Mrs.
Myers (its two sole officer-director-shareholders and the only
members of its management team). The construction workers were
compensated on an hourly basis. Mr. Myers testified that the
construction workers (who were nonunion) received hourly wages,
including higher hourly wages for any overtime work, and were
paid weekly, and that he tried to pay them above average wages
for the area. However, he added, petitioner had no uniform pay
26(...continued)
furnished Mr. and Mrs. Myers. In this connection, we note that
top executives of large, publicly traded companies often will
receive stock options and deferred compensations as part of their
compensation package. However, the record in the case at hand
does not disclose what, if any, stock options the executives
surveyed received. See, e.g. Labelgraphics, Inc. v.
Commissioner, 221 F.3d 1091, 1097-1098 n.9 (9th Cir. 2000).
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