Wagner Construction, Inc. - Page 47




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          that the company's stock price rises greatly.  In at least one              
          other case, the Commissioner conceded that the value of stock               
          options granted to employees in public companies should be                  
          considered in determining what like enterprises paid for like               
          services.  See Owensby & Kritikos, Inc. v. Commissioner, 819 F.2d           
          1315, 1330 n.60 (5th Cir. 1987) (experts calculated the average             
          amounts the top three executives could expect to earn in cash and           
          stock options for an outstanding performance), affg. T.C. Memo.             
          1985-267.  When the compensation paid to Dennis and Curtis is               
          compared with that of other CEO's who did receive options, the              
          options must be considered as part of the compensation packages             
          being used for comparison.  See Labelgraphics, Inc. v.                      
          Commissioner, T.C. Memo. 1998-343, affd. 221 F.3d 1091 (9th Cir.            
          2000).  Accordingly, we reject Dr. Lacey's opinion.                         
               3.  Paul A. Katz                                                       
               Respondent offered the report and testimony of Paul A. Katz            
          (Mr. Katz) for purposes of establishing whether the compensation            
          petitioner paid to Dennis and Curtis in 1995 and 1996 was                   
          comparable to that paid for similar positions in the industry.              
          Mr. Katz is a compensation consultant certified by the American             
          Compensation Association.                                                   
               Mr. Katz compared the compensation paid to Dennis and Curtis           
          in 1995 and 1996 to the median compensation paid in those years             
          to CEO's, and COO's, respectively, as reported by the Economic              






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