Wagner Construction, Inc. - Page 49




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          good compensation practice.  On that basis, Mr. Katz opined that            
          Dennis and Curtis were overpaid by an almost unprecedented                  
          amount.  On the basis of Mr. Katz' opinion, respondent contends             
          on brief that compensation petitioner paid to Dennis and Curtis             
          in excess of the following amounts for 1995 and 1996 was                    
          unreasonable:                                                               
               Position                 1995                1996                      
               Dennis (CEO)        $243,000       $258,600                            
               Curtis (COO)        192,450             202,350                        
               Mr. Katz based his analysis of compensation paid to Dennis             
          on the duties performed as the CEO and his analysis of                      
          compensation paid to Curtis on the duties performed as the COO.             
          Mr. Katz did not consider any other functions performed by Dennis           
          and Curtis or the number of hours they worked.                              
               We find the report of Mr. Katz to be unreliable.  The report           
          contains several typographical and mathematical errors.  Although           
          some errors were corrected by Mr. Katz' testimony at trial,                 
          others were not.  Except for a statement in his report that the             
          median salaries were based on ERI data, the report does not                 
          include the ERI data used by Mr. Katz to determine the median               
          salaries and does not indicate the number of corporations, CEO's,           
          or COO's included in the data.  Additionally, although Mr. Katz             
          testified that he looked at the range of compensation to evaluate           
          the quality of the data, the report does not provide a range of             
          compensation amounts from the ERI data.                                     






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