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litigation.4 Shriner did those things, and reasonably concluded
that it was unlikely that WSA would survive without Gelder.
C. Whether Shriner Properly Estimated Gelder’s Future
Compensation
Respondent contends that Shriner underestimated future net
cashflows by overestimating future compensation to Gelder. On
the basis of Spiro’s testimony, respondent contends that Shriner
should have used $125,000 per year as Gelder’s future
compensation. We disagree.
Gelder’s salary in 1995 was $381,465 and his salary and
dividends totaled $548,704. Spiro acknowledged that Gelder was a
key employee, and that no one would buy WSA without Gelder. We
do not believe that Gelder could have been replaced for $125,000
per year.
Respondent contends that WSA could have found a suitable
replacement for Gelder in 1995 and that Gelder had no attractive
employment alternative. We disagree. Slipher testified that it
was unlikely that anyone could assume Gelder’s responsibilities
because few people understood as well as did Gelder the market,
the industry, underwriting, and management as they affect WSA.
4 In his report, Spiro said:
Not having interviewed persons in authority at The
Maryland in 1995, it is impossible to determine
conclusively whether or not The Maryland would have
cancelled or materially modified WSA’s personal lines
underwriting authority upon the transfer of Mr. Adams’
interest to another party.
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