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We conclude that Bergreen is not entitled to compensation by
the estate. Thus, it was not necessary for the estate to borrow
funds to compensate him.
c. Whether Davis’s Compensation Was an Obligation of
the Estate
The estate contends that Davis’s $5 million compensation is
an administration expense because Bergreen and Moody, acting in
their capacity as executors, hired Davis to manage Gilman Paper
Co. and to help Bergreen sell the Gilman assets, and that his
work for the GIC businesses benefited the estate. We disagree.
Bergreen and Moody were officers of GIC (as well as
executors of the estate) when they hired Davis to help revive the
Gilman businesses. Davis was rehired to serve as chief operating
officer of Gilman Paper Co. and Gilman Building Products in June
1998. The foundation’s compensation committee approved
Bergreen’s and Moody’s request to pay Davis $5 million for his
return from retirement and his turnaround and sale of the Gilman
Paper Co. Davis was paid $1.5 million in 1998, and $1.2 million
in 1999 and 2000. It appears from the foundation compensation
committee report that those payments were not part of the $5
million that Bergreen and Moody offered him and that the
compensation committee in October 2001 recommended that he be
paid. The accounting prepared by the estate as of February 28,
2003, does not show that the estate made those payments. It
appears that Bergreen and Moody hired Davis in their capacity as
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