Menard, Inc. - Page 48

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          compensation paid to Target’s CEO.  Accordingly, Dr. Hakala                 
          concluded that Mr. Menard’s compensation was not reasonable.44              
                    3.  The Parties’ Criticisms of the Expert Reports                 
                         a.  Comparable Companies                                     
               Petitioners object to the inclusion in Dr. Hakala’s                    
          comparison group of Dollar General, May Department Stores, Office           
          Depot, and TJX.  Petitioners assert that those four companies did           
          not sell hard goods products, experience sustained sales growth             
          and profitability from 1988 through 1998, or attain $1 billion in           
          revenue by 1998.                                                            
               In criticism of petitioners’ comparison group companies, at            
          trial, respondent established that, when Mr. Rowley selected                
          comparable companies based on sustained sales growth and                    
          profitability between 1988 and 1998, he did not make certain that           
          the same CEO ran the comparison group companies for the entire              
          period.  Mr. Rowley testified that he was certain only that Home            
          Depot and Staples had the same CEO for the period but emphasized            
          that CEO continuity was not necessary for purposes of                       
          “understanding the market”.                                                 




               44Dr. Hakala also compared Mr. Menard’s compensation to the            
          Watson Wyatt Executive Compensation Survey, a market survey which           
          compiles compensation data for various industries.  Respondent              
          has not established that the surveyed companies are comparable to           
          Menards.  Accordingly, we reject this portion of Dr. Hakala’s               
          analysis.                                                                   




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