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Mr. Herber relied on the National Institute for Business
Management (NIBM) Executive Compensation Survey and the RMA
studies in addition to the ERI data to compare Darle’s
compensation. The NIBM data Mr. Herber relied on was for
companies most similar to petitioner on the basis of overall size
in terms of revenues, having sales volume of less than $5
million, and businesses classified as construction, contracting,
or extraction. However, at trial, Mr. Herber testified that
NIBM’s survey group included industries that were not comparable
to petitioner’s, including mineral extraction, and we shall not
rely on the information contained therein.
Mr. Herber also used the RMA data to compare Darle’s
compensation, represented as a percentage of income, to a subject
group composed of companies in the SIC 1742 category and having
revenues similar to petitioner’s. Officer-shareholder
compensation is expressed as a percentage of total revenue. For
1997 through 1999, officer-shareholder compensation represented
as a percentage of revenues was as follows:
25th 75th
Calendar year percentile Median percentile
1997 2.8% 4.4% 7.7%
1998 3.2 5.1 7.5
1999 3.7 5.0 7.4
Darle’s compensation as a percentage of total revenues for
the tax years ended June 30, 1998 through 2000, was 16.2 percent,
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