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percentages method he employed for its other fiscal years could
not be used for 1999, and that it was necessary to consider the
“absolute numbers”. He noted that Mr. Wechsler was paid
$1,494,771 in 1999, which represented 28.6 percent of his average
compensation for the prior 7 years, and that his 1999 yearend
bonus of $900,000 was 22.6 percent of his average bonus for the
prior 7 years. He further noted that Mr. Wechsler made several
large interest-free loans to petitioner during its 1999 fiscal
year. He reasoned that those loans justified a substantial
portion of the $900,000 bonus Mr. Wechsler received for that
year. Mr. Matthews concluded that the 1999 compensation
petitioner paid Mr. Wechsler was reasonable because of those
loans and Mr. Wechsler’s services in managing petitioner.
Lastly, Mr. Matthews opined that the 1994 fiscal year
compensation of $7.09 million petitioner paid Mr. Wechsler was
unreasonable and that reasonable compensation for 1994 would have
been $4 million. He noted the aggregate compensation of $10.53
million petitioner paid for 1994 represents 100.5 percent of its
net revenue for that year and 122.2 percent of its pretax income
before payment of compensation for that year. He further noted
that, if Mr. Wechsler’s 1994 compensation had been $4 million,
rather than $7.09 million, petitioner’s adjusted aggregate
compensation of $7.44 million ($10.53 million, less $3.09
million) would represent 71.0 percent of its net revenue for that
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