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C. Reasonable Compensation to Mr. Wechsler
1. Introduction
We believe that an appropriate method for reasonably
compensating Mr. Wechsler for each of the years in issue should
be based upon his receiving (1) an annual salary and (2) an
annual bonus that is closely tied to petitioner’s earnings and
profitability for that year. We reach that conclusion because we
are persuaded by respondent’s expert (Mr. Hakala) of the
appropriateness of that method. We are not persuaded by the
approach of either of petitioner’s experts. Our reasons follow.
2. Expert Testimony
a. Petitioner’s Experts
i. Mr. Matthews
We give little if any weight to Mr. Matthews’s opinion
concerning the reasonableness of the compensation petitioner paid
Mr. Wechsler for the years in issue to the extent it is based on
his comparisons between petitioner and the 27 broker-dealers he
examined. We are persuaded by Mr. Dorf that Mr. Matthews’s
approach in drawing an analogy between petitioner and the 27
broker-dealers is unreliable because of the disparity in size
between petitioner and those companies. See B & D Founds., Inc.
v. Commissioner, T.C. Memo. 2001-262 n.25 (rejecting expert’s
assumption that same mathematical relationship, calculated
through regression analysis, between various surveyed companies’
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