Wechsler & Co., Inc. - Page 62

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         risk that compares the volatility of a specific stock to the                 
         market as whole) representing the median beta for six “smaller”              
         publicly traded broker-dealers.                                              
              Mr. Matthews has failed to persuade us of the reliability of            
         his return-on-equity comparison between the 17 broker-dealers and            
         petitioner because he has failed to convince us that the 17                  
         broker-dealers are comparable to petitioner, whose business                  
         interests were varied, as described in our findings of fact, and             
         include an increasing concentration on its own proprietary                   
         trading and short-term and long-term investments.  He has                    
         likewise failed to persuade us that his capital asset pricing                
         model analysis is reliable because he has failed to persuade us              
         of the comparability to petitioner of the six publicly traded                
         “smaller” companies that he used to determine beta.                          
              We also question whether a 10.4-percent compounded annual               
         rate of return would be “highly satisfactory” to an independent              
         investor in petitioner when compared to the compensation paid to             
         petitioner over the 1992 through 1998 period.  Mr. Matthews’s                
         calculations show that petitioner’s adjusted common stock equity             
         increased by $14.546 million, from $14.533 million to $29.079                
         million during that period.  For that same period, petitioner                
         compensated Mr. Wechsler $37.992 million.  That $37.992 million              
         is more than 2.5 times the $14.546 million increase in                       
         petitioner’s adjusted common stock equity.  Thus, for each dollar            






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