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considerations, including petitioner's performance, Mr.
Wechsler’s responsibilities to, and the services he provided for,
petitioner, as well as general economic conditions and the nature
of petitioner’s business. However, Mr. Dorf did not give weight
to these factors. Nor did he provide a method of analysis that
an independent investor could use to determine whether Mr.
Wechsler’s compensation was reasonable or unreasonable in a given
year. He merely concluded without explanation that, in the light
of the factors he considered, Mr. Wechsler’s average compensation
was reasonable. Mr. Dorf’s “trust-me” approach does not aid us
substantially in determining whether an independent investor
would be satisfied in any given year with the compensation paid
Mr. Wechsler or whether that payment was reasonable, within the
meaning of section 162(a)(1).
iii. Conclusion
Neither of petitioner’s experts’ approaches provides a
reliable method for determining whether the amounts of
compensation paid to Mr. Wechsler during the years in issue were
reasonable.
b. Respondent’s Expert
Mr. Hakala opined that the base salaries paid Mr. Wechsler
throughout the relevant period were reasonable but that the
15(...continued)
Dorf’s average differs from the average ($4,748,971) we calculate
from the annual compensation amounts stipulated by the parties.
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