Vitamin Village, Inc. - Page 16
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Helvering v. Natl. Grocery Co., 304 U.S. 282, 295 (1938);
Silverman v. Commissioner, 538 F.2d 927, 933 (2d Cir. 1976),
affg. T.C. Memo. 1974-285. Furthermore, the Court may be
selective in determining what portions of an expert’s opinion, if
any, to accept. Parker v. Commissioner, 86 T.C. 547, 562 (1986).
Only respondent offered expert testimony comparing Mr.
Reeves’s compensation with that paid by similar companies for
similar services. Respondent’s proffered expert, Scott D.
Hakala, was a principal and director of CBIZ Valuation Group,
Inc., an appraisal, financial advisory, and litigation support
firm. Mr. Hakala has a doctorate in economics, has worked as an
economist and financial analyst, and has testified on numerous
occasions as an expert in cases involving compensation disputes.
Mr. Hakala compared Mr. Reeves’s compensation to chief
executive officer (CEO) compensation in five publicly traded
companies (guideline companies).17 He used four methods to make
the comparison: (1) The average compensation paid to the CEOs
from the guideline companies; (2) a regression analysis based
upon the guideline companies’ relationship between CEO
compensation and their respective sales;18 (3) a guideline
17 Mr. Hakala stated in his report and testified at trial
that he used the guideline companies because some or most of
their operations were based in the development and marketing of
18 The regression equation for 1995 was Y = 315653.0283 +
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Last modified: November 10, 2007