Compensation Studies

Our valuation expertise provides a platform to balance shareholder value and tax authority issues to form an opinion as to fair compensation for key employees.

We believe that since the amount of compensation paid to key employees directly impacts shareholder value, a comprehensive approach that includes validation of stockholders’ investment is key to arriving at fair compensation.

Our challenge is to determine how much compensation is fair without diminishing shareholder value.

Our studies include:

  • Management compensation comparables
  • Enterprise value (i.e., Business Valuation)
  • Majority and minority shareholder value
  • Royalty and commission arrangement impact

    Our experience in this area includes:

  • Nasdaq Public Company, Information Technology and Software, Chicago Illinois. The Company engaged us to evaluate the compensation a terminated CEO had been earning and the reasonableness the compensation he was alleging he was due. The result was the CEO settled for a significant decrease.
  • Private company, Wholesale Hardware Distributor, Indianapolis Indiana. We were hired by the minority shareholder to show that the compensation policy bore no relationship to performance. The result was favorable to the minority shareholder, awarding him prior year dividends.
  • Private company, Securities broker-dealer, Chicago Illinois. The Company wanted to reward its CEO who did not own any stock. We were retained to determine, based upon past performance, how much stock he should be given. The Company followed our recommendation to the satisfaction of both parties.
  • Nasdaq public Trucking Company, Detroit Michigan. Two minority shareholders hired us to show that the third shareholder was treating the Company as if it were his personal bank account, without consideration of the best interest of the Company or its shareholders. The result was an out-of-court settlement that changes the compensation package and the dividends to shareholders.
  • Nasdaq public Telecommunications Provider, Chicago Illinois. The Company hired to help defend class action lawsuit by supporting the Board’s review of the compensation arrangement and opine that was in the best interest of all the shareholders to maintain the compensation program and the management.
  • Private Machine Manufacturing Company, Peoria Illinois. The IRS challenged compensation on the grounds that by being in proportion to stockholdings, it was in fact dividends. The Company hired us to support its compensation package and provide a study to the IRS, and if necessary, testify before the Tax Court.

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