Independent Analysis of Executive Compensation

Executives and boards of directors of private entities are increasingly defending themselves against excessive compensation claims made by the Internal Revenue Service (IRS), minority shareholders, or funding agencies (for non-profit entities). Excessive compensation can result in substantial income tax penalties, costly corporate dissolution lawsuits, or the loss of grants from public or private funding sources. 

Engagements:

Shareholder Protection 

SP&H determined fair market compensation for a majority family owned company with minority non-family shareholders and a company with an Employee Stock Ownership Plan. Claims of excessive compensation by minority shareholders could result in significant legal difficulties and costs. SP&H's analyses determined reasonable compensation amounts for the executives based on their actual duties and functions. 

IRS Challenges 

SP&H determined reasonable compensation for a highly paid executive of a large C corporation that was accused of paying its executive and sole shareholder unreasonable compensation to avoid corporate taxation. Our report aided the company and sole shareholder in quickly settling its dispute with the IRS and thereby avoiding costly litigation.

Non-Profit Entities 

SP&H provides comprehensive compensation analyses for non-profit entities based on the salaries of executives that provide similar services and perform comparable duties.