For what it’s worth — The issue of owners’ compensation

Description

Abstract: One of the biggest expenses for private businesses is owners’ compensation. Value often is based on comparisons between a subject company and guideline companies. If owners are overcompensated compared with similar businesses, the subject company will be undervalued on a controlling basis — and vice versa — unless the valuator adjusts the company’s income stream. This article discusses the issues involved with owners’ compensation, including executive compensation in divorce cases, tax issues, the company’s industry and the general economy.