Reasonable compensation is an issue that comes into play in divorce, shareholder disputes and tax cases. It’s also a common financial statement adjustment that valuators make when valuing a business. Although experts are often hired to make the calculations, business owners and attorneys should understand how they do it. Multiple factors Valuators weigh a variety of factors when determining reasonable compensation for a specific business owner or executive, including: Role in the business. Many companies employ multiple executives, but they don’t all fill the same roles. Some are sales rainmakers, while others drive strategic direction or manage the day-to-day operations of the business. A valuator considers the experience and qualifications necessary to fill the individual’s specific job, as opposed to the qualifications the individual currently in the job...