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Executives before and after the acquisition by Schneider, as well
as a comparison of the Retained Executives’ compensation paid in
1992 with compensation paid in 1992 to executives of other
companies. Ms. Meyer conducted what she termed an internal
analysis, focusing on aspects of petitioner’s financial condition
and need for skilled executives, and three external analyses,
which measured the Retained Executives’ compensation packages
against those of executives working at other companies.
We conclude that two of Ms. Meyer’s external analyses fall
considerably short of providing clear and convincing evidence of
the reasonableness of the compensation of the Retained Executives
in 1992. One such analysis employs data from “executive
compensation surveys” prepared by Towers Perrin, Watson Wyatt
Data Services, and William M. Mercer, Inc. As described in Ms.
Meyer’s opening report, these surveys include compensation data
from anywhere from 250 to 1,000 organizations, many of which are
conceded to be outside the electrical equipment industry. We
reject this analysis because it employs data from companies that
have not been shown to be comparable to petitioner. Although
section 280G itself does not address the use of comparable
companies and their executives as a basis for determining
reasonable compensation, the legislative history of the 1986
amendment of section 280G(b)(4) specifically endorses the use of
“similarly situated employees” working for “comparable employers”
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