Square D Company and Subsidiaries - Page 99

                                       - 78 -                                         
          constitute a principal basis for each expert’s opinion regarding            
          the reasonableness of the Retained Executives’ compensation.  We            
          shall consider the experts’ differences in more detail                      
          hereinafter.                                                                
                    2.  Historical Compensation                                       
               As noted, Mr. Rosenbloom also performed an analysis of the             
          Retained Executives’ compensation before and after the                      
          acquisition by Schneider.  Notably absent from Ms. Meyer’s                  
          opening report is any serious consideration of the Retained                 
          Executives’ historical compensation.40  The legislative history             
          of section 280G makes clear that one factor to be considered in             
          determining reasonable compensation for purposes of section                 
          280G(b)(4) is “compensation * * * paid to the disqualified                  

               40 Ms. Meyer addressed historical compensation only in her             
          rebuttal report, by way of criticizing Mr. Rosenbloom’s analysis.           
          In connection therewith, Ms. Meyer reached the conclusion that              
          the appropriate historical comparison should be between the                 
          compensation paid to all of petitioner’s senior executives prior            
          to the acquisition and the compensation paid to all such                    
          executives after the acquisition.  In Ms. Meyer’s computations,             
          the increase in these two figures was only 48 percent between               
          1988 and 1992, which she found unremarkable.  In reaching this              
          figure, however, Ms. Meyer omitted entirely the Retention                   
          Payments and 1991 SRP Benefits paid to the Retained Executives in           
          1992, notwithstanding the fact that petitioner has stipulated               
          that a substantial portion of the former and all of the latter              
          were earned by the Retained Executives in that year.  Moreover,             
          as discussed more fully hereinafter, we reject the notion that              
          compensation payments of this magnitude can be ignored in                   
          measuring the reasonableness of the Retained Executives’                    
          compensation in 1992.  Accordingly, we accord no weight to Ms.              
          Meyer’s attempt at an historical analysis of the Retained                   
          Executives’ compensation.                                                   





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