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Retained 1990 1992 Percentage
Executive Compensation Compensation1 Increase
Brink $324,100 $1,093,613 237
Denny 697,380 2,831,254 306
Francis 401,174 1,117,239 178
Free 399,759 1,865,816 367
Garrett 456,100 22,172,240 376
Hite 505,378 1,744,526 245
Kurczewski 463,038 1,396,821 202
Pugh 205,031 3992,638 384
Richardson 218,492 1,191,644 445
Thompson 498,474 1,145,748 130
Williams 182,320 1,080,292 493
1 Includes 1/3 of LTIP payout.
2 Mr. Garrett did not receive an LTIP payout.
3 Includes 1/2 of LTIP payout.
In developing a comparison of pre- and postacquisition
compensation, we believe that 1990 is the most appropriate
measure of preacquisition compensation because in 1991 the
Retained Executives received $10,896,942 in compensation that was
triggered by the acquisition.42 Thus, 1991 compensation does not
reflect preacquisition levels of compensation. The dramatic
increase between the 1990 (preacquisition) compensation and 1992
(postacquisition) compensation of the Retained Executives
provides support for the conclusion that the Retention Payments
and 1991 SRP Benefits earned in 1992 were not reasonable
compensation for purposes of section 280G(b)(4). Petitioner has
42 This figure consists of $8,752,996 in stock-related
payments under the 1990 Employment Agreements, plus $2,143,946 in
“gross up” payments to compensate the Retained Executives for
nondeductible excise taxes they incurred as a result of their
receipt of the stock-related payments.
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