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LTIP payouts as earned ratably over the 3-year period covered by
the LTIP arrangements is reasonable, and we accept it.56 We
accordingly shall treat the Retained Executives’ 1992
compensation for purposes of determining its reasonableness in
this case as including 33 percent of the LTIP payout covering the
period 1992-94, except in the case of Mr. Pugh, whose LTIP payout
covered only 1992 and 1993 and is therefore allocated 50 percent
to 1992.
(iii) 1991 SRP Benefits
Petitioner made payments of 1991 SRP Benefits and related
interest totaling $4,191,053 to the Retained Executives in
December 1992, under the terms of the 1991 Employment Agreements
as amended in 1992. Petitioner deducted these amounts in 1992
and takes the position herein that these amounts were fully
earned by the Retained Executives in 1992 because, unlike the
Retention Payments, they were not subject to clawback if a
56 Ms. Meyer faults Mr. Rosenbloom’s inclusion on a pro rata
basis, arguing that if any amount of the LTIP payout is to be
included in the Retained Executives’ 1992 compensation, it should
be 20, not 33, percent, because the LTIP arrangements weighted
petitioner’s financial performance in 1992, 1993, and 1994 at 20,
30, and 50 percent, respectively, in computing the amount of an
LTIP award.
Without further evidence, we are not persuaded that ratable
inclusion should be supplanted by a weighted inclusion
corresponding to the weighting of petitioners’s annual financial
performance used in computing the LTIP award.
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