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Mr. Menard’s compensation of $20,642,485 is nearly two times
higher than Target’s CEO’s compensation, more than three times
higher than Staples’s and Lowe’s CEOs’ compensation, more than
four times higher than Kohl’s CEO’s compensation, and more than
seven times higher than Home Depot’s CEO’s compensation. After
comparing Mr. Menard’s compensation to the comparison group
companies’ CEOs’ compensation, we conclude that (1) Mr. Menard’s
compensation substantially exceeded the compensation paid by
comparable publicly traded companies to their CEOs, and (2) such
evidence was sufficient to rebut the presumption of
reasonableness created by Menards’s rate of return on investment.
Consequently, we examine the total record to decide what portion
of Mr. Menard’s compensation was reasonable.
In his report, Mr. Rowley asserted that Menards’s
performance in TYE 1998 demonstrated that Mr. Menard’s
compensation should be at or above the 90th percentile of the
comparison group companies’ compensation. We disagree. Nothing
in the record suggests that, for a company of Menards’s size and
growth, compensating Mr. Menard at or above the 90th percentile
is reasonable. Even so, certain measures of Menards’s
performance relied upon by Dr. Hakala and Mr. Rowley in their
reports, and reproduced in the appendix to this Opinion, indicate
that Mr. Menard’s compensation should be much higher than the
$1,380,876 that respondent allowed. We now must compare
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