March 20, 1997 6:15 PM ET
Gerstner, Pfeiffer share a lot (about $4 million)
By Margaret Kane

  IBM CEO Lou Gerstner and Compaq Computer Corp. CEO Eckhard Pfeiffer have a lot in common.

Both men are seen as visionary leaders who turned their companies around, Gerstner pulling the venerable IBM out of a slump, Pfeiffer making Compaq the No. 1 PC vendor in the world.

And in 1996, both men were about equally compensated for their jobs by their boards of directors.

According to proxy statements filed earlier this week, Gerstner pulled in a salary of $1.5 million and a bonus of $3.3 million, while Pfeiffer got a salary of $1.25 million and a bonus of $3 million. The high salaries reflect the fortunes of their respective companies in 1996.

Compaq brought in net income of $1.3 billion in 1996, and saw its shareholder return grow 54.4 percent. IBM had net income of $5.9 billion, a slight drop from the year before, but its shareholder return grew almost 67 percent, compared with the Standard & Poor's 500 rate of 22.5 percent.

"The real key here is, if the shareholders are happy, then the compensation numbers are justified," said Terrence Brown, senior vice president at the Compensation Resource Group Inc., in Pasadena, Calif. "I can't imagine shareholders looking at these numbers being too upset."

One thing that is unusual is that, despite the large disparity in size between the two companies, both CEOs are receiving essentially the same cash payment from their companies.

Usually, the larger the company, the more money its executives receive.

But experts who follow executive pay said the high-tech industry deviates from this rule.

"We have found, in high-tech companies, that very often pay is not related to revenue size," said Robert Salwen, principal at Executive Compensation Corp., in New York. "There is a market out there for high-tech executives that's independent of the size of the company, so two companies so far apart are competing at the same level."

Where Gerstner does receive a boost is in the $2 million long-term incentive payout he received from IBM. Pfeiffer did not receive any long-term payouts, Brown said.

However, Pfeiffer did receive $1.25 million in a deferred account, which basically means that although he earned the money, he can't have it until some future period. Compaq's proxy statement says the money is tagged to conditions put on it by the company's human resources committee, but doesn't state what those restrictions are.

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