Methodology and definitions

Executive compensation data for top executives in up to five of the biggest companies in 13 technology sectors, based on fiscal 1997 revenues, were compiled for this special report from proxy statements filed with the Securities and Exchange Commission by June 5. Two exceptions were Dell Computer and NeoMagic, for which data were compiled from their fiscal 1998 proxies, given that 11 months of their fiscal years were accounted for in 1997.

Market Value
Based on companies' closing stock prices and the number of common shares outstanding at the end of their 1997 fiscal years. One exception was CDnow, whose 1997 market value was not available because the company went public in February 1998.

Total Compensation
Based on short-term and long-term compensation. Short-term compensation comprises salary, bonuses, and other annual compensation. Long-term compensation is restricted to stock awards, long-term incentive payouts, value realized on options exercised during the year, and all other compensation.

Return on equity (ROE)
Based on net income before extraordinary items and discontinued operations, and before preferred dividends and common stock equivalents, and divided by common equity at the end of the companies' 1997 fiscal years. The end result was multiplied by 100.

Options granted
Unadjusted for stock splits that occurred after the close of the companies' fiscal years. If an executive received more than one grant, the grants were aggregated.

Value of options
Based on the assumption of a 5 percent compounded annual stock price growth rate over the term during which the options were granted. Exceptions were Dell, Digital Equipment, Gateway 2000, Hewlett-Packard, and National Semiconductor, which used the Black-Scholes option-pricing model to determine current options values.

Exercisable options value
Derived from the companies' stock prices at the end of their fiscal years, minus the exercise price of the options. The end result was multiplied by the number of exercisable options.

Unexercisable options value
Derived from the companies' stock prices at the end of their fiscal years, minus the exercise price of the options. The end result was multiplied by the number of exercisable options.

Company revenues
Fiscal 1997 revenues

Revenue change
Percentage change from previous year

Company net income
Fiscal 1997 net income, before extraordinary items and before preferred dividends and common stock equivalents. Net loss is indicated in brackets.

Net income change
Absolute percentage change from previous year.

Source: Standard & Poor's Compustat, a division of the McGraw-Hill Companies