A Small Token Of Rjr's Esteem

RJR NABISCO HAS DONE CEO Charles Harper a double favor: It bought him an annuity, principal undisclosed, estimated at around $11 million by BUSINESS WEEK. And since that's a taxable gift, RJR also covered the $5.5 million tab for Uncle Sam. Overall, Harper, 67, bagged $10.5 million in cash and bonus pay for 1994, not counting the annuity and his regular future pension payout of $1 million.

Compensation consultants say the RJR annuity tax payment, disclosed in the latest proxy, is unusual. More often, companies set up an in-house retirement fund, which is taxable only qhen the exec dips into it. The risk: The fund might be axed if the beneficiary is fired. By contrast, Harper owns his annuity. Predecessor Louis Gerstner, now IBM's head, had the same deal, RJR says.

Since the $5.5 million tax tab RJR paid is counted as income, Harper presumably must pay taxes on it. RJR wouldn't comment on this. Still, that's a lower bill than on the $11 million annuity. One of the few with the same setup: just-retired CEO William Alley of American Brands, which paid $4.7 million in taxes over the past two years for his retirement fund.

Before it's here, it's on the Bloomberg Terminal.