In 1990, Meyer's predecessor, Walter M. Cabot '54, earned a retirement bonus that made him the highest paid employee in HMC history, with a total compensation of more than $1.4 million for the year.

According to documents filed with the IRS, the company's Incentive Compensation Plan, implemented in fiscal 1991, "provides for incentive payouts based on the returns of specific asset classes managed by employees relative to a specified benchmark."

"Certain amounts earned under this plan are deferred from payment in the year earned and are subject to drawback, based on the relative return of the asset pool in the subsequent year," according to the documents.

Meyer also changed the standard against which the company measures its performance from a conventional "vanilla portfolio" of stocks and bonds to a new system of internal benchmarks based on the estimated performance of HMC"s asset allocation schedule.

Critics have said the move makes it easier for HMC to appear to outperform the market when in fact it is not.

According to HMC's annual report, the company's fiscal 1992 performance exceeded its benchmarks in every category except for commodity-based assets.

Other Top Earners

In addition to Mittelman, Jacobson and Meyer, HMC Vice President Timothy Peterson also cleared half a million dollars in fiscal 1992. Peterson, who manages the company's high-yield portfolio, earned $547,373, compared with the $400,666 he was compensated in fiscal 1991.

Sperling and Eisenson, who had not been listed at the top of the company's salary disclosure forms since fiscal 1989, each earned $473,500.

Officials of the management company could not be reached for comment last night.

David B. Lat contributed to the reporting of this story.