First understand that 4:3 and 16:9 are both 720x480 (in NTSCland) just different shape pixel. So for the fix have to add padding to keep the extreme wide look you have.
Drop your movie into compressor and add a DVD m2v preset. Choose your video Format. NTSC for US. Then the Frame Rate to match movie, Aspect Ratio: 16x9, Field Dominance to match source movie. Set the quality bit rate as needed.
Jump to the Geometry Tab > Output Image Inset (Padding)
You will see it adds 108 to the top and 107 to the bottom. If your movie is not progressive you need to be very careful here, the odd frame padding will most likely give you a field order issue. If you are using interlace. change it to and add 110 to the top and 108 to the bottom. This will cut into the image just a bit.