We present a compound image compression algorithm for real-time applications of computer screen image transmission. It is called shape primitive extraction and coding (SPEC). Real-time image transmission requires that the compression algorithm should not only achieve high compression ratio, but also have low complexity and provide excellent visual quality. SPEC first segments a compound image into text/graphics pixels and pictorial pixels, and then compresses the text/graphics pixels with a new lossless coding algorithm and the pictorial pixels with the standard lossy JPEG, respectively. The segmentation first classifies image blocks into picture and text/graphics blocks by thresholding the number of colors of each block, then extracts shape primitives of text/graphics from picture blocks. Dynamic color palette that tracks recent text/graphics colors is used to separate small shape primitives of text/graphics from pictorial pixels. Shape primitives are also extracted from text/graphics blocks. All shape primitives from both block types are losslessly compressed by using a combined shape-based and palette-based coding algorithm. Then, the losslessly coded bitstream is fed into a LZW coder. Experimental results show that the SPEC has very low complexity and provides visually lossless quality while keeping competitive compression ratios.