But last year, many stocks fell sharply as the great technology bubble finally burst and brought the rest of the market down with it. Corporate profits fell an average 4.3 percent during the fourth quarter. And companies have laid off more than 400,000 in recent months, including 86,000 last month. It looks like boards were trying to deliver lost value to these executives by just changing the pay mix and reducing the risk. In particular, companies turned to restricted shares instead of stock options.
Options give a recipient the ability to buy shares at a set price sometime in the future.
They are valuable only if a company's stock goes up, giving CEOs an incentive to improve performance. For example, MBNA and PNC Financial Services Group gave out more restricted shares than options. Some companies give out both, trying to make up for lost value in options executives have from previous years. Boards also are paying bigger bonuses or using retention bonuses to replace performance awards when a company fails to meet goals. Corporations insist the salaries are warranted because CEOs have a tougher job in a difficult economy.