For the past two years, the phrases "investor outrage" and "corporate scandal" have appeared nearly daily in the papers and have been sprinkled liberally throughout the speeches of the leaders of regulatory agencies -- rivaled in their frequent use only by the words "Sarbanes-Oxley" and "corporate reform."

And let's not forget, former New York Stock Exchange chairman Richard A. Grasso, who was forced to resign last September after he infuriated investors by accepting a $188 million compensation package. The incident led to the splitting of the exchange's chairman and CEO posts and to the overhauling of its board. And the Securities and Exchange Commission is looking into how the exchange's directors approved a pay package considered by some to be obscene in scale.

But apparently, some Wall Street firms didn't pay much attention to all of that. While some firms paid their CEOs less last year in spite of the fact the companies performed well, at some Wall Street firms, the so-called pay-for-performance mentality is alive and well.

The New York Times reported this week that Sanford I. Weill, chief executive of Citigroup, and Merrill Lynch chief E. Stanley O'Neal collected their biggest paychecks ever in 2003 - $44 million and $28 million, respectively. Citigroup paid Weill $30 million in cash, while O'Neal, who led Merrill to a record profit of $4 billion last year after presiding over the elimination of more than 20,000 jobs, received $14 million in cash, $11.2 million in stock and options valued at $2.8 million in 2003.

And Bear Stearns' James E. Cayne received $27 million last year, up from $19.6 million in 2002. Cayne received options valued at $5.4 million, $10.4 million in stock and an $11 million bonus, as well as $12.3 million in gains on performance-based stock units, raising his total payout to more than $39 million.

According to the Times, the baseline amount for Wall Street chief executives last year was $20 million -- the amount J. P. Morgan Chase paid William B. Harrison and that Goldman Sachs paid Henry M. Paulson Jr.

And it appears that Wall Street's bigwigs are taking home more of their fat paychecks in the form of cash and restricted stock and less in the form of stock options. With option expensing expected to become mandatory, the days of doling out options like Monopoly money are over, according to a survey, also released this week, by executive compensation firm Pearl Meyer & Partners.

The firm's review of 50 early proxy filers, which bore the headline "Stock Option Bandwagon Stalls," showed that 40 percent of companies made significant changes in their option programs -- eliminating or reducing option use, trimming participation, or restructuring programs.

Nearly a third increased their use of restricted stock, in some cases by partly or totally substituting restricted stock for stock option grants. Some firms that didn't make restricted stock grants a year earlier made multi-million dollar awards to their CEOs, while others doubled the size of the previous year's awards. And Pearl reported that 16 percent introduced or increased executive stock ownership guidelines, including several that imposed mandatory share retention requirements for equity awards.

The firm's president, Steven E. Hall, declared, "Stock options will remain an important component of executive compensation programs – but they will no longer be the dominant reward for executive performance or the sole driver of executive wealth."

According to Pearl, stock options dropped in value by a third, to $4.7 million, the result of lower share prices at the beginning of 2003 and significant reductions in the number of shares granted. The overall result was an 8 percent decline in average CEO total pay -- but before you get out your violin, that average pay was still $10.3 million.

The average value of 2003 restricted stock grants to CEOs doubled to $2 million, and salary rose 6 percent to $1.1 million. Annual bonuses rose 23 percent to $2.2 million, for an overall 17 percent rise in total cash compensation. And the value of long-term incentives rose 13 percent to $313,450.

I wonder what some of those figures will do to restore investor confidence.

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