A Popular Reward: Restricted Stock

"The options were accelerated to reduce the expense impact in 2005 and beyond of a new accounting standard for stock based compensation," Gannett said in a report filed with the SEC.

Companies can impose performance-related conditions on an executive's right to sell restricted stock, but last year, only 18 percent of restricted stock awards in an Equilar study were linked to a performance standard.

Among the major awards of restricted stock at local companies, Coventry Health Care, an HMO company, awarded former chief executive Allen F. Wise $9.7 million in restricted stock in June 2004, up from $3.3 million in 2003. He ceased to be chief executive at the end of December and took on the role of chairman, the company reported. By the end of last year, Wise held restricted stock worth a total of $19.9 million, which he will be free to sell by the time of his planned retirement in August 2007, according to a company SEC filing.

Defense contractor Lockheed Martin last year awarded president Robert J. Stevens, who has since become chairman and chief executive, $2.3 million in restricted stock, and it awarded millions in restricted stock to other top executives. The awards generally vest over four years and were conditioned on the executives signing agreements not to compete with Lockheed if they left for another job, the company reported.

Gannett last year awarded McCorkindale $1.6 million in restricted stock, which vests over a year in monthly installments.

Less than a year and a half at the helm of MCI Inc. paid off for chief executive Michael Capellas in April 2004 when the telecommunications company, formerly known as Worldcom Inc., emerged from bankruptcy protection. For passing that milestone, the company awarded him $12 million in restricted stock, as approved by a court-appointed monitor when he joined MCI. For Capellas's overall performance helping the company recover from a watershed accounting deception, the board last year awarded him another $6 million in restricted stock, plus a bonus of $5 million.

While the restricted stock vests in quarterly installments over three years, the unvested shares last year generated dividends of $589,061 for Capellas.

MCI gave Capellas restricted stock instead of stock options because its court-appointed monitor, former SEC chairman Richard Breeden, prohibited it from issuing options for five years as part of his plan to restore trust in the company, MCI spokeswoman Brittany Hoff Feinson said by e-mail.