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Stock-option compensation has been in the crosshairs of shareholder activists and other critics. They contend that options provide too much incentive for executives to focus on the share price - and, perhaps, to cook the books.

Last year the compensation committees of corporate boards seemed to take that criticism to heart. In a reversal of a strong recent trend, the pay packages of many top-earning CFOs no longer sported whopping options components.

Yet even though finance chiefs saw steep declines in option gains, their median total compensation soared 21 percent. The reason? CFOs made hay in other areas, mainly bonuses and restricted stock.

Those were among the key findings of our 2003 special report on CFO compensation. We've based our report on a survey, conducted by Mercer Human Resources Consulting, of 250 CFOs at large public companies that filed proxy statements between July 30, 2002, and April 4, 2003.

In our feature article, ''Bonus Babies,'' deputy editor David M. Katz provides an aerial view of today's lofty pay packages. We also examine ten top-earning finance chiefs, take a ''where are they now'' look at top earners from last year, give an overview of CFO compensation at a selection of major companies, and provide a four-year comparison that tracks CFO compensation against company net income. A selection of recommended reading rounds out our report.

Bonus Babies: The Best-Paid CFOs
The finance chiefs at Bank of America, Bear Stearns, and John Hancock scored high in this year's survey of best-paid CFOs. Their income from cashing in stock options? Zero.

Ten Top-Paid CFOs of 2002
Hance, Anderson, Molinaro, Moloney, Cloninger, Stewart, Page, Chazen, Lannert, Lewent.
Ten Top-Paid CFOs of 2001: How They Fared One Year Later
Lehman, Swartz, Carter, Thornley, Stewart, Winger, Kaufman, Shedlarz, Viniar, Joyce.
2002 CFO Compensation at a Selection of Major Companies
Base salary, bonus, gain on options exercised, restricted-stock grant value, long-term incentive plan payout.
CFO Compensation and Company Net Income, 1999-2002
Percentage changes in salary, bonus, and other compensation compared with the change in company net income.

Pigging Out?
Special retirement plans for top executives are becoming a target for other stakeholders.
You've Got a Great Employer
How do you know if you're working for the right company? Here are ten markers that all point to the same thing: a great workplace for finance managers.
Better Options
Disillusioned investors are demanding stronger links between executive pay and long-term performance.
You're Not CFO Material
Wondering whether you have what it takes? Here are ten signs that you're never going to make it to the big chair.
The Holes in Black-Scholes
Valuing stock-option grants with Black-Scholes may cause some confusion on the income statement.
Incentive Confrontation
A bitter dispute over bonuses highlights the hazards of incentive pay.
The Gorilla Across the Table
Increasingly free of CEO influence, compensation committees appear set to push back on executive pay and perks.
Executive Credit Crunch
The federal ban on corporate loans leaves some managers scratching their heads.

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Options may not be in favor, but they certainly haven't disappeared entirely. This tool uses the Black-Scholes model developed in the 1970s to calculate their value. It can be used to determine the fair value of an option, how the option will change if market conditions change, the probability of making a profit, and the implied volatility of the option.
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