Executive compensation specialists are reporting that stock option grants will decrease due to FASB's new stock-option expensing proposal, and will likely be replaced by restricted stock grants.

According to two new studies, that trend may already be underway.

Compensation analysis firm Equilar, Inc., and compensation consultants Pearl Meyer & Partners each released separate studies last week that demonstrated that fact.

Interestingly, each study also showed total CEO compensation in 2003 was down slightly from the year prior. Both studies included only CEOs who were in that position during both years, however, the Equilar study was much more comprehensive, analyzing 223 relevant companies in the S&P500; Pearl Meyer & Partners only looked at 50 "early proxy filers."

Though the numbers in the surveys differed slightly, the results were the same: total CEO compensation was down, primarily due to a decrease in the number of CEOs receiving stock option grants, as well as a decrease in the value of those grants.

However, nearly all other pay metrics—including base salary, cash bonuses, restricted stock awards and long-term inceptive plans—showed increases.

That increase is in line with a prediction made back in December 2003, by former SEC chairman and Compliance Week columnist Harvey Pitt, who recommended that companies reexamine the use of options and consider restricted stock instead.

Extensive details from both studies are available below:

Details On Equilar's Analysis

Related Pearl Meyer Study