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The New Equation for CEO Pay: Cash Up and Options Down Equals 8% Decline
2004 Proxies Reveal Major Changes in Pay Structure

NEW YORK, April 8, 2004 - Executive pay in 2003 was a study in contrasts. The chief executives of leading U.S. companies on average took home 23% more in cash and restricted stock, while their total compensation fell 8% to $9.1 million, according to an analysis of 2004 proxies by compensation consultants Pearl Meyer & Partners.

The unusual pay picture was the direct result of steep growth in the value of restricted stock and long-term incentives, as well as sharply lower CEO option grant values, due to the market slump in early 2003 and the granting of fewer options, according to the firm. The shift in pay slashed the proportion of total CEO pay delivered in stock options to a seven-year low of 36% from 52% a year earlier.

"We're looking at a major overhaul of executive pay programs," said Steven E. Hall, President of Pearl Meyer & Partners. "Companies are acting on investor demands that pay programs be less dependent on short-term stock price movement and more directly related to long-term financial performance as well as real growth in shareholder value."

In 2003, the average value of options granted to CEOs fell to $3.2 million, a 38% decline from the prior year, according to the firm's analysis of the proxies of 180 companies with the same CEO in 2002 and 2003. Cash and other non-option compensation averaged $5.9 million, comprising $1.0 million in base salary, $2.0 million in bonus, and $2.5 million in restricted stock and long-term incentives, with the remainder in perquisites or other compensation.

Approximately two-thirds of the companies paid their CEOs more cash in 2003 than a year earlier, while less than 20% provided higher option grant value.

CEO Pay Drops at Technology Cos., Soars at Diversified Financials
Looking at by industry, CEO pay declined in 11 out of 20 industries in 2003, with nine showing double digit drops. Technology company CEOs saw their average total pay drop by 37% to $10.6 million, one of the most extreme declines among all industries. Defying the norm, total compensation for CEOs at Diversified Financial/Brokerage companies soared by 78% to $23.7 million in 2003, the highest industry average.

Changes to Pay Plans
In addition to shifting the mix of CEO pay delivered in cash, stock and options, companies are redesigning their pay programs. More than one-third of the companies studied by Pearl Meyer & Partners are making changes that include adoption of share ownership guidelines, use of performance-based equity, elimination of reloads, and more annual incentive opportunities.

"Going forward, CEOs will be required to meet stiffer performance demands to earn their pay," said Mr. Hall. "There will be far less reliance on options and giveaways."

About Pearl Meyer & Partners
Founded in 1989, Pearl Meyer & Partners is recognized for its counsel to Board Compensation Committees and senior managements. The firm specializes in the evaluation, design, development and implementation of compensation programs for executives, employees and Boards, as well as issues related to corporate governance. Services also include customized marketplace surveys, organizational development and sales incentives, all supported by strong actuarial and benefits expertise. Headquartered in New York, Pearl Meyer & Partners maintains offices in Atlanta, Boston, Charlotte, Chicago, Houston and Los Angeles.

Pearl Meyer & Partners is a practice of Clark Consulting (NYSE: CLK), a leading publicly traded firm in its field, serving more than 3,800 U.S. companies nationwide with comprehensive advice on the design, financing and administration of compensation and benefit programs.

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