In this new era of stock option expensing, companies are moving to a portfolio of long-term incentive vehicles. Now that companies must expense options like every other form of compensation, the goal is to maximize value delivery, both real and perceived, for a given level of expense. This changed paradigm can be seen in Figure 5.1. The transformation to a portfolio approach is well under way. From 2002 to 2004, among approximately 1,000 companies, the Black–Scholes value of stock option awards for CEOs fell by 24 percent (see Figure 5.2). While this is a big decline even in a flat stock market, the fact that the share price for the vast majority of these companies shot up during the same period makes it even more meaningful. Some of the decline in value simply reflects a more aggressive management of Black–Scholes assumptions to reduce expense, but most of it reflects the dramatic drop – 30 percent – in the number of options awarded to these CEOs. In the same period, CEOs' restricted stock and long-term performance plan values increased by 46 percent and 51 percent, respectively – a major realignment of the delivery of long-term incentive values.