A once-popular corporate giveaway known as restricted stock is making a comeback.

Such stock -- restricted in that it can't be sold unless the employee remains at the company for a stated period -- costs a recipient little or nothing and generally isn't tied to future performance. Even if the company's stock price sinks before the shares are fully vested, the individual profits from selling the shares.

Best of all, restricted shares aren't stock options, which have fallen out of favor. Recipients of employee stock options have the right to buy a certain amount of shares in the company at a predetermined price, and investors howled in recent years when leaders of several scandal-torn concerns reaped huge gains from option exercises just before bad corporate news broke. Also, many businesses are doling out fewer options because the companies intend to count them as expenses in their financial results.

Hints of this striking shift have begun to emerge. Twenty-nine major U.S. corporations gave their chief executives restricted shares during fiscal 2002 -- about one-third more than the 22 doing so the prior year, concludes an analysis of 100 proxy statements for The Wall Street Journal by Mercer Human Resource Consulting, New York. The median value of such awards jumped to $929,600 from $563,200. Ten corporate leaders got grants valued at more than $2.4 million last fiscal year, up from five in fiscal 2001.

According to regulatory filings recently, Jones Apparel Group Inc. granted 400,000 restricted shares to two top executives last week; in exchange the officers terminated their rights to two million stock options. As this spring's proxy season unfolds, "we will see greater emphasis on restricted stock largely because it increases retention" of key staffers, says Peter Chingos, head of Mercer's U.S. executive compensation practice.

Cardinal Health Inc., a prescription-drug wholesaler in Dublin, Ohio, is a company exemplifying the trend. Robert D. Walter, its chairman and CEO, collected 150,000 restricted-stock units valued at about $10.4 million in the year ended June 30. The units vest as shares in mid-2004. (A holder of restricted-stock units, unlike a holder of restricted stock, lacks voting rights and may be paid in stock or cash.)

During the prior eight years, Mr. Walter received restricted shares only twice. His biggest award was valued at $650,286. What changed? The 57-year-old founder signed his first employment contract last year and agreed to stay through June 2004. In return, the board compensation committee suggested paying him a higher salary and annual bonus. "I said, 'I don't want that,' " Mr. Walter recalls. "I said I'd rather you give me more in the form of restricted stock ... because everybody will say, 'He can't get it unless he stays.' "

Mr. Walter's restricted-stock award should eventually put money in his wallet regardless of what happens to the Cardinal share price. The same holds true for Michael Eisner, Walt Disney Co. chairman and CEO. At his request, directors of the entertainment titan paid his $5 million annual bonus in restricted-stock units rather than cash for the year ended Sept. 30. His decision "is yet a further demonstration of his belief in the long-term growth prospects of the Walt Disney Co.," a spokesman says.

Such awards displease some institutional shareholders, however. Restricted stock "is a freebie if the stock price goes down. That's the fundamental flaw. Is that pay for performance? I don't think so," contends Ann Yerger, research director of the Council of Institutional Investors, which represents more than 130 pension funds with more than $3 trillion in assets.

About 14% of the 29 CEO restricted-stock awards tracked by Mercer were linked to performance, down from 27% of grants in the year-earlier analysis. Sensitive to such criticism, Disney recently provided four other top executives with performance-based restricted stock units, which they lose if the company doesn't reach unspecified targets.

A Jones Apparel spokeswoman said that company's restricted stock grants come with performance strings attached, but she wouldn't elaborate.

The AFL-CIO has submitted shareholder resolutions at American Express Co. and five other businesses urging a ban on stock options for senior executives and greater use of restricted stock. Labor officials call performance-linked restricted stock "a better motivator of performance," says the AFL-CIO's Brandon Rees. Conventional restricted shares, he adds, represent "pay for pulse."

"We will be recommending against that proposal," says an American Express spokeswoman. Nevertheless, the New York concern announced last July it would trim the number of stock options offered to top management. All middle and lower-level managers now get restricted stock instead of options, but aren't tied to performance.

Progressive Corp. will substitute plain-vanilla restricted shares for stock options starting this spring. The switch affects about 600 managers and executives. The auto insurer, of Mayfield Village, Ohio, hasn't handed out restricted shares since the 1980s. "We concluded that restricted stock would better align interests of management with long-term investors" because both own shares, says Tom King, a Progressive vice president.

Cendant Corp. also is shifting emphasis from options to restricted shares for about 4,000 managers and executives. "We will be issuing very few options," says Elliot Bloom, spokesman for the New York real-estate and travel-services company. (The change doesn't cover Chairman and CEO Henry B. Silverman.) The restricted shares Cendant expects to award this year; will vest solely based on continued employment. Mr. Bloom says, "The ultimate performance measure is that if you're not with us anymore, you're not going to get the stock."