The money involved isn't huge by the standards of overall executive pay, but it can add up. General Electric Co. (GE) Chief Executive Officer Jeffrey Immelt, who gets a growing share of his compensation through what GE calls "performance share units," received more than $1 million last year in dividends on unearned restricted and performance shares.

Gary Neale, chairman and former CEO of NiSource Inc. (NI), a Merrillville, Ind., utility-holding company, is in line to receive more than $827,000 in dividends this year on performance shares he hasn't yet earned.

Performance, or "phantom," shares are a form of restricted stock paid to an executive only if the company meets certain performance targets. Dozens of other CEOs are paid dividends on unvested restricted stock, which typically requires the recipient only to wait several years before actually receiving the shares, regardless of performance.

Bank of America Corp. (BAC) CEO Kenneth Lewis is in line to receive $2.89 million in dividends on restricted stock this year. Altria Group Inc. (MO) CEO Louis Camilleri received more than $2 million in dividends on restricted stock last year, even though he won't earn some of the shares until 2011.

All told, among the 50 large-company CEOs who received the largest dollar grants of restricted stock over the past three years and whose companies pay dividends, 37 are paid dividends in cash before the shares vest, according to an analysis for The Wall Street Journal by Equilar Inc., a San Mateo, Calif., compensation-research firm.

Corporate-governance watchdogs and executive-pay consultants say the dividends on performance shares undermine the effort to link pay to performance. "It's more stealth compensation," says Paul Hodgson, a senior research associate at the Corporate Library, which monitors corporate governance.

"There's a sleight of hand there that's frustrating" when companies tout pay-for-performance plans but pay executives dividends, says Brian Foley, managing director of pay consultancy Brian Foley & Co. in White Plains, N.Y.

The dividend payouts typically aren't well-disclosed in corporate proxy filings with the Securities and Exchange Commission. Companies usually state whether they pay dividends on restricted or performance shares, but totaling an executive's holdings in unvested stock can require hunting through the proxy, or multiple proxies. Dividend payments usually aren't included in proxies, so investors in most cases have to track those down and do their own math.

Dow Jones & Co., publisher of The Wall Street Journal, pays dividends to the holders of "contingent stock rights," a form of performance shares. Dow Jones does not disclose the total amount of dividends paid to executives who hold contingent stock rights.

Disclosure could soon become more transparent. As part of its overhaul of compensation-disclosure rules, the SEC has proposed that companies detail dividend payments to top executives. The new rules could take effect in time for next year's proxies.

Meanwhile, the number of executives eligible to receive dividends on unvested shares likely has been rising as performance and restricted shares become more popular. For one thing, new rules that require companies to record stock options as an expense have made the shares a preferred alternative. And in response to criticism that too many CEOs are paid big bucks for lousy performance, a growing number of restricted-stock awards are linked to profit or share-price performance. At the same time, a 2003 tax cut spurred many companies to increase dividend payments.