The Paradox of success payments. (Arrivals).

THIS SEASON'S NEW CROP of turnaround CEOs will tell you that bringing a company out of bankruptcy is an accomplishment that richly deserves reward. Conventionally, such rewards have taken the form of often-lavish "success payments," on top of the usual salary and equity enticements.

If Michael Capellas steers WorldCom off the shoals, for example, he'll receive $12 million in stock. Adelphia Communications' William Schleyer will earn a bonus of up to $33 million based on how much Adelphia's value has increased when it comes out of bankruptcy. Julian Day was just named CEO of Kmart in January, but when the retailer emerges from bankruptcy April 30, he'll automatically get $1 million.

Pay for success isn't a bad idea if that's what it takes to get the job done. But in recent months, critics ranging from compensation experts to shareholders to court judges have questioned whether such bonuses are too short-term, too rich or too detached from the work performed. Because payments vary by company and inclination, no clear standard exists for determining how much is fair.

Success payments can be downright paradoxical in cases where the turnaround team includes some of the same managers who stalled the company in the first place--which is increasingly common these days, according to Chris Stuttard, database editor of BankruptcyData.com.

A recent example is J. Barclay Knapp, CEO of NTL, Britain's largest cable company. He led NTL into bankruptcy, then pulled it out again a few months ago, tripling his salary at the same time. Quips Stuttard, "It's good to be the boss."