2003 Annual Bonus : BSC

EXHIBIT B

THE BEAR STEARNS COMPANIES INC.

PERFORMANCE COMPENSATION PLAN
(Amended and Restated as of February 24 , 2003)

Section 1. Purpose. The purposes of The Bear Stearns Companies Inc.
Performance Compensation Plan, as amended and restated (the "Plan") are (i) to
compensate certain Senior Managing Directors of The Bear Stearns Companies Inc.
and its subsidiaries (the "Company") on an individual basis for significant
contributions to the Company and (ii) to stimulate the efforts of such persons
by giving them a direct interest in the performance of the Company.

Section 2. Term. The Plan became effective as of July 1, 1998 (the
"Effective Date"). The Plan shall be extended and shall be applicable for an
additional period commencing July 1, 2003 and ending November 30, 2008, unless
earlier terminated by the Company pursuant to Section 9.

Section 3. Coverage. For purposes of the Plan, the term "Participant"
shall include for each fiscal year each Senior Managing Director so designated
by the Compensation Committee within 90 days following the first day of such
fiscal year.

Section 4. Base Salary.

4.1. Each Participant shall receive a salary of $200,000 per annum ("Base
Salary"). The Base Salary of the Participants may be increased from time to time
by the Compensation Committee of the Board (the "Compensation Committee") by
amendment of the Plan pursuant to Section 9.

4.2. Notwithstanding the provisions of Section 4.1 above, in the event a
Participant is not a Senior Managing Director for an entire fiscal year, his
Base Salary for such fiscal year shall be computed by multiplying such Base
Salary as computed under Section 4.1 by a fraction, the numerator of which is
the number of days in such fiscal year during which such Participant was a
Senior Managing Director and the denominator of which is the number of days in
the fiscal year. Any Base Salary shall be in addition to any base salary payable
with respect to periods during the fiscal year in which a Participant was not a
Senior Managing Director.

Section 5. Annual Bonus Pools.

5.1. For each fiscal year of the Company, each Participant shall be
entitled to receive an award of a bonus (the "Bonus"), payable from one or more
annual bonus funds (the "Annual Bonus Pools") in an amount not to exceed the
amount provided for in Section 6. A Bonus under the Plan shall be the sole bonus
payable with respect to a fiscal year to each Participant ("Full Year
Participant") who was a Senior Managing Director on the date that proportionate
shares of the Annual Bonus Pools for such fiscal year were determined by the
Compensation Committee and who remains a Senior Managing Director at all times
thereafter during such fiscal year. For each fiscal year, each Participant who
was not a Full Year Participant shall be entitled to such a Bonus, if any, for
the portion of such fiscal year not covered by the Plan, determined in
accordance with the procedures applicable to employees who are not Senior
Managing Directors, in addition to the Bonus, if any, payable pursuant to the
Plan.

5.2. For each fiscal year, the formula for calculating the Annual Bonus
Pools shall be determined by the Compensation Committee in writing, by
resolution of the Compensation Committee or other appropriate action, not later
than 90 days after the commencement of such fiscal year. Such formula shall be
based upon one or more of the following criteria, individually or in
combination, adjusted in such manner as the Compensation Committee shall
determine: (a) pre-tax or after-tax return on equity; (b) earnings per share;
(c) pre-tax or after-tax net income; (d) business unit or departmental pre-tax
or after-tax income; (e) book value per share; (f) market price per share; (g)
relative performance to peer group companies; (h) expense management; and (i)
total return to stockholders.

5.3. As a condition to the right of a Participant to receive any Bonus
under this Plan, the Compensation Committee shall first be required to certify
in writing, by resolution of the Compensation Committee or other appropriate
action, that the Bonus has been accurately determined in accordance with the
provisions of this Plan.

5.4. The Compensation Committee shall have the right to reduce the Bonus
of any Participant in its sole discretion at any time and for any reason prior
to the certification of the Bonus otherwise payable to such Participant pursuant
to Section 5.3 hereof.

5.5. The maximum amount allocable by the Compensation Committee to the
Annual Bonus Pool related to Participants who are members of the executive
committee of Bear, Stearns & Co. Inc. in the aggregate for any fiscal year shall
not exceed $165,000,000. The maximum amount allocable to any individual
Participant who is not a member of such executive committee shall not exceed
$15,000,000.

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Section 6. Allocations.

6.1. Prior to the commencement of each fiscal year, or not later than 90
days after the commencement of each fiscal year, the Compensation Committee
shall determine in writing, by resolution of the Compensation Committee or other
appropriate action, each Participant's proportionate share of the Annual Bonus
Pools for such fiscal year, which shall not exceed in respect of any Participant
who is a member of such executive committee 30% of the amount of such Annual
Bonus Pool.

6.2. Notwithstanding anything in Section 6.1 to the contrary, any
Participant who ceases to be a Senior Managing Director for any reason prior to
the end of such fiscal year shall be entitled to a Bonus computed as follows: A
Bonus first shall be computed as if such Participant had been a Senior Managing
Director for the full fiscal year, and such Bonus then shall be multiplied by a
fraction the numerator of which shall be the number of days in the fiscal year
through the date the Participant ceased to be a Senior Managing Director and the
denominator of which shall be the number of days in the fiscal year; provided,
however, that if the application of the preceding clause would cause the total
Bonuses payable under the Plan to exceed the Annual Bonus Pools, the Bonuses
payable to each Participant shall be reduced pro rata, so that the total of all
Bonuses shall equal the Annual Bonus Pools. If a Participant ceases to be a
Senior Managing Director after the end of the fiscal year in respect of which
such Bonus is payable, the amounts thereof nonetheless shall be payable to him
or his estate, as the case may be.

6.3. Except as hereinafter provided, Bonuses for a fiscal year shall be
payable as soon as practicable following the certification thereof by the
Compensation Committee for such fiscal year. In its discretion, the Compensation
Committee may authorize, prior to the final determination of Participants'
Bonuses for such fiscal year, payments on account of Bonuses payable hereunder
to one or more Participants entitled to such Bonuses, (a) during the last month
of such fiscal year, in an amount not exceeding 95% of the aggregate amount that
would be payable to such Participant or Participants hereunder as determined by
the Controller or Chief Accounting Officer of the Company (so long as he is not
a Participant) on the basis of his good faith estimate, (b) during the last ten
calendar days of such fiscal year or after the end of such fiscal year, in an
amount not to exceed 98% of the aggregate amount that would be payable to such
Participant or Participants hereunder as determined by the Controller or Chief
Accounting Officer of the Company (so long as he is not a Participant) on the
basis of his good faith estimate, and (c) at any time during such fiscal year or
after the end of such fiscal year to a Participant who ceases to be a Senior
Managing Director for any reason prior to the end of such fiscal year. Within
the limitations set forth in the preceding sentence, the Compensation Committee
may authorize one or more such "on account" payments, but the aggregate amount
of any such on account payments shall not exceed the aggregate amount permitted
to be paid pursuant to the Plan with respect to the same fiscal year. In
connection with any such "on account" payments, the Compensation Committee shall
require an undertaking or other assurance by or on behalf of the Participant
receiving such payment to repay the Company the amount, if any, by which such
"on account" payment exceeds the actual amount determined to be due to such
person under the Plan in respect of such fiscal year. Any "on account" payments
received prior to the end of a fiscal year shall be discounted to reasonably
reflect the time value of money from the date of payment to the date 30 days
after the end of the fiscal year.

6.4. The Compensation Committee may determine that payment of a portion
of the Bonuses shall be deferred, the periods of such deferrals and any
interest, not to exceed a reasonable rate, to be paid in respect of deferred
payments. The Compensation Committee may also define such other conditions of
payments of Bonuses as it may deem desirable in carrying out the purposes of the
Plan.

6.5. In any fiscal year, any balance in the Annual Bonus Pools for any
reason, including the limitation contained in Section 6.1, the forfeiture of a
Bonus under Section 6.2, the reduction of a Bonus under Section 5.4, or
otherwise, shall not be distributed to other Participants and shall not be
carried forward or be available for distribution as Bonuses under the Plan in a
future year or years.

Section 7. Administration and Interpretation. The Plan shall be
administered by the Compensation Committee, which shall have the sole authority
to interpret and to make rules and regulations for the administration of the
Plan. The Compensation Committee may correct any defect or supply any omission
or reconcile any inconsistency in the Plan in the manner and to the extent the
Compensation Committee deems necessary or desirable to carry it into effect. Any
decision of the Compensation Committee in the interpretation and administration
of the Plan, as described herein, shall lie within its sole and absolute
discretion and shall be final, conclusive and binding on all parties concerned.
No member of the Compensation Committee and no officer of the Company shall be
liable for anything done or omitted to be done by him or her, by any other
member of the Compensation Committee or by any officer of the Company in
connection with the performance of duties under the Plan, except for his or her
own willful misconduct or as expressly provided by statute. The Compensation
Committee may request advice or assistance or employ such persons (including,
without limitation, legal counsel and accountants) as it deems necessary for the
proper administration of the Plan.

Section 8. Administrative Expenses. Any expense incurred in the
administration of the Plan shall be borne by the Company out of its general
funds and not charged against the Annual Bonus Pools, except insofar as such
expenses shall be taken into account in determining the components of the Annual
Bonus Pools hereunder.

Section 9. Amendment or Termination. The Compensation Committee of the
Company may from time to time amend the Plan in any respect or terminate the
Plan in whole or in part, provided that no such action shall retroactively
impair or otherwise adversely affect the rights of any Participant to benefits
under the Plan which have accrued prior to the date of such action.

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Section 10. No Assignment. The rights hereunder, including without
limitation rights to receive a Base Salary or Bonus, shall not be sold,
assigned, transferred, encumbered or hypothecated by an employee of the Company
(except by testamentary disposition or intestate succession), and, during the
lifetime of any recipient, any payment of Base Salary or a Bonus shall be
payable only to such recipient.

Section 11. The Company. For purposes of this Plan, the "Company" shall
include the successors and assigns of the Company, and this Plan shall be
binding on any corporation or other person with which the Company is merged or
consolidated, or which acquires substantially all of the assets of the Company,
or which otherwise succeeds to its business.

Section 12. Stockholder Approval. The Plan was approved by the
stockholders of the Company at the 1998 Annual Meeting of Stockholders. The
extension of the Plan pursuant to Section 2 and the increase in the maximum
aggregate amount of the bonus pool that can be paid to executive committee
members pursuant to Section 5.5 shall be subject to approval by the affirmative
vote of a majority of the shares cast in a separate vote of the stockholders of
the Company at the 2003 Annual Meeting of Stockholders, and such stockholder
approval shall be a condition to the right of a Participant to receive any Bonus
hereunder.