Never mind show business the real money these days is coming from the banking and finance arena.

A full one-third of L.A.'s 100 highest-paid public company executives (and seven of the top 10) work for banks or other finance-related companies, according to the Business Journal's annual survey of executive compensation.

Great Western Financial Corp., H.F. Ahmanson & Co., Jefferies Group Inc. and SunAmerica Inc. each have five executives among L.A.'s 100 highest paid.

Of the 33 banking and finance executives on the list, 10 come from mortgage lending, nine from general financial services, five each from investment banking and health insurance, and four from general insurance services.

"You're going to see more of that," predicted Joshua Lurie, chief executive of Joint Information Inc., a New York-based compensation research firm that compiled this year's List of L.A.'s top-paid 100. "Because the stock market is doing well and you've got things like mergers and IPOs (initial public offerings) happening, those companies are going to flourish."

Besides banking and finance, other industries with heavy concentrations of top-paid L.A. executives include energy, manufacturing and yes, entertainment/media.

As a group, L.A.'s top-paid executives hauled in their richest pay package ever. But they didn't get fat just off their salaries and bonuses. Those two components of compensation rose a mere 1.8 percent for L.A.'s 100 highest-paid executives in 1996, not even keeping pace with inflation.

The real bonanza, as has been true throughout American business, came in the form of long-term compensation. The same 100 L.A. executives saw their stock options and other incentive-based pay soar by 195 percent in 1996, nearly triple the amount in the previous year.

"We all still need a paycheck to live on," said SunAmerica Chief Executive Eli Broad, "but there's more of a trend now toward getting top management pay aligned with the interests of shareholders."

Broad, whose $30 million package ranked him a distant second to Walt Disney Co. Chief Executive Michael Eisner, said salaries of SunAmerica's top managers have been held flat for the past three years, although cash bonuses have in some cases nearly doubled, and stock options have made more than a couple SunAmericans rich.

The notion behind such long-term compensation is that an executive's pay should be tied to how well his or her company performs, usually as judged by its stock price.

And in general, that makes sense, said Kevin Murphy, a finance professor at USC who sits on the National Association of Corporate Directors' committee on executive compensation.

"Giving your CEO incentives based on stock prices might in fact encourage him to take actions to increase the value of the firm, and discourage actions that would reduce value," Murphy said.

Stock options, which let an executive buy shares in the company at a predetermined price far into the future, are the most common form of long-term compensation. But they don't always reflect how good a job an executive is actually doing, especially when the stock market is booming, Murphy and others say.

In a bull market such as the one of recent years, the value of a CEO's options can skyrocket even though their personal performance may be little changed.

"A rising tide raises all ships," Broad acknowledged.

Also potentially distorting the picture is that a group-think mentality has taken hold in recent years among corporate boards of directors and compensation committees that approve executive pay packages, said compensation expert Lurie.

"It's very incestuous," Lurie said. Compensation committees are usually made up of executives from other similarly situated companies, Lurie explained, and by approving mammoth pay at other firms, "it obviously raises the overall bar on executive pay."

That in turn benefits the committee members themselves, he said.

Ultimately shareholders are to blame for letting that happen, Lurie said, and for failing to recognize that just because executives are demanding to be paid twice as much as in years past doesn't necessarily mean they're doing twice as good a job.

Authentic Fitness Corp. Chief Executive Linda Wachner pocketed a 67 percent raise last year, hauling in $5.5 million, while the company she heads suffered a net loss of more than $40 million.

Wachner was unavailable for comment last week.

Of course, the L.A. executive who draws the most heat for "excessive pay" is Disney's Eisner.

Between a relatively modest salary of $750,000, $9 million in cash bonuses, and a whopping $195 million in stock options, Eisner's total compensation for 1996 was as much as the 30 next-highest paid Los Angeles executives combined.

Some may argue that such largesse is justified considering Disney's $1.2 billion in net income on $18.7 billion in revenues last year. The company has also seen steady growth in its share price since Eisner took the helm in the 1980s, with shareholder equity standing at $16 billion at end of 1996.

But Disney shareholders didn't get nearly as fat as Eisner did last year; they saw an 8 percent return on equity hardly a bonanza.

By comparison, Atlantic Richfield Co., which posted similar net income and revenue figures last year, enjoyed a 21 percent return on equity. (Return on equity is calculated by dividing a company's net income by its shareholders' equity.)

Arco Chief Executive Mike Bowlin got $5.2 million in total compensation in 1996, or about 3 percent of what Eisner made. Even minus Eisner's stock options, he made about four times Bowlin's pay.

Such disparity has led to calls among some shareholders for indexed or pegged stock options, to ensure that executives like Eisner aren't cashing in while the company itself is flattening out.

The options of SunAmerica's Broad, for example, are dependent on the company outperforming the S & P; 500 stock index.

"If we only did as well as the S & P; 500 I'd get nothing," Broad said.

So far, few other L.A. companies have integrated indexing into their executive pay structure, Murphy said.

Men still dominate the ranks of L.A.'s most handsomely paid, as is the case nationwide. But L.A. women kicked it up a notch last year, with five represented in the top 100, compared to just two in 1995.

"It's still sort of disconcerting, the fact that the top executives are so dominated by men, and if you had to guess, probably white men," Lurie said. "But that's still typical across the county."

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