Stories abound of money-hemorrhaging Internet startups run by fresh-faced wunderkinds who, even in the tech downturn, have made a killing in salary and options.

While such high-fliers may grab the limelight, in their shadows are the grizzled L.A. business veterans who lead highly profitable Old Economy companies, and earn relatively modest pay.

For the second time in three years, John J. Bryson, chief executive of Edison International, was the most cost-efficient of the highest-paid L.A. executives in 1999. Bryson's total package came to $3.3 million last year, a nice sum indeed, but only 0.6 percent of the utility's 1999 net income of $589.3 million.

"(Bryson) has done a pretty good job," said Douglas A. Christopher, a utilities analyst at Crowell, Weedon & Co. in San Francisco. "Things have improved over the last couple of years. Of course, Edison is in a pretty predictable business. Unless you go out on a limb and propose earth-shattering changes, you should do pretty well, and I think that's reflected in his salary."

Old Economy money

Almost by definition, the most-cost efficient executives come from industries that aren't high-growth, but make so much money that they can well afford to pay attractive salaries. Thus the most cost-efficient executives (as defined by their salary as a percentage of the company's net income) come from industries such as aerospace, energy, banking and media.

Some bargain CEOs in those industries include Kent Kresa of Northrop Grumman Corp., whose 1999 pay was only 0.67 percent of his company's net income; Mike Bowlin of Atlantic Richfield Co. and Ray Irani of Occidental Petroleum Corp., at 0.98 percent and 1.58 percent, respectively; Angelo Mozilo of Countrywide Credit Industries Inc. at 1.3 percent; and Mark Willes of Times Mirror Co. at 1.96 percent.

The few bargain CEOs who work in the high-tech industry are employed by long-established L.A.-area companies. They include Gordon Binder of biotech giant Amgen Inc., whose 1999 compensation represented only 0.81 percent of net income, and Van Honeycutt of Computer Sciences Corp. at 1.90 percent.

Fortune 500 company CEOs are well compensated, of course, but the big money these days is going to those who run companies with phenomenal growth or growth potential, as reflected in the $153 million pulled in last year by Mark Goldston of NetZero Inc., which is still hemorrhaging red ink.

"There's a shortage of talent, especially entrepreneurial talent at the executive level," said James Hatch, executive vice president of Compensation Resource Group Inc., an L.A.-based executive compensation and benefits consulting firm. "You've got to figure in how complex and risky a business is vs. other businesses in paying executives. With some (companies), you can pretty much predict (earnings) from year to year. It's a nice cushy executive job, but there's not as much risk. Part of capitalism is that you reward risk-takers more than people who invest in a sure thing."

But certain established industries have to deal with plenty of uncertainty. The oil industry made a huge comeback in 1999 thanks to the rise in worldwide petroleum prices, and Arco's Bowlin and Occidental's Irani became more "efficient" simply because the price of a barrel of crude oil tripled. In fact, Bowlin was ranked as the least cost-effective of L.A.'s 100 top-paid public company executives for 1998, when his company lost $657 million. In 1999, Arco posted a $1.3 billion profit.

"Sometimes it's better to be lucky than good," Hatch said.

Some not on the list

Of course, it's also important to keep in mind that the Business Journal's list of L.A.'s most cost-efficient executives is drawn from the list of the county's highest-paid public company executives. There are likely a number of other local public company chiefs who are even better bargains, but who don't appear on the highest-paid list.

The most cost-efficient executive on last year's list was Walt Disney Co. Chairman and CEO Michael Eisner, whose $6 million in salary and bonuses in 1998 accounted for only 0.3 percent of Disney's profit that year.

In 1999 Eisner's compensation accounted for an infinitesimal percentage of Disney's $1.3 billion in net income, but that's because Eisner was paid only his base salary of $750,000, not enough to make the highest-paid executive list.

And it's important to note that several of this year's bargain executives won't be on next year's list. Amgen's Binder is retiring, and Arco's Bowlin and Times Mirror's Willes bailed out with golden parachutes in the wake of mergers, as BP Amoco took over the oil company and Chicago's Tribune Co. acquired Times Mirror.

The latter case certainly proves that cost-efficiency doesn't always translate into job security. Willes was severely criticized for the Staples Center affair, under which the L.A. Times shared revenue with the arena as part of a special magazine devoted to the new arena. While Willes apparently cried upon hearing the news that Times Mirror was being taken over, he may be somewhat consoled by his severance package, worth a reported $80 million.

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