For Los Angeles' top public company executives, it was a pretty good year.
In 1999, the average base salary for L.A.'s 100 most handsomely paid corporate execs was $569,160, about the same as the previous year. But average bonuses climbed 22 percent to $904,760.
Bigger pay packages for top executives appear to be the way of the corporate world all across the United States, and possibly even more so in Los Angeles because of its concentration of entertainment and media companies, which tend to pay better than other industries.
"I think bigger salaries is a nationwide trend," said Joshua Lurie, chief executive of Joint Information Inc., a New York-based compensation research company that compiled the list of L.A.'s highest-paid executives for the Business Journal. "And the trend of exorbitant pay packages will continue."
Especially, it seems, for New Economy companies.
Dot-com pay bonanza
L.A.'s highest-paid public company executive is Mark R. Goldston, hired last year as chairman and chief executive of Westlake Village-based NetZero Inc., the nation's largest provider of free Internet access. The forty-something executive was given a modest $127,000 salary and bonus package. But his long-term compensation package of stock options is potentially worth $153 million.
"The New Economy companies like NetZero have a low cash compensation package and a very high equity package," said George B. Paulin, president of Frederic W. Cook & Co., an executive compensation consultancy in Los Angeles. "The Old Economy companies, like Hilton Hotels, have a better cash package for their executives and offer less in option values. Old Economy companies also have pension plans that are very valuable, where a New Economy company has very little in benefits outside of the basic health insurance."
New Economy companies tend to be riskier, too. Executives sign on without knowing if their company is going to be around next year. Also, New Economy companies often have sky-high expectations of their CEOs. And often the initial rush of enthusiasm eventually wanes. For example, NetZero went public last fall. On the first day of trading, its stock fetched $27.75 a share. As of last week, it was scraping the barrel at about $7 a share. With that kind of performance on Wall Street, is Goldston really worth $153 million?
"You have to look at where he takes the company to see if he is worth it," Lurie said.
No other Southern California company came close to offering its executives a compensation package similar to Goldston's.
For reprint and licensing requests for this article, CLICK HERE.