State CEO Pay Grows Faster Than Firms’ Profits : Compensation: A study finds that the value of chief executives’ salaries and benefits rose 9% in 1989, while their firms’ profits were up only 5.9%.

When growth is the yardstick, being a big-time California chief executive is more profitable than being a big California corporation.

That’s the conclusion of management consultant Towers Perrin, which surveyed CEO compensation at the state’s 100 biggest public companies.

The study found that the median increase in CEO compensation was 9% last year, giving the CEOs median cash pay of $750,000.

Meanwhile, net income of the companies studied rose just 5.9%. Worse yet, return on equity fell 2.6%.

“Clearly, the relationship between pay and company results is weak,” says Donald L. Lowman, a principal of Towers Perrin. “Executive pay in California, as in the country overall, is on a far faster track than corporate performance.”

By national standards, the California executives were not egregiously compensated. Towers Perrin said median compensation of chief executives of the top 100 U.S. industrial companies was up 9.2% last year.

The California study, based on 1989 proxy statements, looked at pay, incentives and supplemental benefits of the top five executives at the companies analyzed, as well as for outside directors.

Other results:

* The natural resources and entertainment industries consistently paid their executives more than other industries.

* The services and health-care sectors consistently paid less.

* Restricted stock grants are the fastest growing long-term incentive device.

* The median 1989 retainer paid to outside directors was $20,000. The median board meeting fee was $1,000.