Firms have wildly different approaches to pay: some local CEOs take no salary, preferring investment in company. (The Executive Pay Crisis - Big Bucks, Mixed Results).

THE tide that raises and lowers all boats shouldn't boost their captains any higher than anyone else.

That's the view espoused by the most effective chief executives in Los Angeles, whose compensation is derived largely from shares in their respective companies and other investments, rather than from salary or stock options.

"We've been very well treated in life," said Charles Munger, chairman and chief executive of Pasadena-based Wesco Financial Corp., which is 80.1 percent owned by a unit of Warren Buffett's Berkshire Hathaway Inc.

"Warren always says we're trying to get rich with the shareholders, not off the shareholders. That's our managerial ethos. At a certain point, if a businessman is associated with a company for a long time, he shouldn't be taking any compensation."

The Business Journal measured the effectiveness of the chief executives of the 50 largest companies in L.A. by dividing their compensation, including options exercised, by the company's 2001 net income. The top three executives on the list had a ranking of "0."

The top two -- Munger and A. Jerrold Perenchio, chairman and chief executive of Univision Communications Inc. -- received no compensation from the companies they lead. The third, B. Wayne Hughes, chairman and chief executive of Public Storage Inc., which reported $186.7 million in 2001 net income, earned $81,000 in salary and other compensation last year.

Still, the top three aren't strapped for cash.

While Munger does not directly own shares in Wesco, he holds 1.2 percent of Berkshire's stock, valued at $1.09 billion, based on its July 24 close of $63,200 per share.

Munger does take an annual salary of $100,000 from Blue Chip Stamps, the Berkshire subsidiary, and in 2001 sold 200 shares of Berkshire for about $14.8 million, according to Thompson Financial.

Based on Univision's July 24 close of $26.40 per share, Perenchio's 37.7 million shares were valued at $994.9 million.

Perenchio was not compensated in 2001 by Univision, which reported $52.3 million in net income for the year. He did, however, sell $24 million worth of Univision stock between March 2001 and March 2002, according to Thompson Financial.

Perenchio, through a spokeswoman, declined comment.

Hughes, who earned $37.2 million in dividends on his PSI holdings in 2001, controls 20.6 million shares, valued at $677.8 million based on a July 24 close of $32.83.

His compensation from Public Storage included a $60,000 salary, a company car and employer contributions to a 401(k) plan. "I can make it without the $60,000," he said. "I have income from investments I've made."

The company's 2001 proxy noted that Hughes' compensation "reflected the judgment... that (his) performance was rewarded primarily through his significant equity stake in the company."

Munger, who also is vice chairman of Berkshire Hathaway, bewailed excessively high salaries. "I think it's nutty," he said. "Once you have hundreds of millions of dollars in a company, you're a moral exemplar for the people working in the company."

The philosophy is similar to that of Buffett, who essentially controls Wesco through Blue Chip Stamps. Buffett's stringent views on corporate governance have gained traction with three companies on which he holds a board seat: Coco-Cd a Co., the Washington Post Co. and Gillette Co. have all recently announced they would account for option grants as expenses.