Home equity lending is proving phenomenally profitable for the industry's top executives, especially when compared to banking.

According to proxy statements, Gary Judis, former chief executive officer of subprime lender Aames Financial, earned about $4.8 million in 1996-more than many commercial bankers overseeing much larger companies.

For example, Charles Rice, chairman of Barnett Banks, earned $4.5 million, though his company towers over Aames. Barnett has a market capitalization of $9.8 billion, versus $579 million for the Los Angeles- based Aames. Barnett posted net income of $564 million last year, versus $31 million for Aames.

Similarly, James E. Moore, chief executive officer of Contifinancial Corp., received about $3 million in 1996-the same as Paul Hazen, chairman of Wells Fargo & Co.

Mr. Moore was responsible for a company with a $1.8 billion market capitalization and $106 million of net income, while Mr. Hazen led an organization with $24.6 billion of market cap and $1 billion of profits.

The lucrative pay packages for these home equity executives is more evidence of how hot the consumer finance sector has been, and they could create cultural issues when banks try to integrate consumer finance and home equity units as the industry consolidates.

The tabloids had a field day this year with news of Lawrence Coss' $102.4 million of 1996 compensation at Green Tree Financial Corp. His salary, for running a home equity and manufactured-home finance company with $308.7 million of net income, was the highest for any corporate executive in America, far outstripping the top compensation package in banking-$15.5 million paid to Fleet Financial Group chairman Joel Alvord.

Mr. Coss' salary was based on a formula that gave great weight to the growth of the St. Paul company. And although he appears to be in a category of his own, experts attributed the general disparity between bank and finance company compensation to finance companies' use of such rewards.

The growth-based compensation nonbank lenders offer is a good incentive for individualistic thinking, said a finance company chief executive. "If the same formula was applied to top executives at banks, it might make them more entrepreneurial as well."

There's another good reason that finance company executives take home fatter paychecks, said Jeffrey Larsen, chief executive of First Street Mortgage Co., Jacksonville, Fla. "It's just a harder job."

Bank leaders concentrate on setting policy, said Mr. Larsen, a former senior vice president at Bank of Montreal, and they work in committees, but finance executives have to be quicker and make more decisions about how a company is run. Before starting First Street, Mr. Larsen was head of Equicredit, Barnett Banks' subprime mortgage unit.

Salaries are richer on the finance side, too, because consolidation left a glut of banking executives, Mr. Larsen said. At the same time, he said, executives capable of running a finance company are in short supply.

Compensation in the industry is "all tied to growth rates," said Hugh Miller, chief executive of Delta Financial Corp., a Woodbury, N.Y., home equity lender. As the industry matures, compensation levels will come down, comparatively, he predicted.

Finance company executives generally also have much larger equity positions in their companies than bankers, said Cathy Weiss, president of C. Weiss Associates, a Manhattan executive search firm.

Banks buying finance companies are often required to shell out big bucks for the top brass there, she noted. "Most of the successful finance companies are run by entrepreneurs," she said, so they demand to be paid like entrepreneurs.

Demand for branch and regional managers is especially high, noted several sources. A regional manager commands around $100,000, Ms. Weiss said.

As the home equity market continues to be hot, and the industry's stocks rise, the difference between finance company and bank executive compensation may be growing, analysts said.

The recent boom in home equity lending has contributed to rising compensation across the spectrum at subprime lenders, said Jeff Evanson, an analyst at Piper Jaffray & Co., Minneapolis. "As these companies have grown very fast, CEOs have realized that higher quality people are what drives the business."

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