By Sara Merken, Bloomberg BNA
General counsel at U.S. public companies are being paid more to reflect their increasing involvement in strategic decision-making, with the highest pay increases at companies with revenues of between $1 billion to $5 billion, a new report found.
The top legal officers at such companies received an 8.1 percent pay raise in fiscal 2015 and 2016, reaching a median total compensation of $1.5 million.
“General Counsel Pay Trends,” released Oct. 4 by compensation consultant Equilar, also found that median total direct compensation for general counsel rose 4 percent year-over-year. The report reviewed annual proxy filings for more than 1,100 public companies that named the general counsel as one of their top-paid employees.
“The chief legal officer of an organization is vital to the success of the public company,” said Amar Sarwal, chief legal officer and senior vice president of advocacy and legal services for the Association of Corporate Counsel.
There is “cause for concern” if the general counsel is not among other corporate leaders listed in securities filings who are highly compensated, Sarwal told Bloomberg BNA.
Public companies each year must disclose in their annual-meeting proxy materials the compensation of “named executive officers,” which include the chief executive officer, the chief financial officer, and the three most highly paid executives other than the CEO and CFO.
One consequence of the higher pay is increased shareholder scrutiny, said Dan Marcec, Equilar’s director of content and marketing communications.
Shareholders have become more vocal about executive compensation in the past few years, and investors have recently been looking beyond CEO pay to those of other top executives to be “assured that pay is tied to shareholder value,” Marcec told Bloomberg BNA.
According to the report, general counsel at companies with less than $1 billion in revenue saw pay raises of 6.6 percent in fiscal 2015 and 2016, while those at companies with revenues of between $5 billion to $15 billion saw 3.3 percent raises.
The report also found that stock grants have been a key factor in total compensation for general counsel, consistent with other C-suite roles at larger companies. In 2016, the top legal officers at companies reporting over $15 billion in revenue received about 46 percent of their compensation in stock, while general counsel at smaller companies received about one-third of their pay in stock, it said.
The general counsel role has been evolving over the last few years, with in-house attorneys taking on more responsibilities beyond legal and compliance matters.
CEOs now want in-house counsel who can offer both legal and business advice, and can do more than identify potential risks, John Gilmore, managing partner of executive-search firm BarkerGilmore, told Bloomberg BNA.
BarkerGilmore participated in Equilar’s report by offering independent commentary.
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