Pay packages are growing for some of the best compensated legal department leaders in the land, according to Corporate Counsel’s 2017 General Counsel Compensation Survey. It’s a sign that as GCs grow in strategic importance to their companies, remuneration can grow as well. The report also revealed there’s also a new compensation champion in town.
In this year’s report, a female is at the No. 1 spot on the list of the 100 highest-paid general counsel. She topped the list once before, six years ago, and is the only woman to have made it to the top since ALM Legal Intelligence, a Corporate Counsel affiliate, began compiling the report in 1994.
Still, it isn’t exactly evident from the rankings that this year was a win for women overall. Only one other woman appeared in the top 10. Twenty-four percent of the list this year is comprised of women. That’s an increase from 19 percent a year ago, but some industry observers had expected this year’s percentage to be higher.
Tobacco giant Altria Group Inc.’s Denise Keane, who retired from the company June 30, now sits atop our ranking of the highest-paid general counsel. She brought in more than $9 million in total cash, including base salary and bonus, in fiscal year 2016, according to the report.
Our rankings are based only on cash compensation, which includes salary, bonus and nonequity compensation. They do not include options and other equity compensation. ALM Intelligence used publicly available information from 2016 proxy filings to obtain data for the report. (For more details, see “Where We Get Our Numbers,” page 53.)
Lee Udelsman, managing partner of the in-house practice at legal recruiting consultancy Major, Lindsey & Africa, says he was expecting more female representation on the list. “Our clients and companies are using the general counsel role as an opportunity to inject diversity into the C-suite, including gender,” he says. “We know there are many qualified women who are able to serve as general counsel, and so I would have thought there would have been a higher concentration of women in the Top 100.”
Keane worked for Altria for more than 40 years, which legal experts say is likely among the reasons for the combined $9 million she received in 2016, the bulk of which was in the form of bonuses and other nonsalary compensation. In addition, the company’s proxy statement highlighted her key role in resolving important litigation last year. Altria Group is one of the largest companies in the world, No. 169 on the Fortune 500, so it makes sense that the executive team would be well-compensated, the experts noted.
Keane, who has been replaced by deputy general counsel Murray Garnick, did not respond to a request to comment for this report through a representative. But Altria CEO and President Marty Barrington said in a statement issued after Keane’s retirement was announced that she “contributed tremendously to Altria’s success” by leading the company through challenging legal issues and significant litigation and serving as “a role model to our employees and external law firms with diversity and inclusion.”
Right behind Keane in the rankings was Alan Braverman, general counsel of The Walt Disney Co., with total cash compensation for 2016 of just under $7 million. He held the top spot in the rankings for the past two years, before being dethroned by Keane.
Laureen Seeger of American Express Co. is No. 3 overall and the second-highest-paid female on the list, bringing in $6.2 million in total cash compensation last year. Seeger and Keane are outliers in terms of female general counsel pay, though. After Seeger, the next highest-paid woman is Lockheed Martin general counsel Maryanne Lavan, who dropped out of the top 10 to No. 12 this year, and received less than half the cash compensation that Seeger did.
Time Warner Inc.’s Paul Cappuccio was No. 4, taking home slightly more than $6 million in total cash last year. Lawrence Tu of CBS Corp. was the fifth-highest-paid general counsel, making $5 million in total cash.
More Duties, More Money
Measured by most metrics, general counsel in the report overall seem to have done well in 2016. Keane serves as a prime example. When she appeared as the list’s highest-paid GC in 2011, she had received $6.5 million in cash pay. In 2016, she made about $2.5 million more, a significant boost.
This represents a broader trend, says Udelsman. “The GC role is being embraced as part of the leadership team and their sphere of influence has really expanded,” he says. “Compensation reflects that and has continued to rise over the past five, six, seven years.”
Corporate Counsel’s data demonstrates this pattern. Average total cash compensation for GCs grew 3 percent in 2016 to north of $2.1 million, compared with an average of nearly $2.06 million the year prior. Compensation grew 21.9 percent from 2011, when the average total cash payout for lawyers on the list was about $1.74 million.
Median cash compensation for 2016 rose by 4.2 percent over 2015. The 2016 median total cash for GCs was about $1.68 million, an increase from $1.61 million the year prior and $1.32 million in 2011.
Average base pay for GCs sat at around $611,000 five years ago and jumped to roughly $699,500 in 2016, although base salaries were down about 1.1 percent in 2016 year over year.
Bonuses alone were down 13.6 percent from the previous year but bonuses combined with other nonequity compensation made up for the slight dip in salaries, rising 5.2 percent to more than $1.4 million on average, compared with about $1.02 million in 2015.
Generally speaking, the numbers are nothing to scoff at, says Michael Roche-Kelly, director with Special Counsel’s Parker + Lynch. He says he wants to share the report “with a midlevel associate in a law firm who is scared about stepping back in salary to make a move in-house because they think they’re going to get stuck making $150,000 a year for the rest of their lives. … In reality, you can do very, very well making a lot of money in-house.”
Corporate Counsel’s rankings focus on nonequity compensation, but as Roche-Kelly points out, there is a lot of money to be made in equity grants and long-term incentives such as stock options.
There are many factors that play into a GC compensation package, but Roche-Kelly says he often tells would-be in-house counsel: “You live on your base, you bank your bonus and long-term incentives pay for the kids’ college.” Granted, he says, most of the heavy hitters in the Top 100 are a few steps beyond having to worry about paying their bills.
Apple Inc. general counsel Bruce Sewell, for instance, cashed in on $75.7 million last year in stock options alone. Sometimes the only thing to really say about numbers that high is, “That’s crazy,” as Roche-Kelly puts it. Remarkably, he says, GC compensation across the board still has room for growth.
The Highest-Paid Industries
As for the industries that had high-earning performers, GCs in the tobacco industry, besides just Altria’s Keane, made out well for themselves. Marc Firestone of Philip Morris International brought in nearly $2.6 million last year while Martin Holton at Reynolds American took home almost $1.9 million.
Roche-Kelly points out that GCs in the tobacco industry can earn a sizable salary but there is a stigma attached to that field. The industry itself is a controversial one and the skill sets of lawyers there are narrowly focused, he says.
“Once you go over to tobacco, it’s very hard to go back and find jobs in other industries,” he says. “It’s a consumer product industry and there is some movement, but tobacco litigation is quite unique. It’s very product liability-oriented and there aren’t many other industries that have that type of litigation—maybe the asbestos industry—but it’s been difficult for them to move on.”
The entertainment industry cut some pretty hefty checks for its top lawyers last year as well. Four of the top 10 highest-paid GCs were in that sector. In addition to Disney’s Braverman, top lawyers at Time Warner Inc., CBS Corp. and Discovery Communications Inc. each individually earned north of $4 million in total cash.
Then there were some GCs who dropped from last year’s Top 10 list. Twentieth Century Fox’s Gerson Zweifach, the second-highest-paid general counsel for 2015, doesn’t appear on this year’s rankings because he is no longer among the top five paid executive officers at Fox. This means his data is not included in the company’s most recent proxy statement, though there is no indication that his pay has dropped.
Thomas Mason, general counsel at Energy Transfer Equity, who appeared in last year’s rankings as the second-highest-paid general counsel for 2015, dropped to No. 92 this year, as his total cash compensation decreased to less than $1.3 million in 2016 from nearly $6.9 million in 2015. Mason’s bonus and nonequity earnings totaled $6.3 million in 2015, but equaled only about $706,000 this year.
In years to come, the degree that industries increase pay for their top lawyers will likely be determined by the level of regulation directly affecting their businesses, says Todd Sirras, managing director with executive compensation consulting firm Semler Brossy. For instance, Sirras points out that general counsel such as CVS Health Corp.’s Thomas Moriarty, No. 14 on the list, have recently stepped up to make their companies’ concerns known to lawmakers and regulators.
“In the political landscape we have today, there’s more uncertainty and more potential ways that the regulation could go,” Sirras says. He notes that health care lawyers and those within the financial services industry will likely find themselves with added obligations to participate in public policy debates and could therefore receive higher compensation.
If they’re not already, Sirras says, companies, particularly those challenged by the new administration, will be “paying GCs more to retain and motivate them or when those companies go to the outside to hire, they’ll be bringing in the heavy hitters.”