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Want to know the secret of becoming a general counsel who’s able to afford the good life? Here’s a hint: Good lawyering is only part of it. A glance at the nation’s 100 top-paid general counsel in 2004, as measured by Corporate Counsel’s annual survey of GC compensation, shows that top legal officers are raking it in. Most surprising, the cash bonus staged a major comeback. The average bonus payout to GCs last year was $784,539 � a 31 percent increase over 2003 levels. The average raise in salary wasn’t too shabby either, climbing 9 percent to $561,738. The conventional wisdom for the raises is that GCs, in the post-Sarbanes-Oxley era, are more valuable than ever to their companies. “The risks of being corporate counsel are going up, and so it seems appropriate that the rewards are going up too,” says Joel Henning, senior vice president and GC of Hildebrandt International Inc., a legal consulting firm in Somerset, New Jersey. But there’s a wrinkle. Those fat bonuses weren’t exclusive to corporate CLOs. Take Alan Braverman, general counsel of The Walt Disney Co., for example. It’s been a rough ride for the Mouse the past year, and the legal department had to help smooth it out. Braverman spent much of last year fending off shareholder rebellions, including one class action lawsuit aimed against the lavish ways in which the company compensated its executives in the past. At the end of the year, Braverman enjoyed a much larger payout for his efforts; his bonus climbed to $1 million, up from $700,000 in 2003. Extra cash for more hours in the office? Not completely. Disney redesigned its management incentive program last fall and linked bonuses to the company’s financial performance. Because profits were up, and Disney’s stock beat the S&P 500 index, Braverman was entitled to a hefty boost in his bonus, along with every other senior executive. Over the past decade, bonuses on average never exceeded salaries by more than 23 percent. This year, they’re a whopping 40 percent more than the average salary, according to Corporate Counsel’s compensation survey. And unlike past years, particularly during the high-tech bubble during which options were king, nearly three-quarters of the top 100 GCs now count their bonus as their top form of cash compensation. The cash bonus’ new luster is, in some ways, part of a bigger shake-up in executive compensation. Three years ago, in the dark days of the recession, shareholders put pressure on companies to adopt incentive programs that encouraged top-notch performance. Stock options, which had served that function in the past, were virtually useless because of the drastic fall in share prices, especially in the once-hot technology sector. And as shareholders and regulators pressured companies to treat options as an expense, options became even less popular. Not everyone thinks it’s terribly fair, meanwhile, to tie bonuses and other aspects of compensation to corporate financial performance. “A few years ago, shareholders were very critical that executives were being rewarded when their companies were struggling,” says Ron Peppe, vice president of law at the Association of Corporate Counsel and a former GC at Canam Steel Corp. “So bonuses were adjusted to match the rise and fall of certain financial performance metrics.” The problem, says Peppe, is that financial metrics like profits, revenue and operating income poorly measure the performance of chief legal officers. “Sometimes,” he says, “you do your best work as a general counsel when the going is toughest.” Eriq Gardner is a reporter at Corporate Counsel magazine, which is affiliated with GC California.

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