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General counsel at public companies today are betting heavily on the stock market. Although GC salaries and bonuses at major companies continue to rise, equity as a percentage of compensation packages is going up at a much faster rate, according to an annual salary survey published by Corporate Counsel magazine, done in conjunction with Joint Information Inc. And because this trend has been going on for a while now, the players have racked up huge numbers in stock options. Time Warner Inc.’s recently retired Peter Haje has the most chips on the table, with $82.6 million in exercisable options. Behind him are Cendant Corp.’s James Buckman, who has exercisable options valued at $49.4 million. Counting cash compensation alone (salary plus bonus), the highest paid in this survey, based on 1999 figures, was the sole investment banking executive on our list, The Bear Stearns Cos. Inc.’s Mark Lehman, who received a $2.5 million bonus on top of $1.9 million in restricted stock grants and $200,000 in salary. Information for this survey was gleaned from corporate proxy statements which, by law, must disclose the compensation of a corporation’s five highest-paid executives. Pushing for stock options Particularly notable are the large number of GCs getting — and holding on to — stock options, and also the big money these options represent. The push in this direction comes both from the GCs and from the companies, say compensation consultants and legal recruiters. Companies — increasingly treating GCs like other most-valued executives — are tying top legal officers closer to the corporation’s success with short-term incentives such as bonuses and long-term inducements such as stock options. In 1993, 14 of the GCs in the Corporate Counsel survey did not receive a bonus. In 1999, all of the top 100 on the list pocketed a year-end bonus. And while median salary has gone up 92 percent since 1993 (to $437,500 from $228,000), the median bonus has increased by 123 percent (to $412,500 from $185,000). Meanwhile, on the stock-option front: In 1996 the median value of options granted to the 100 highest-paid GCs was $692,592 — more than twice that year’s median salary for the same group ($319,833). On this year’s list, the median salary among the top 100 is $437,500, a respectable increase of 37 percent. But the median value of options jumped higher; up 46 percent, to $1,010,331. The number of GCs getting options has held steady at about 85 of the 100 during this period. Legal recruiters say they have seen stock options rise in importance during the last five to eight years. “There’s no question that these valuable options keep strategic people in their positions,” says Susan Sneider, a consultant with Chicago-based law firm consultancy Hildebrandt International. What’s new, she says, is that general counsel are now viewed as being among the few critical people companies must keep. This is clearly demonstrated by the growing number of chief legal officers who are among the best paid at their companies. In 1995, only 260 of the top 1,000 publicly traded companies counted their GCs among their five most highly compensated employees. This year it’s up to 320. WHAT’S PUBLIC, WHAT’S NOT A few caveats: The list does not include general counsel at privately held companies or general counsel at public companies who are not among the top five paid employees — some of whom, as Bear Stearns’ Lehman pointedly noted, certainly make more than those exposed by the proxy statements from which the data was culled. In addition, even though all those on the list are the chief legal officers of their companies, some also have additional titles and responsibilities, which means that comparisons are not entirely apt. To view the entire salary survey, go to http://www.nlj.com/.

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