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Compiling the list of the best-paid general counsel is a complicated process involving Securities and Exchange Commission documents, reporting, and number crunching. Here’s a brief look at how we came up with the Corporate Counsel 2001 GC Compensation Survey. First, we scoured the latest proxy statements and annual reports of the Fortune 1,000 companies. We noted which businesses disclosed the compensation packages for their top legal officers. The SEC requires publicly traded U.S. companies to reveal the pay packages of their CEOs as well as the next four most highly compensated strategic policy makers. GCs frequently make the cut: In 2000, 349 GCs at Fortune 1,000 companies were included in this “strategic” group. We studied this universe intently — looking at salary, bonus, stock options granted and stock options exercised, and more. For uniformity and clarity, we ranked the GCs according to just their cash compensation (salary plus bonus) — although we did note the status of their options packages. We have included financial information for the 349 best-paid GCs. WHO’S NOT ON THIS LIST Be warned, our compensation survey does not include every top-paid GC in corporate America. Sometimes a well-paid top attorney is not listed as one of the top five most highly compensated policymakers at his company. That’s what happened to William Barr. As general counsel of GTE Corporation, he appeared on our survey for several years. In June 2000 his company merged with Bell Atlantic Corp. Barr snagged the top legal job — and his compensation increased substantially. But the much larger combined company, Verizon Communications Inc., did not put him in its 2000 proxy statement because Barr was no longer among the top five highest-paid strategic policy makers at the telecommunications giant. On rare occasions a company lists two executive lawyers in its proxy statement, as The Warnaco Group Inc. did in 2000. We included only the highest-ranking legal officer. In Warnaco’s case, that’s GC Stanley Silverstein. He was listed second after CEO Linda Wachner among the top five policy makers at the apparel company. Excluded from our rankings was Warnaco’s Philippe de La Chapelle, who joined the company in 2000 as senior vice president of the legal department and human resources. Silverstein had a salary of $525,016 in 2000; La Chapelle earned $488,800. (None of the top five Warnaco execs were given bonuses.) When foreign owners buy a U.S. company, the business’s GC also falls off our survey list. Dutch publisher VNU N.V. acquired ACNielsen Corporation last year, so we said good-bye to Nielsen GC Earl Doppelt. Top lawyers also escape our radar because they move to the business side. This is the last year we will see Thomas Gallagher of Hilton Hotels Corporation, Jeffrey Kindler of McDonald’s Corporation, James Parker of Southwest Airlines Co., and Jeffrey Smisek of Continental Airlines Inc. Each attorney has moved up the management ranks. DOING THE MATH There’s one other important footnote to our compensation package. In previous years we calculated the value of all stock option grants using the 5 percent stock appreciation model. This is an SEC-approved method that assumes that stock values grow 5 percent annually. But an increasing number of businesses are turning to the Black-Scholes methodology. This formula takes into account stock price volatility as well as other factors, and is generally considered more accurate. So this year we stopped doing the math ourselves and listed the numbers supplied by the companies. As a result, a third of the GCs on our list have their stock options calculated using the Black-Scholes formula. The values of the others’ stock option grants were tallied using the 5 percent method. In the “Value of Options Grants” column on our master chart, figures calculated using the Black-Scholes method are italicized. Depending on which method is used, the value of a GC’s stock options can vary dramatically. UNUMProvident used the Black-Scholes method and stated GC F. Dean Copeland’s stock options as worth $288,000. But if those same options had been calculated using the 5 percent model, that number would have been about $2 million more — a total of $2,234,648, to be exact. What a difference a little arithmetic can make.

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