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How do we determine the 100 best-paid legal officers in corporate America? The Securities and Exchange Commission requires public companies to list their five highest-paid executives in their annual proxy statements. Every year we scour those documents to see which Fortune 500 companies ranked their general counsel among the top five. This year there were 180 Fortune 500 companies whose top legal officers made the cut. We looked at all 180 pay packages and ranked the 100 best-paid GCs by cash compensation — salary plus bonus. If a company’s general counsel wasn’t among that business’s five highest-paid employees, that lawyer doesn’t appear on our compensation survey. As a result, some well-paid GCs, such as Microsoft Corp.’s Bradford Smith, don’t show up on our list. There are a few other reasons why we might have missed a top-compensated chief legal officer. Eight companies didn’t file proxies on time for our report this year. Some filed after our June 1 cutoff date. Others are in bankruptcy or recently emerged, like Kmart Corp., or are restating their earnings, like OM Group Inc. Also, about two dozen Fortune 500 companies don’t file proxy or annual statements. Typically those businesses include mutual insurance companies whose stock is not publicly traded. But we do know what more than a third of the Fortune 500 GCs earn. For the final results, turn to our chart on page 89. In addition to salary and bonus information, we also publish equity data, including value realized on stock cash-outs, option grants, restricted stock grants, and options that are exercisable. And while we see some of the same names year after year (we’ve been conducting this survey for 11 years), there are always a few surprises. Thomas Gottschalk of General Motors Corp. has the distinction of increasing his rank on our 2004 list the most — from 59 last year to six this year — because the automaker decided to reinstate bonuses for its top executives in 2003. Gottschalk got an $850,000 bonus, boosting his total take-home pay to $1.8 million. In 2002 he and four other top executives forfeited bonuses in exchange for restricted stock. Maura Abeln Smith, who left Owens Corning to head International Paper Co.’s legal department, fell the farthest on our roster, dropping from No. 3 last year to 48 this year. This year there are also 40 GCs that weren’t on our chart last year. The highest-ranking member of this club is Richard Baer, EVP and GC of Qwest Communications International Inc. He took over the reins of that legal department in December 2002. He debuts in the No. 10 slot on our survey with $1.7 million in cash compensation last year. If he was on a quest for greater riches, it looks like he found them. Rosemarie Clancy is Corporate Counsel’s research editor.

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