Pay packages are growing for legal department leaders in the land, including general counsel in the metro Atlanta area and Southeast region, according to the 2017 General Counsel Compensation Survey, conducted by Daily Report affiliate ALM Legal Intelligence. It’s a welcome change from last year’s results, which saw a slight drop in compensation, and fulfillment of executive compensation experts’ predictions that Southern GCs had reason for optimism about their pay in upcoming years.
A quick word on methodology: Public companies in the United States are required to reveal the compensation of their five most highly paid executives. Despite being paid well, some prominent GCs like Atlanta-based Home Depot’s Teresa Wynn Roseborough and Delta Air Lines’ Peter Carter do not appear in the 2017 General Counsel Compensation Survey because they are not among the five most highly paid executives at their companies.
Acknowledging the limits of our quantitative data, the Daily Report discussed big-picture trends with Bob Graff, an Atlanta-based partner and recruiter in the in-house practice group at legal search consultants Major, Lindsey & Africa. The interview has been edited for length and clarity.
The ALM data demonstrate that, nationally, average total cash compensation—which includes salary, bonus and long-term incentive program—for GCs grew 3 percent in 2016. Is that the case in metro Atlanta?
Yes, I think pay packages are continuing to grow. If the economy’s growing, and companies are doing well, then they are going to reward their executives, including the general counsel.
And is that what’s happening now?
I think so. No one is super excited about two-percent-a-year growth, but it’s a lot better than what we saw in ’09, ’10, ’11 or ’08. At least we’re not contracting anymore.
I think the South benefits a little bit just from the Sunbelt migration. In the Rust Belt or the Northeast, a lot of those cities are losing population, and we’re gaining population. We pick up Mercedes[-Benz USA, which announced in January 2015 that it would relocate to Sandy Springs from Montvale, New Jersey], or we pick up new companies fairly regularly, and I think that helps.
One trend we’ve seen over the past few years is GCs’ growth in strategic importance to their companies, often increasingly assuming additional roles such as chief compliance officer, vice president of human resources or corporate secretary. Does this growing importance play a role in increased GC compensation?
That’s more of a case-by-case [scenario]. If GCs are taking on a broader executive role, certainly they are going to have a shot at increasing their pay, but I don’t think it always goes that way. Sometimes it’s just the company saying, “Take this on,” and I think that [increasing compensation accordingly] is not the norm. I think the economy is a more important factor.
And individual company performance. The economy can be doing well, but if your company stubs its toe, you’re not going to get your bonus.
What about industry? Are there some that pay better than others, or not necessarily?
I think with industries, especially for the general counsel, the more highly regulated the industry is, the more apt the GC is to be highly compensated. So if there are a lot of complex legal issues in financial services or health care or energy, those are going to be the industries that tend to pay a little bit more. My personal theory is that highly regulated industries also tend to have higher margins, and that leads to equity increases generally.
And I think the size of the company is still just as important, regardless of industry. Bank of America, Home Depot are a whole lot larger than Graphic Packaging or some good strong companies that are $3, $4, $5 billion but not [double-digit] billions.
In addition to the economy and industry, what are some factors that can affect GC compensation in a given year?
There could be a really good result for the company on a bet-the-company piece of litigation or a big M&A win, [in which case] the board might say, “Here’s an extra hundred grand on your bonus.” Sometimes it’s just individual—if the GC exercised a lot of options or cashed out a lot of restricted stock, for example.
At the other end, if somebody is newly hired into a job, they may have had a big equity package at their old company that their new company had to buy out, and that can create an artificial spike. But a change [in the position] sometimes can cause a compensation to drop depending on who is hired. If somebody who has been with a company a long time, and has gotten raises and higher bonuses every year, leaves and somebody more junior, a deputy for example, is hired, those people often are going to make less initially. If the company promotes from within, the candidate doesn’t have a lot of leverage. He or she has not been a GC before and is likely to say, “Yeah sure, put me in, coach. I don’t care what you pay me.”
What role do bonuses play in GC compensation?
Salaries generally are going to increase pretty slowly and at the cost of living unless, again, there’s some kind of major event. If you merge with your largest competitor and double the size of your company, the compensation committee may be able to justify a higher salary, but I think the big swings are around the bonus and the equity.
Most bonuses are about half individual performance and about half company performance. So the company has to meet its goals, and if the company meets its goals, and you did a good job as Ms. GC or Mr. GC—managing the department or meeting whatever objectives the board or the CEO set out for the general counsel that year—then you’re going to get or sometimes even exceed your target bonus.
Although a female, Denise Keane of tobacco giant Altria Group Inc., topped the list of the 100 highest-paid general counsel nationwide, it isn’t exactly evident from the ALM rankings that this year was a win for women overall. How have females fared in the top legal roles at Atlanta companies in recent years?
There is a lot to talk about here. Juliette Pryor got the top job at Cox [Enterprises last October after seven years as the GC at Chicago-based US Foods], and Lanesha Minnix joined [lumber and building-materials manufacturer] BMC in June. Lauren Tashma went to Graphic Packaging [in early 2014], Sarah Powell to Focus Brands [in January 2015], and Meredith Lackey moved from [GC at] Colonial Pipeline to [GC at] Georgia Power last October.
There’s always room for improvement in this area, but Atlanta is a pretty darn diverse city, and I think we’re making good progress.