For chief legal officers at publicly traded companies in New Jersey, the difference between a prosperous 2011 and a mediocre one was largely dictated by the stock market.
Gains from the exercise of stock options among 30 general counsel rose in 2011 by 49 percent, to $492,040, according to Securities and Exchange Commission filings.
Average nonequity incentive compensation, tied to the employer’s stock price, was $450,534, up 6 percent.
In general, compensation for general counsel in New Jersey stabilized in 2011, with salaries rising modestly after a decline in 2010, the Law Journal‘s annual survey finds.
The average salary for the 22 GCs who made the list this year and last was $391,531 in 2011, a 4 percent rise. That is a turnaround from 2010, when average salary fell 4 percent.
The average traditional bonus, however, was down 3 percent, to $34,147. Five of the 22 on the list both years got bonuses in 2011, compared with eight in 2010.
Enjoying the biggest gain in exercised options was Scott Lerner, of B&G Foods in Parsippany, who realized $2.4 million — 347 percent more than the year before. The next highest was Thomas Haughey, of Par Pharmaceutical Cos. Inc. in Woodcliff Lake, with $2.263 million — a 599 percent increase.
For GCs who did not exercise options, income was down.
William Farran of Innophos Holdings in Cranbury, a maker of phosphate products for food and drug production, who reaped $578,357 in options in 2010 but none in 2011, and whose nonequity incentive compensation dropped from $242,666 to $139,030, saw his total compensation drop 27 percent despite a $10,000 salary bump to $281,894.
Johnson & Johnson general counsel Russell Deyo, the state’s highest-earning chief legal officer for the fourth consecutive year, reduced exercised options from $1.5 million in 2010 to $781,722 in 2011, which shaved his total draw from $6.3 million to $5.6 million. This came despite hikes in salary to $895,269 and in incentive bonus to $3,967,694.
Among the 22 general counsel who were on the list for the past two years, 15 drew nonequity incentive compensation, compared with 16 in 2010.
Nonequity incentive compensation went up 181 percent for Timothy Michno of Movado Group Inc. of Paramus, to $105,525; 121 percent for Roy Smith of Cytec Industries Inc. of Woodland Park, to $844,023; and 106 percent for Philip Yachmetz of Savient Pharmaceuticals Inc. of East Brunswick, to $347,100.
James Wilber, a principal at legal consultant Altman Weil in Newtown Square, Pa., says cash compensation raises were modest for general counsel nationwide in 2011, as corporations focused more on raises for others lower on the law department organizational ladder. “Corporations are saying, ‘we had to go down the hierarchy to keep our good people happy,’” says Wilber.
For employers who did give big raises to general counsel, it was far more likely to be in the form of an incentive bonus, rather than a raise, says Wilber. Such cash infusions can be withdrawn in the future without ruffling too many feathers, he adds.
On the National Stage
Total cash compensation of five New Jersey general counsel catapulted them onto a list of the 100 highest-paid legal officers at large companies nationwide, according to Corporate Counsel magazine, a Law Journal affiliate.
They are Deyo at J&J, Bruce Kuhlik at Merck & Co. Inc., Ellen Oran Kaden at Campbell Soup Co., J. Jeffrey Zimmerman at Hertz Global Holdings Inc. and Steven Schwartz at Cognizant Technology Solutions Inc. Kuhlik, Kaden, Zimmerman and Schwartz were Nos. 2, 5, 7 and 8, respectively, on the Law Journal list.
The national and New Jersey lists are based on documents submitted to the SEC, which requires companies whose stock is traded publicly to divulge all compensation to its five highest-paid executives.
Women GCs in New Jersey lag behind their male counterparts in compensation, if the five in the Law Journal survey are any indication. They had an average total compensation of $853,909, compared with $1,313,448 for the men.
That paints a grimmer picture than a recent survey by Equilar Inc., which tracks executive compensation.
Its “In-Depth Top General Counsel Compensation Report” found that women general counsel in the Fortune 500 came out slightly ahead of their male counterparts: men earned a median total compensation of $1,111,578, while women took in $1,285,063.
Overall, Stuart Cohen, a principal of Topaz Legal Search in Livingston, calls 2011 “a stabilizing year” for New Jersey general counsel after several years of layoffs and meager raises.
He says the shift to incentive-based compensation causes fluctuations that are tied in large part to the price of the company’s stock and the perception of the company’s management about whether the legal department is well-run.
Incentive-based compensation is “a good thing if you’re doing a good job and your boss considers you to be performing well. If he’s not excited about your performance, you’re not going to get a great raise,” he says. •