General counsel who are among the highest-paid executives at large Texas companies earned more on average in 2011 than in 2010, according to Texas Lawyer‘s annual Corporate Roster, which reports on GC compensation.

Compensation for chief legal officers at 51 large Texas companies averaged $2,198,109 in 2011, up 11.8 percent compared to an average of $1,966,590 at 48 large Texas companies in 2010.

It’s the second year in a row that average total compensation for the GCs improved on a year-to-year basis, following two years of declines, and the highest average since 2007, when compensation averaged $1,991,410 for 51 general counsel at 51 Texas companies.

GC pay packages continue to exceed the average profits per partner at large Texas firms. In 2011, partners in the 25 highest-grossing firms in Texas made $924,280 on average, which is less than half of the $2,198,109 average compensation for the GCs at large Texas companies in 2011.

Wayne Watts, senior executive vice president and general counsel at AT&T Inc. in Dallas, heads the list of Texas’ highest-paid GCs, with compensation totaling $8,505,373 in 2011, including equity valued at $3,407,689.

In an emailed statement, AT&T writes that it “remains committed to paying for performance, and Mr. Watts’ compensation reflects this: in 2011, more than 85 percent of his target compensation was tied to performance.

“Mr. Watts’ compensation also reflects his responsibilities as general counsel of one of the world’s largest telecom companies and the 12th largest corporation in the United States. During 2011 he effectively guided the company’s regulatory filings and compliance matters in addition to providing support for day-to-day operations and M&A activity — and successfully managed litigation matters, including 158 appeals to various Federal and State Courts of Appeal and 10 to the United States Supreme Court.”

Right behind Watts on the best-paid list are Robert Reeves of Anadarko Petroleum Corp.; Larry Hutchison of Torchmark Corp.; and John Wombwell of Plains Exploration and Production Co.

All but six of the 51 general counsel on the best-paid list racked up at least $1 million in compensation in 2011, including the value of their equity compensation. That’s more than in 2010, when 40 of the 48 general counsel on the best-paid list earned more than $1 million in compensation.

Texas Lawyer has reported on general counsel compensation in the annual Corporate Roster for the past 20 years.

To compile the Corporate Roster, Texas Lawyer examined executive compensation at the 105 Texas companies on the Fortune 1,000 list. Compensation information is included in the financial reports the companies file each year with the U.S. Securities and Exchange Commission.

In those filings, the companies report the total compensation going to their chief executive officer, chief financial officer and the three highest-paid executives other than the CEO and CFO. Their pay includes salary and bonus, and the value of equity compensation that can include time- and performance-based restricted stock awards and stock options.

This year’s Corporate Roster includes three charts: “Texas’ Best-Paid General Counsel” lists the total compensation paid to the 51 general counsel in Texas at companies where the GC is among the five highest-paid executives. “The Second Tier” chart includes an estimate of compensation paid to another 27 general counsel. And “Option Exercises and Stock Vesting” notes the best-paid general counsel who exercised stock or unit options in 2011, or who had restricted stock or units that vested during the year.

Some of the general counsel at the 105 Texas companies don’t appear on the best-paid or second-tier lists. For instance, United States Automobile Association of San Antonio does not file proxy statements. The general counsel of Enbridge Energy Partners Inc. in Houston, David Robottom, is based in Canada. American National Life Insurance Co. of Galveston does not have a general counsel. Greer, Herz & Adams of Galveston does its legal work, and partner Irwin Herz Jr. is an advisory board member. According to American National’s proxy statement, Greer Herz received about $7,376,523 in legal fees and reimbursements for serving as general counsel, along with offices and telephones.

The compensation of GCs at a number of other Texas companies cannot be estimated on “The Second Tier” chart because of disclosure rules. “The Second Tier” chart estimates GC compensation by reporting it as some amount less than the fifth highest-paid executive at a company. However, the rules require companies to report compensation for the CEO and CFO, even if they would not otherwise be among the top five. If either has the lowest compensation on the list of the five highest-paid executives, the GC’s compensation for 2011 could not be estimated.

Companies in that group include Alliance Data Systems Corp., J.C. Penney Co. Inc., Benchmark Electronics Inc., Commercial Metals Co., Southwest Airlines Co., Valhi Inc., ConocoPhillips, El Paso Corp., Halliburton Co., HCC Insurance Holdings Inc., Noble Energy Inc., Plains All American Pipeline, Targa Resources Corp., D.R. Horton Inc., Dell Inc., GameStop Corp., Insperity Inc., Rush Enterprises Inc. and Whole Foods Market Inc.

As he did last year, S. Jack Balagia, vice president and general counsel of Exxon Mobil Corp., heads “The Second Tier” chart, with compensation estimated as less than $10,944,230, including equity with an estimated value of $6,122,655. Following Balagia are Robert Walters, executive vice president and general counsel of Dallas’ Energy Future Holdings, and Joseph Hubach, senior vice president, secretary and general counsel of Texas Instruments Inc. in Fort Worth.

For related charts with financial details on Texas’ best-paid general counsel, see the full report from Texas Lawyer.