ROCHESTER, NY — Compensation for general counsel lawyers increased 6.9 percent this year, topping $1 million, according to the Equilar & BarkerGilmore General Counsel Pay Trends 2016 report, which evaluated more than 1,400 GCs for companies ranging from less than $1 million to nearly $500 billion in annual revenue.
This increase reflects the growing importance of general counsel (GC) within the senior management team, says executive search firm, BarkerGilmore, which provided expert analysis and commentary on the report.
Median compensation for general counsels at companies under $1 billion in revenue was $725,000 in 2015. Pay increased to $1.2 million at companies with $1-$5 billion in revenue, $1.7 million for companies with $5-$15 billion in revenue and $2.5 billion at companies over $15 billion in revenue.
“Over the past 15 years, the number of companies that consider their GC a member of the executive management team has grown from 55 percent to 93 percent today,” says Bob Barker, Managing Partner for BarkerGilmore. “Today’s GC typically serves as primary legal counselor to the CEO and board, while back in the 1990s, outside counsel assumed this critical responsibility. GCs are increasingly considered on par with the CFO, charged with navigating highly complex and evolving laws, regulations and public policies.”
BarkerGilmore is a boutique executive search firm dedicated exclusively to the placement of General Counsel, Chief Compliance Officers and their strategic hires.
GC compensation at S&P 500 companies on the rise
Pay increased 2.4 percent for GCs in the S&P 500 from 2014 to 2015, reaching $2.1 million, according to the report, which examined GC compensation at a total of 269 S&P 500 companies in 2015.
The report showed significant variability across industry sectors, ranging from $1.6 million for utilities to $3.0 million in healthcare. Median total direct compensation (TDC) in healthcare rose 32.4 percent year over year, representing the greatest sector increase, while TDC in technology tumbled from $2.5 million in 2014 to $2.2 million in 2015, representing the largest decline across sectors.
In terms of performance incentives, the financial sector was the most generous, awarding 36.4 percent of total compensation, followed by utility companies at 35.7 percent and technology companies at 35.6 percent.
“GC candidates must possess a clear understanding of how complex regulations impact long-term business strategy and day-to-day operations, especially in highly regulated industries like financial services, insurance and healthcare,” says Barker. “This narrows the field of available candidates, driving up demand and compensation. It’s important to recognize that today’s GC serves as a guardian of the company and its brand reputation, which demands paramount judgment and integrity.”
When it comes to compensation, size matters
Companies that generate higher revenues pay their GC more. In fact, businesses with revenue exceeding $15 billion paid their GCs more than three times as much as those with revenues below $1 billion. In addition:
- GCs at companies with over $15 billion in revenue earned a median $2.5 million in 2015, up from $2.4 million in 2014 — 48.2% higher than those at companies with revenue between $5 billion and $15 billion.
- Companies with revenue over $15 billion offered 628.1% more equity and long-term incentives at the median than companies with revenues below $1 billion.
- Long-term performance incentives accounted for the largest component of pay for GCs at companies with revenues over $15 billion at a median of $682,290.
“In general, the bigger the company, the more complex the issues the GC must tackle – especially in highly regulated industries, like financial services,” says Barker. “Today, the GC’s worth extends far beyond financial metrics to the intellectual contributions they make to the executive team and board. And their growing compensation reflects the heightened value they bring to the business.”