BarkerGilmore is pleased to, once again, have partnered with Equilar for publication of the 2021 edition of General Counsel Pay Trends. The purpose of the report is to shed light on trends in General Counsel compensation at the 500 largest U.S. public companies. Several factors influence overall compensation including tenure, scope of leadership responsibilities, complexity of legal and compliance challenges ahead, company performance, the GC’s reporting structure, and benchmarked pay across other company executives. Determining exactly how much a GC should earn simply by considering a peer group is not practical.
As the data reveals, compensation reported for Named Executive Officers (NEOs) is all over the map, ranging from a low of $400K up to an astonishing $25MM. Many experienced inflated overall compensation in 2019 as a result of significant cash performance bonuses or one-time equity awards. Today, General Counsel are carrying greater weight on their shoulders, working endless hours, and managing stress with anticipation that bonuses and equity awards for 2020 will be significantly reduced — or not paid at all. Some of these remarkable leaders may not receive the appreciable performance awards to which they are accustomed, and of which they are deserving, until full economic recovery is achieved, likely several years from now.
The expanded role of the GC has been reported over the past several years.
General Counsel are carrying greater weight on their shoulders, working endless hours, and managing stress with anticipation that bonuses and equity awards for 2020 will be significantly reduced — or not paid at all.
Just when it appeared the GC reached the pinnacle of responsibility, 2020 created new challenges and opportunities to demonstrate value. CEOs and boards have called upon the GC to step up even further in areas of diversity and inclusion, corporate communications, business strategy, finance, crisis management and board interaction. The successful, modern-day GC is equally savvy in legal, compliance, and business matters, while possessing the gravitas, emotional intelligence, and leadership abilities necessary to influence others and create trusted relationships at all levels, both inside and outside of the company.
BarkerGilmore conducted a separate study which shows greater gender equality in the ranks of high-income earners with signs of continued improvement in the next few years. The 2019 Top 20 list of revenue earners included eight women and twelve men. Three of these men retired after the data was disclosed, and two of them have been replaced by externally-recruited women. No women retired since the Top 20 list was produced.
It is predicted that next year’s Top 20 will be equally comprised of men and women. Within the Top 20, female General Counsel ranged from 46 to 60 years of age with a median of 56; male General Counsel ranged from 57 to 71 years of age with a median of 60. It is noteworthy that the 71-year-old GC is not one of the recent retirees. As aforementioned, tenure plays a crucial role in GC compensation. Tenure among the female General Counsel within the Top 20 ranged from two to 13 years with a median of 3.6, while tenure for male General Counsel ranged from three to 22 years with a median of 7.4.
Recruiting activity for GC and succession candidates has not slowed since the onset of the pandemic. Every year, approximately 10% of Fortune 500 Companies appoint a new GC. Today, CEOs and boards insist on a diverse pool of candidates. Ultimately, qualifications, experience, and cultural fit determine the final hire, but with more women and minorities vying for the position, the stage is set for a more even playing field in the years to come. In 2019, 56 lawyers were appointed to the enterprise GC/CLO post; 54% were women and/or minorities. GC succession planning is proving to be successful as 35 of the newly appointed General Counsel (62%) were internally promoted. Of the internal successors, 51% were women and/or minorities. Those who had been externally recruited came from other in-house leadership roles, law firms and government agencies, demonstrating there is no clear-cut path to the coveted position.
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Money is rarely the primary driver among General Counsel.
These natural leaders are attracted to high-quality substantive work, and the opportunity to impact the organization directly and to form meaningful relationships with the business, the executive team and the board.
Companies seek to retain General Counsel who serve as true business partners with cash bonuses and long-term equity awards which vest over time. In reality, money is rarely the primary driver among General Counsel. Rather, these natural leaders are attracted to high-quality substantive work, and the opportunity to impact the organization directly and to form meaningful relationships with the business, the executive team and the board. When the GC is intellectually challenged, well aligned with the business and respected by the leadership team, it is indeed difficult to lure them away.
In a recent report by BarkerGilmore and Chief Executive Group, 70% of CEOs described their ideal GC as one who acts as a strategic business partner and is a valued member of the leadership team. However, while the GC is viewed in most cases as an integral member of the executive leadership team, a majority of CEOs surveyed believe their General Counsel are falling short in terms of contributing meaningfully as strategic business partners. The report’s findings indicate that CEOs want their General Counsel to step up, raise their game and add greater value to the senior management team dynamic.
Board members must rely on, and have an unwavering trust in, the GC as an individual and the GC-CEO partnership. This trust must extend not only to the General Counsel’s character and expertise, but to how they manage processes and relationships within the organization. When board members are confident that the GC is protecting the interests of the organization, their valuable time is freed to concentrate on other matters. Therefore, it is critical that the GC works proactively and continuously to establish and maintain trust with the board.
Optimism, strategic adeptness, and the ability to build relationships founded upon trust are three of the most critical elements to GC success.
Largely considered the moral compass of the C-suite, General Counsel across the country are currently pushing forward with a “we’ll get through this” attitude. History will undoubtedly hold 2020 as the year of an unprecedented health crisis and a long-awaited turning point for social justice. Consequently, the best General Counsel will be remembered for their deft navigation in these two areas. By all accounts, optimism, strategic adeptness and the ability to build relationships founded upon trust are three of the most critical elements to their success.
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