Two new reports offer benchmarking data for in-house counsel looking to see how their annual salaries stack up against their peers.
As the role of the top legal officer at public companies continues to evolve, median total direct compensation (TDC) has increased 6.7 percent, according to the “2018 General Counsel Compensation Report” published by Equilar & BarkerGilmore. The report examines the 500 largest (by reported revenue) U.S.-headquartered companies that trade on one of the three major U.S. stock exchanges (Nasdaq, NYSE, or NYSE American).
When analyzed by revenue to identify variances, general counsel (GC) at companies with less than $5 billion in revenue received the largest percentage increase of 21.8 percent from fiscal years 2016 to 2017, or a median $2 million in total compensation. Comparatively, GCs at companies reporting $5 billion to $10 billion in revenue experienced a 3.3 percent decrease in total compensation to $2.0 million.
GCs at companies with revenue between $10 billion and $20 billion showed a 6.6 percent increase in median pay to $2.7 million, while those on the highest end of the revenue spectrum with more than $20 billion saw a pay increase of 0.9 percent, or a median of $4.5 million in 2017.
“As the general counsel role expands beyond the traditional legal, compliance, and governance functions, compensation continues to increase accordingly,” said Robert Barker, managing partner at BarkerGilmore. “Also worth noting is that compensation for GCs who have been in the role for five years or less are often exceeding those with long tenure with one employer. This can be partially attributed to new hires negotiating higher compensation than that of their predecessor and partially to the change in the role meriting higher compensation.”
Other key highlights from the salary benchmark report include:
- The median stock award given to a GC in companies between $5 billion and $10 billion is more than twice as large as that of companies with less revenue.
- In 2017, salary was the largest part of the compensation package for GCs at companies generating less than $10B in revenue.
- The median TDC for GCs at Equilar 500 basic material companies experienced the largest increase of over 27.6 percent, followed by healthcare with an increase of 25.6 percent.
- Conversely, GCs at utility companies experienced the most significant decline of 16.3 percent, and financial services had a decline of 6 percent.
- The median for all Equilar 500 industry sectors changed 6.7 percent from the 2016 median.
John Gilmore, also a managing partner at BarkerGilmore, described what CEOs expect of GCs today: “CEOs expect the general counsel to bring a heightened level of gravitas, persuasive communication, and assertiveness to the table, more so now than in the past,” he said.
“The GC is a spokesperson for the company and those lacking the ability to effectively communicate will not be successful in the recruiting process,” Gilmore added. “Therefore, compensation is being driven up, paying more to those GCs who are performing at this higher level.”
A second salary report, the “2018 Global Compensation Report” published by the Association of Corporate Counsel, offered some further color into GC salaries. Key findings are discussed in more detail below:
Industry-by-industry. According to the ACC’s salary report, GCs in the biotechnology and life-sciences industry, as well as the technical research and development sectors, receive the highest-earning incomes.
In both industries, the top 5 percent are paid at least $3.3 million in annual total compensation. Median compensation for biotechnology GCs is $346,000, while that of GCs in technical research and development (R&D) is $265,000. Other top, high-paying industries for general counsel are accommodation/food services; agriculture/forestry/fishing/hunting; and fast-moving consumer goods/consumer services.
Public companies vs. private companies. Base salaries, performance-based bonuses, and total compensation are all consistently higher in public companies than in private companies, and by a wide margin in some cases. Median base salaries for all in-house legal positions are nearly $25,000 higher in public companies than in private ones, and there is a $48,000 difference when comparing total compensation, according to the ACC report.
At the GC level, median total compensation is significantly higher in public companies ($399,000) than in private companies ($225,000). The gap between public and private is as prominent for non-GC in-house lawyers as well, with those in public companies reporting a median total compensation of $225,000 as opposed to $165,000 in private companies.
Seniority and tenure. By no surprise, seniority in legal position and length of tenure significantly affect compensation levels. Increases in compensation are relatively large when moving from a non-management-level position (legal counsel) to a management-level position (managing counsel/legal director). These large increases begin to diminish, however, at the more senior levels (assistant GC through heads of legal) and show a steadier upward trajectory, the ACC said.
Moreover, the number of years worked at a company, as well as years worked in-house overall, directly impact compensation levels. The median total compensation for all survey respondents with one year or less working in-house is $135,000 and steadily increases over time, with a median of $200,000 over six to 10 years and $300,000 with over 20 years in-house.
A similar trend holds true for years worked (regardless of work experience prior to one’s current job). Total compensation with less than one year of experience at an organization is $170,000. It increases to a median of $229,131 after six to 10 years and reaches $310,000 with a tenure of 20 years or more, the ACC report said.
In-house counsel specializing in capital markets, securities, and finance earn a median total compensation of $280,000—37 percent more than the median of all respondents. The median of lawyers working in mergers and acquisitions and antitrust and trade regulations is $252,000 and $246,000, respectively.
The top five highest-paying practice areas also include environmental regulation and employee benefits/executive compensation, with counsel working in these specialties earning a median total compensation of $240,000.
The top 5 percent of those compensated are in-practice areas that largely align with those that have the highest median salaries, with the sole exception being government relations. Those in this practice area are not in the top five in median salaries but do break the top five when considering the top end of earners. The top 5 percent of earners in each of the top five practice areas make over $1 million in total compensation, with capital markets/securities/finance the highest at $1.2 million.