It’s Not Polite to Ask about Money. But It Certainly Is Revealing if You’re Hiring a New GC.
The past decade has seen a subtle shift in the role of the GC—from competent legal adviser to vital member of the executive team. As part of that shift General Counsel duties have expanded into non-traditional areas like government relations, enterprise risk management, and even security and business continuity. And with expanded duties comes a bigger paycheck.
BarkerGilmore collaborated on the report 2015 General Counsel Pay Strategies with Equilar, whose TrueView methodology blends publicly reported proxy data and company-reported compensation information from Equilar’s Top 25 Executive Compensation Survey. The method extends line of sight into executive compensation that may not be disclosed in proxy filings.
The report examines GC compensation, as well as strategies to incent and reward these executives, who are among the top paid leaders at their companies. For the GC recruiting experts at BarkerGilmore, the findings underscore the fact that attracting and retaining effective GCs is more important than ever to business success. This post focuses on findings relative to total direct compensation (TDC). Click here to receive the full report.
Equilar defines TDC as the sum of base salary, annual incentives and long-term incentives at target. Pension, deferred compensation and perquisites are excluded in the calculation. The study found that GC pay strongly correlated with company revenue. Median GC pay at companies with over $15 billion in revenue was 434% higher ($2.4 million during the study period) than median pay at companies with less than $500 million in revenue ($547,250).
The survey also found that compensation levels correlate to tenure. GCs with more than 10 years made 32.1% more than those with three years or less. And GCs with between four and 10 years of tenure received 20% more in median TDC than those with three years or less.
Reporting structure also influenced compensation. Equilar data shows that the median compensation for GCs reporting directly to the CEO was more than 40% higher than median pay for those who did not report to the Chief Executive Officer.
As an executive recruiting firm with our finger on the pulse of compensation trends, we were not surprised to see that GCs are receiving significant raises after just three years with a company. In their search for General Counsel, companies search for lawyers with a strong career runway, and tend to hire at a lower starting compensation than the outgoing GC. This includes both internal promotions to GC as well as eternal hires.
After the three-year period, the new GC will have established sound relationships with the executive team and the board, and their value and impact on the business will already be apparent. The reward for their effort and success comes in the form of pay increases and equity awards.
Click here to receive the full Equilar report featuring BarkerGilmore insight and commentary.