The compensation king is back. For the second year in a row, Morgan Stanley chief legal officer Eric Grossman is America’s top paid legal executive. According to our 2019 General Counsel Compensation Survey, Grossman cashed in on $8,057,786 last year. That’s up from his chart-topping $6,948,750 cash comp in 2017.
Before we break that pay down, here’s the rundown on our survey. Corporate Counsel affiliate ALM Intelligence combed through Fortune 1000 companies’ 2018 SEC filings, compiling their legal execs’ compensation stats. Because not every general counsel is named on their company’s proxy filing, not every lawyer in the Fortune 1000 is included on our list. Our ranking is based on cash compensation, which includes salary, bonus and nonequity incentives, a post-Dodd-Frank Act form of performance-based pay.
FINANCE TAKES THE TOP SPOT
Now, back to the Benjamins. Grossman’s multimillion-dollar comp splits into a $1 million salary, a $7,045,000 bonus and $12,786 in nonequity compensation. He also received $4,604,015 in stock awards for a total compensation of $12,709,217—not bad for a year’s worth of work. Morgan Stanley didn’t respond to a request for comment on why their legal chief earns what he does.
It could help that he’s in the top-earning industry for legal execs. Finance GCs were 2018’s highest paid. They brought home a total of more than $63 million in cash compensation last year.
“Regulators are very, very involved in [banks’] day-to-day business. Navigating that is a skill that makes the general counsel role very valuable to them,” says Todd Sirras, a managing director at Semler Brossy.
One other finance industry general counsel slid into this year’s top 10, Jefferies Financial Group GC Michael Sharp. He’s been with the investment banking firm since 2010 but didn’t make the named executive cut last year. His company did not respond to request for comment.
GCs from The Travelers Companies Inc., KKR & Co. L.P. and ProLogis were last year’s other top-earning finance industry legal execs. Each brought home more than $2 million.
Our usual comp list top fiver and last year’s No. 2, American Express Co. GC Laureen Seeger, fell off the list this year because she wasn’t named in her company’s proxy.
TECH’S TOP FOR TOTAL PAY
Again, our list is based on cash comp alone. But tech general counsel, who work in the second-highest cash paid industry for legal execs overall, tend to get a large chunk of their total pay in equity.
Looking at our cash comp list, only one tech GC broke our top 10, Apple Inc.’s Katherine Adams. If equity is included, that list changes dramatically. Google parent company Alphabet Inc.’s CLO David Drummond shoots to the top, with a total compensation of $47,282,232 in 2018. Comparatively, his total cash comp is just $650,000; in 2018 he received no bonus or nonequity incentives, according to SEC filings.
When equity is factored in, the top five highest-compensated general counsel are almost all in tech: Apple, Intel Corp. and Microsoft Corp. fall beneath Alphabet, with only one finance company, OneMain Holdings Inc., in the mix. Each general counsel earned more than $10 million in total compensation last year.
“Cash comp is king [in finance] and in the tech sector equity is king. … It’s just a tradition in each industry sector,” says John Gilmore, co-founder and managing partner at legal recruiting firm BarkerGilmore.
Equity is also a way to make talented legal execs “more incentivized to stay with the organization,” notes Josephine Gartrell, director of Willis Towers Watson’s talent and rewards practice. Sirras says that, as “pay packages get larger, they tend to be more heavily equity dominant.”
MONEY’S GREEN ELSEWHERE, TOO
Fortunately for nonfinance or tech-oriented lawyers, there are other industries paying GCs enough to purchase a decent-sized private island.
Seeger’s 2018 second place spot was swiped by telecommunications company AT&T Inc.’s general counsel David McAtee. His $7,752,333 cash comp—$1,058,333 salary, $5 million bonus and $1,694,000 in nonequity incentives—bumped him up from 23rd-highest paid on our previous list. He also received more than $4.7 million in stock awards.
An AT&T representative said McAtee’s pay “reflects not only his responsibilities as an executive officer of a Fortune 10 company, but also his critical contributions toward completing the Time Warner merger.”
Media GCs also made it big in 2018, filling two of our top five cash compensation spots. Sirras said that’s in part because there are “so many complicated IP topics that are involved in what [media companies] do.”
Entertainment companies also “need a general counsel who is well versed in M&A,” Gartrell says, on top of the other legal responsibilities.
Alan Braverman, The Walt Disney Co. general counsel who has consistently hovered in our top five for years, came in third for 2018. His $6,350,213 cash comp, up from $5,165,000 last year, wasn’t enough to seat him in the top spot, which he held from 2015 to 2016. Disney did not respond to request for comment.
Fourth place went to Discovery Communications Inc.’s chief development, distribution and legal officer Bruce Campbell, who earned a cash comp of $5,580,850 in 2018. A company rep said Campbell’s earnings “recognizes the number of roles in which he serves.”
Ehsan Zargar, the general counsel of Spectrum Brands Holdings, came in fifth—but a company representative said that’s due to a “once in a lifetime situation.” His $5,315,384 cash comp was partially a severance package from his previous role at HRG Group Inc., which merged with Spectrum last year. He joined Spectrum as its general counsel months after the merger, the representative said.
Excluding Zargar’s unusual annual comp, Boeing general counsel Michael Luttig would fall into fifth, earning $5,285,081 in total comp last year.
A RISING WORKLOAD LIFTS CASH COMP
Discovery’s Campbell is far from the only general counsel getting more pay for more responsibilities.
“General counsel pay in general has gone up over the last several years. And it’s gone up really at one of the highest rates among the C-suite,” Gartrell says. That’s because GCs are “newer to the C-suite” and their “roles and responsibilities within the C-suite have changed significantly,” she added.
It’s a trend Gilmore has also noticed. He says companies want a “business-minded strategic adviser” when hiring for general counsel nowadays, not just someone well-versed in law—though that is important, too.
That is their explanation for the past year’s rise in GC cash compensation. Average total cash comp for 2018’s top 100 paid GCs rose by 17.9% since 2017, up to $2,390,754 from $2,028,221. Median general counsel pay also rose for the top 100, to $1,915,452 from $1,660,405. Gilmore noted the rise in pay is part of a multiyear trend. In 2011, the average top-paid GC made $1,736,869 in cash comp.
“If things stay on track, I would not be surprised to see 2019 to exceed 2018,” Gilmore says. Average salaries were up by 0.5% for the top 100, a budge Jamy Sullivan, the executive director of staffing firm Robert Half Legal, credits to increased “cost of living” and an attempt to attract top talent with guaranteed pay in a “candidate-driven market.”
Average bonus and nonequity incentive packages for this group saw bigger jumps, up 5.9% and 20.9%, respectively.
Those numbers aren’t as large when expanded outside of the 100 top-paid general counsel to include all 438 legal execs included in this year’s survey. On average, GCs on the full list earned $1,228,526 in total cash comp last year, up from $1,190,837 in 2017. The median general counsel cash comp for the entire surveyed group was $988,237, down 0.6%.
Average salaries went down by 2.4% for the total GC group to $525,024 from $538,174 in 2017. But bonuses and nonequity incentives are up, rising by 2.6% and 8.5% respectively.
GENDER GAP’S STILL OPEN
We saved the bad news for last. While average general counsel cash comp is on the rise as a whole, most women aren’t seeing those pay gains. Average cash comp for women actually dropped last year, falling to $1,088,788 from $1,147,793 in 2017. The average male GC earned $1,277,971 last year.
There was a nearly $600,000 gap in average bonus amount for women and men. Women GCs earned an average bonus of $285,754, while men brought home an average bonus of $826,131. Average compensation in nonequity had a smaller but present gap, women earning $598,896 and men $669,631. Women’s average salary clocked in at $497,958 versus $534,601 for men. There are some glimmers of hope for women’s pay in this year’s data. Slightly more women made the top-paid cut this year, accounting for 26% of all listed GCs compared to 25% last year. And two women broke into the top 10 for cash comp, up from one last year: Apple’s Adams and PolyOne Corp.’s Lisa Kunkle, who respectively earned $4,884,615 and $4,735,307 in 2018. Neither of their companies provided comment on their compensation.
Gilmore and Gartrell said they’re seeing companies become increasingly interested in hiring and retaining diverse legal talent, including women. Both predict gender pay equity and representation will come—it’s just not clear how quickly.
“Those numbers don’t surprise me now, but I would expect that they will go up,” Gartrell says.