January 29, 2013
In this ever-changing economic and regulatory climate companies face a growing number of legal challenges, increasing the profiles and demands placed on General Counsels. The General Counsel’s role has grown in dimension as companies have an increasing need to manage the mounting legal and regulatory risk present in today’s environment. A top legal officer can be responsible for anything from setting patent strategy, to protecting the company from harmful litigation, or even overseeing aspects of increasingly complex M&A transactions. In November, Equilar released the 2012 In-Depth Top General Counsel Compensation Report, a comprehensive analysis that covered a wide range of data concerning General Counsels. While the 2012 Report’s data on General Counsels was derived from Equilar’s Top 25 Survey, this article differs by using General Counsel data from public filings of S&P 1500 companies. The purpose of this article is to highlight unique demographic and compensation data for General Counsels from an industry standpoint.
Harvard and Northwestern were the only schools represented in the top eight most represented law schools attended by General Counsels for both the highest paid industry, Business Services, and the lowest paid sector, Tech, Media & Telecom.
Business Services General Counsels had the lowest median age at 44, while General Counsels in the Energy, Utilities & Materials sector had the highest median age at 47.
Food & Beverages had the highest prevalence of female General Counsels at 22 percent, while Finance & Insurance had the lowest prevalence at 12 percent.
General Counsels in Food & Beverages received the largest cash slice at 14 percent while their counterparts in Tech, Media, & Telecom only received a cash slice of 6 percent.
Education has long been considered a critical success factor in the professional accomplishments of an individual. As part of the 2012 Report released in November, Equilar compiled the educational backgrounds of General Counsels within the Fortune 500 and determined the ten most highly attended law schools. The law schools attended by the greatest number of General Counsels within the S&P 1500, a broader index, included Harvard University, Georgetown University, and University of Virginia.
The tables below show the most highly attended law schools among S&P 1500 General Counsels for both the lowest and highest paying industry sectors by median total compensation, which were Tech, Media & Telecom, and Business Services, respectively. Within the Tech, Media & Telecom industry 29 percent of General Counsels graduated from a top 10 law school (according to US News & World Report). Similarly, in the Business Services sector, where median total compensation was lowest, 28 percent of General Counsels attended a top 10 law school.
Age can often correlate to how much a General Counsel is compensated. Older General Counsels tend to be longer-tenured while also offering more experience, and as a result can earn higher pay. Comparing median ages between all industry sectors, General Counsels within the Business Services sector proved to have the lowest median age, 44, and General Counsels within the Energy, Utilities & Materials sector had the highest median age, 47. Comparing age to sector, the age of the General Counsels in the Business Services sector reflects a distribution skewed younger, compared to the ages of General Counsels within the Energy, Utilities & Materials.
It can be argued that gender is one of the more controversial aspects of executive pay. Employing this logic, gender may in turn impact an individual’s position within a company. In the 2012 Report Equilar presented gender information for the 175 Fortune 500 companies that reported information about General Counsels. This section looks more closely at gender statistics for the S&P 1500 sector with the highest prevalence of male General Counsels, Finance & Insurance, and the S&P 1500 sector with the lowest prevalence of male general counsels, Food & Beverages.
While the gender breakdowns are very similar, the Finance & Insurance sector does employ the highest percentage of males versus females throughout all sectors examined. Across all sectors of the S&P 1500 16 percent report having females as General Counsels. The Food & Beverages sector is composed of 22 percent female General Counsels while the Finance & Insurance sector employs 12 percent females. This translates into a roughly 7:1 ratio of male to female General Counsels in the Finance & Insurance sector and a 4:1 ratio of male to female General Counsels in the Food & Beverages sector.
The pay given to the chief executives has historically set the pace for other executives at his or her firm, but many companies are increasingly concerned about relative levels of pay within the C-Suite. While the SEC has yet to issue a rule relating to internal pay equity, debate surrounding the issue has heated up in recent years as a result of its inclusion in the Dodd-Frank Act. While most of the discussions on internal pay equity have concerned the compensation of the CEO, examining relative levels of pay for Named Executive Officers (NEOs) can offer comparative information.
While many companies are moving to pay-for-performance compensation models for executives that include equity awards based on various performance metrics, many General Counsels continue to receive a large portion of their compensation in the form of cash awards. In the chart below Equilar calculates a General Counsel cash slice, defined as the cash compensation of the General Counsel as a percentage of the total cash compensation paid to all Named Executive Officers. The cash compensation includes salary, bonus, and non-equity incentive awards.
The General Counsel’s cash slice may be more or less depending on the industry in which they work. The industry with the largest cash slice was the Food & Beverage industry where General Counsels were paid 14 percent of the total NEO cash compensation. The industry with the smallest cash slice was Tech, Media & Telecom where General Counsels were paid 6 percent of the total NEO cash compensation.
Please contact Dan Marcec at email@example.com for more information. Dan Marcec is the Director of Content & Marketing Communications at Equilar. The contributing authors of this paper are Chris McGoldrick, Senior Research Analyst, Jennifer Estomba and Leslie Lau, Research Analysts.