Dive Brief:
- General counsel pay in 2021 increased 8.1% from the year prior to a median $3.1 million, executive compensation and governance consulting company Equilar says.
- As in past years, most of the pay is in stock awards and bonus incentives. The biggest chunk of pay increase was in stock awards, which rose almost 28%. Salaries grew the least, about 2%.
- Equilar measures pay based on what general counsel are earning in the 500 largest companies listed on the three main public stock indexes in the United States, so the pay trends might bear little resemblance to what’s going on in most companies. What’s more, given the sharp turn in the economy, what happened with pay last year, when the economy was coming out of the doldrums from COVID-19, could be very different from what’s happening this year.
Dive Insight:
Pay increased for general counsel in companies of all sizes among those Equilar tracks, with the exception of the largest companies, defined as those with more than $24 billion in revenue. For GCs in these companies, pay dropped to a median $5.2 million from $5.7 million.
GCs in comparatively smaller companies, those earning $800 million in revenue, saw the biggest pay hike, 35%, to $1.1 million.
Pay is typically allocated among four buckets: salary, cash bonus, stock awards and performance incentives.
Stock awards have tended to be the smallest bucket and that’s still the case, although it saw the biggest percentage gain last year, to a median $499,000, up from $390,000. Performance incentives is the largest bucket, and last year the median was $753,000, up from $631,000.
Salary was a median $592,000, up from $579,000, and cash bonus was $520,000, up from $493,000.
The gender pay gap, which narrowed significantly in 2020, slipped last year. Over the last five years, with the exception of 2020, the gap has been about 6%.
For 2021, women earned a median $2.979 million compared to $3.091 million for men. Women comprised 35.4% of disclosed Equilar 500 GCs last year compared to 23.5% in 2017.
Uncertainty ahead
Although the data doesn’t look at what’s happening this year, inflation and recessionary pressures, among other things, are creating a dynamic that could impact pay trends in the near term.
Since annual cash bonuses and long-term incentive awards are linked to earnings before interest, taxes, depreciation and amortization (EBITDA), compensation could drop this year along with company performance.
“The demand for general counsel will persist even in an economic downturn,” John Gilmore, co-founder and managing partner of BarkerGilmore, an executive search firm for the legal profession, said in a Q&A included in the Equilar report. “However, there would be a reduction in hiring activity for specialized mid-level and senior counsel-level lawyers.”
As these positions below general counsel are vacated, due to resignation or retirement, Gilmore said, their replacements could be deferred if companies are facing a headcount reduction.
“Other in-house lawyers will be tasked to complete the work left behind and/or outside counsel will be engaged,” he said.
