General counsel compensation rose in 2021, survey finds

General counsel at large US companies benefited from pay increases in 2021 although the outlook is less clear, according to new research from Equilar.

Compensation for Equilar 500 general counsel increased from $2.9 mn to $3.1 mn between 2020 and 2021, a rise of 8.1 percent, the research finds. In total, median general counsel pay among that population has increased 24.8 percent over the last five years, from $2.5 mn in 2017.

A strong economic recovery coming out of the Covid-19 pandemic aided higher incentive award payouts and growth in overall direct compensation for general counsel in 2021, mirroring a pattern also seen in chief executive pay, the report’s authors note. But they add: ‘Circumstances in 2022 present significant uncertainty for corporate managers.’

The Equilar 500 comprises the 500 largest US-headquartered companies by reported revenue that trade on Nasdaq, the NYSE or NYSE American. The report also includes compensation at smaller companies outside this group.

The increase in total compensation for general counsel in the Equilar 500 seems to be the result of higher values granted in incentive awards or time-based equity awards, according to the study. It finds that stock awards rose from $390,000 in 2020 to $498,800 last year, an increase of 27.9 percent. Median performance award values for the group of general counsel increased from $630,700 to $753,200, a 19.4 percent increase. Salaries and bonuses rose over the period by 2.2 percent and 5.4 percent, respectively.
 

NOT THE SAME FOR EVERYONE
Although the general counsel group as a whole saw higher median total direct compensation, women’s median pay declined slightly in 2021, the second time this has happened in the five years covered by the research.

In 2020, female general counsel in the Equilar 500 earned more than their male counterparts for the first time, with median total compensation of $3 mn and $2.8 mn, respectively. But in 2021 female general counsel received slightly less than $3 mn at the median, compared with $3.1 mn paid to men. In total, however, compensation for female general counsel has increased by 30.2 percent since 2017, while compensation for their male peers has risen by 22.6 percent.

Compensation trends also vary depending on the industry in question, the researchers find. The largest increases in compensation in 2021 were seen in the basic materials, industrials and healthcare industries, which had all seen declines in median general pay between 2019 and 2020. The largest declines in compensation were in the technology and communication services industries, each of which had seen median pay levels jump by more than 40 percent in 2020.


LESS ROSY OUTLOOK
Companies in the US and globally face an array of challenges over the coming month in the face of inflation, rising interest rates, supply chain and energy issues and the war in Ukraine.

In an analysis of the results, Equilar asked contributor John Gilmore, co-founder and managing partner at recruiter BarkerGilmore, about influences that may affect general counsel compensation in the short term. He comments: ‘If inflation persists and a recession materializes, the short-term total compensation for most general counsel will be negatively impacted as annual cash bonuses and long-term incentive awards are typically tied to Ebitda. As general counsel are viewed as critical members of the senior leadership team, the position cannot go vacant [and] the demand for general counsel will persist even in an economic downturn.

‘[But] there would be a reduction in hiring activity for specialized mid-level and senior counsel-level lawyers. As these positions are vacated due to resignation or retirement, and companies are faced with headcount reduction, replacements can be put on hold. Other in-house lawyers will be tasked with completing the work left behind and/or outside counsel will be engaged.’