General Counsel Salaries Continue To Increase While Bonuses Shrink
General counsel at prominent, publicly owned New Jersey companies earned higher salaries in 2012—and got smaller bonuses—for a second straight year.
Average base salary climbed 4.2 percent, to $396,897 from $380,978 in 2011, for 20 lawyers at companies in the Law Journal's annual survey of general counsel compensation, and 17 of those 20 got raises.
Sixteen lawyers included in three consecutive surveys had an average salary of $380,554, up 8.4 percent from $351,222 in 2010. Of those, 13 got raises in 2011 and 2012.
The largest raises were enjoyed by:
• Kenneth Quinn of Middlesex Water Co. of Iselin, 17.8 percent;
• John Kuntz of Provident Financial Services Inc., the holding company of Jersey City-based Provident Bank, 11.9 percent;
• Kurt Rogers of Vonage Holdings Corp. of Holmdel, a voice-over-Internet telephone provider, 11.8 percent; and
• Timothy Simpson of Covanta Holding Corp., parent company of Morristown-based Covanta Energy Corp., 10.7 percent.
The gains among New Jersey's general counsel coincide with a spike in average base salary for the top 100 in-house lawyers nationwide, according to Corporate Counsel, a sibling ALM publication. After a 1.8 percent dip in 2011, average salary was $656,607 in 2012, a 7.4 percent rise.
And consultant Robert Half Legal's annual salary guide, released on Oct. 31, predicts corporate counsel pay will rise next year, at least incrementally, especially among the longest-tenured in-house lawyers.
The upward trends—after general counsel salaries stagnated or even declined due to the 2008 recession—are "explained in part by the improving economy and perhaps a desire to make up for past years where compensation remained flat," says David Garber, president of Princeton Legal Search Group.
The increases are "likely reflective of a desire to retain top GC talent and remain market competitive," he adds.
Companies continue to hire in-house lawyers in an attempt to get outside counsel fees under control, targeting lawyers who can handle multiple functions. The richest corporations might even have some specialists on staff, such as intellectual-property or antitrust practitioners, says Garber.
The news wasn't all good, as average bonuses for the 20 executives in the survey group continued to shrink.
Average bonus payments—whether discretionary or tied to company performance—shrank 9.3 percent in 2012, to $315,419 from $347,657.
For the group of 16 surveyed for three years, the average bonus was down 27.3 percent since 2010, to $289,889 from $369,008.
Smaller bonuses often are coupled with increases in equity compensation. The average equity compensation among the 16 ($519,706) is 15.8 percent higher than in 2011 ($448,800). Still, both averages are lower than in 2010 ($666,241).
The other less-encouraging news is that salary increases for 2012 over 2011 are by no means across the board.
The average 2012 base salary was $374,287 for the 31 lawyers in this year's survey. That's 6.2 percent less than the $399,074 salary average for the 30 counsel on last year's list.
As for bonuses, the dropoff was even more dramatic when looking at the full lists. The $301,114 average for bonus compensation in 2012 (including discretionary and incentive bonuses) was 38.6 percent lower than in 2011 ($490,026).
High-Paid J&J Counsel Out
The loss of Johnson & Johnson general counsel Russell Deyo, who perennially topped the New Jersey rankings, skewed the averages significantly. He retired in March 2012 after 27 years with the New Brunswick company, the last seven of those as general counsel.
Deyo's $895,269 salary, $4 million bonus and $5.6 million in total compensation for 2011 easily would have put him at the top of this year's list in each category. Deyo ranked No. 3 in the nation in last year's Corporate Counsel's top 100, behind only CBS Corp.'s Louis Briskman and Philip Morris International Inc.'s David Bernick.
Deyo was replaced by J&J legal department veteran Michael Ullmann, whose 2012 income wasn't reported to the U.S. Securities and Exchange Commission because he's not in the top five executive earners. Ullmann has been an in-house lawyer for the company since 1989.
Taking Deyo's place in the No. 1 spot is Bruce Kuhlik of Merck & Co. Inc. in Whitehouse Station, with $1.69 million in total cash compensation—$791,664 in salary plus an $898,270 bonus). Kuhlik was No. 2 on last year's list and No. 3 the year before.
Occupying the second spot, with $1.61 million in total cash, is Ellen Oran Kaden of Campbell Soup Co. in Camden, who was No. 5 in each of the past two years.
Rounding out the top five are three more GCs who eclipsed the $1 million mark in total cash: Paul Antinori of The Medicines Co., a pharmaceutical company in Parsippany ($1.11 million); Roy Smith of Cytec Industries Inc. of Woodland Park, a specialty chemicals company ($1.11 million); and David Buchen of Actavis in Parsippany, a pharmaceutical company ($1.10 million).
In the Corporate Counsel survey, Kuhlik, Kaden and Buchen ranked 37th, 56th and 76th, respectively. Antinori and Smith, though they earned more than Buchen, are not included.
Equity Stakes, Higher Takes
Salary and bonuses are one thing, but in 2012—as always—the in-house lawyers who had the biggest paydays are those who held significant equity stakes in their companies and exercised options.
Though their cash totals were in some cases middling, the lawyers who benefitted most from options cash-ins also had the highest total take-home pay (salary plus bonuses plus options exercised).
Those four are: William Farran of Innophos Holdings Inc. of Cranbury, which makes phosphates for use in food and pharmaceutical products ($3.63 million total take-home); Thomas Riordan of Rockwood Holdings in Princeton, a specialty chemical company ($3.59 million); Michael Prevoznik of Madison-based Quest Diagnostics, a clinical laboratory services provider ($3.49 million); and Buchen ($3.09 million).
Equity compensation, which allows general counsel to have those big paydays down the line, varies from year to year.
"In years past, there was a movement away from the equity component," Garber says. "People really wanted more certainty....Lawyers tend to be more conservative by nature."
Though it varies by company, typically only senior in-house lawyers receive any form of equity compensation, he adds.
The top equity earners in 2012 were Kuhlik ($1.24 million in stock, $919,999 in options); Kaden ($2 million in stock); Buchen ($1.69 million in stock); Jeffrey Sherman of Becton Dickinson in Franklin Lakes, a medical device company ($839,910 in stock, $559,430 in options); and Prevoznik ($858,026 in stock, $488,552 in options). •