Corporate Counsel Magazine Reports Top GCs Cash in Big on Stock Gains as Salary Increases Moderate.

NEW YORK -- In 2003, the stock market finally moved upward, and top in-house attorneys at the nation's largest corporations moved quickly in response. While combined salaries and bonuses rose 6% for the 100 best-paid general counsel (GC's), Corporate Counsel(R)'s 11th annual compensation survey reports that this group cashed in $95 million worth of stock options last year, double the amount from 2002. For general counsel who cashed out their options in 2003, the average gain was $2.4 million, up almost a million dollars from the year before.

But observers say that the cash-out frenzy might have been a last binge, because shareholders and regulators are looking to spoil the fun. Fortune 500 companies gave their top lawyers 32% less in stock options grants in 2003 and instead, looked to less-appealing restricted stock grants. Just over half of the top 100 highest-paid GCs received restricted stock, compared to less than a third who got them in 2002.

"The big news this year is the changing role of equity compensation. Thanks to impending regulations and shareholder complaints, Fortune 500 companies were much stingier about doling out coveted stock options to their top officers and lawyers," said Robin Sparkman, editor of Corporate Counsel. "But, make no mistake; company lawyers are still being well compensated. The average general counsel on our list earned $1,116,398 in 2003."

The cash-out parade was led by Boston Scientific Corporation GC Paul Sandman, who realized a whopping $19.6 million. Not only was his cash-out the biggest on the survey this year, it was the largest cash-out by a GC on the survey in the last four years--since International Business Machines Corporation's Lawrence Ricciardi cashed out $20.4 million in options in 1999.

Former General Electric Company GC Benjamin Heineman, Jr. occupied the number one spot on the overall compensation list for the third year in a row. In addition to $1,475,000 in salary and $2,890,000 in bonus, he exercised $3,597,750 worth of options last year, his first cash-out of GE stock since 1999. Heineman still sits on $18,402,005 worth of exercisable stock appreciation rights and options. In January Heineman assumed a new position as GE's senior vice president for law and public affairs.

But few lawyers, even other Fortune 100 GCs, make Heineman money. The average lawyer on the list saw his bonus rise only 7 percent last year, to $605,773, a major change from 2002, when bonuses skyrocketed 16 percent.

Complete results of the Corporate Counsel 2004 GC Compensation Survey will be published in the August issue of the magazine, and will also be available online at www.corpcounsel.com. Corporate Counsel is published monthly by American Lawyer Media, Inc. (ALM).

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