A recent study conducted by the research firm Equilar found that the pay gap between General Counsels (GCs) and Chief Executive Officers (CEOs) is narrowing. The study revealed that the compensation for GCs is growing at a faster rate than that of CEOs.

The research indicated that in 2022, the median compensation for CEOs was 4.1 times that of general counsel. This is a decrease from 2018, when the ratio was 4.3 times. This trend indicates a shift in the corporate world, where legal chiefs are becoming more versatile and taking on more responsibilities, thus becoming "jacks-of-all-trades."

The role of GCs has evolved over time. Traditionally seen as the top legal officer of a corporation, GCs have taken on greater responsibilities that now entail a mix of strategy and risk management. More than ever, corporate boards and executive management teams rely on GCs for astute leadership on a host of issues, including crisis management, corporate transactions, regulatory compliance and much more.

“While sitting around the table together, other members of the [executive team] may regularly attempt to stretch the limit of regulatory boundaries. General counsel are expected to always be the voice of reason and many times are called upon to act as the parent in the room,” commented John Gilmore, managing partner at BarkerGilmore.

This trend reflects a broader shift in how corporations view their legal departments. Instead of being seen as cost centers, these departments are increasingly being recognized as strategic partners that can contribute to a company’s bottom line.

The Larger Picture

While this trend is noteworthy, it’s important to consider it within the larger context of pay gaps in the corporate world. For instance, the wage gap between CEOs and average workers in the U.S. has been a topic of ongoing concern. In 2022, a study found that the average gap between CEO and median worker pay jumped to 670-to-1. This means that for every $1 the worker received, the average CEO received $670 in compensation.

This wage disparity has been growing over time. From 1978 to 2021, CEO pay based on realized compensation grew by 1,460%, far outstripping S&P stock market growth (1,063%) and top 0.1% earnings growth (which was 385% between 1978 and 2020). In contrast, compensation of the typical worker grew by just 18.1% from 1978 to 2021.

The narrowing pay gap between GCs and CEOs is a positive development for those in legal roles. However, it also highlights the ongoing issue of wage disparity within corporations. As legal chiefs continue to take on more responsibilities and their compensation reflects this change, it’s crucial to continue addressing wage gaps across all levels of an organization.