Are Minority and Women General Counsel Under-compensated?

While the complexion and gender of America's corporate leadership is changing, their paychecks seem to reflect attitudes that say that one person's contribution is more valuable than another's, even though they do the same job. For example, the total cash compensation of minorities among the most highly paid general counsel is almost $400,000 less than white Caucasian men. Similarly, white Caucasian women lag behind their white Caucasian male colleagues by more than $250,000, and not one minority woman made the list.

The ethnicity and gender of consumers, employers, and employees is changing in almost every industry and at every level. The number of minorities who serve as general counsel of a Fortune 500 company has more than doubled (from 11 in 1999 to 28 in 2005) within the last six years and the number of women has increased by 55 percent (from 44 in 1999 to 76 in 2005). This growth should continue, as there are more women and people of color positioned to assume the lead in corporate law departments. However, are these fortunate individuals being compensated on par with their non-Hispanic white male counterparts? If not, why not? Discrimination? Lack of appreciation? Or something else?

The National Association of Female Executives reported disparities in their 2004 salary survey that women lawyers earn on average $73,476 while men make $84,188.¹ The 2005 U.S. Census Bureau, according to data cited in the San Francisco Gate, found that African American women earn 65 percent and Latina women earn 55 percent of salaries paid to all males in identical jobs as of 2005.²

To determine if there is a difference in the salaries of general counsel, Diversity & the Bar® examined the compensation of the most highly paid general counsel in the Fortune 500 that were reported in a 2005 survey conducted by American Lawyer Media and published in Corporate Counsel entitled "A Very Good Year: The 2005 GC Compensation Survey."³ Six white women and four men of color made the list, including Hispanics (non-white and white). Given this, Diversity & the Bar decided to compare the salary and bonuses of women and minority attorneys to the overall compensation packages of their 90 white male colleagues.⁴ What we found may raise serious questions about the apparent disparities. While the complexion and gender of America's corporate leadership is changing, their paychecks seem to reflect attitudes that say that one person's contribution is more valuable than another's, even though they do the same job.

For example, the total cash compensation of minorities among the most highly paid general counsel is almost $400,000 less than white Caucasian men. Similarly, white Caucasian women lag behind their white Caucasian male colleagues by more than $250,000, and not one minority woman made the list. In salary alone, non-Hispanic whites make more than $70,000 more than minorities and more than $315,000 in average bonus, for a total difference of $385,000 in cash compensation, while white Caucasian women general counsel lag behind white Caucasian men by $72,000 in salary and $170,000 in bonus.

In the 2005 Corporate Counsel survey of the most highly paid general counsel, the average salary and bonus compensation was $1,346,277, with $561,738 in salary and $784,539 as an earned bonus for performance. The average total cash compensation for white Caucasian men was $1,374,832, with $569,238 in salary and $805,594 in a bonus. The average total cash compensation for 2005 was $975,531 for minority men in 2005, including $495,373 in salary and $480,158.75 in bonus. The average total cash compensation for white Caucasian women was $1,117,949, with $496,600 in salary and $621,349 in bonus, while all men earned $564,991 and $793,044 for a total of $1,358,036. The amount of cash compensation all general counsel make is increasing, with white Caucasian men taking home $218,000 more last year than they did the year before, and white Caucasian women increasing their cash compensation by about the same amount ($220,000). However, minorities trail their non-Hispanic white colleagues in overall growth; the average total compensation for minorities increased by only $45,000 from 2003 to 2004, most of which came in the form of larger bonuses. White women, on the other hand, increased their pay by more than $100,000 in salary and almost $120,000 in bonus pay, making white women the biggest income gainers. In fact, even though there were five fewer white women to make the top-paid list this year, they surpassed the list's men of color in 2005 by $40,000, in contrast to the year before, when the men of color made more than the white women.

The average total cash compensation in 2004 was $1,117,949 for white women, with $496,600 in salary and $621,349 as an earned bonus. In 2003, the average total cash compensation for white women was $897,468, with $395,035 in salary and $502,433 as an earned bonus. While the numbers have increased over the last year, the total number of women listed in 2005 decreased by five, an obvious disappointment. However, judged by the size of their compensation alone, this trend for women is in a positive direction and is consistent with the gains made by the entire list, which earned $230,000 more last year than the previous year. However, women (white and non-white) now represent 15 percent of the Fortune 500 general counsel, yet only six percent of the list. Those who are on the list are making, on average, $260,000 less than their white male counterparts, and no woman of color has ever made the list.⁶ Clearly, the disparities raise many questions.

In 2005, the average total cash compensation for white general counsel was $1,361,693, with $565,612 in salary and $796,080 in earned bonus. This amount exceeds the total compensation of minorities by almost $386,000—$70,000 of which was in salary and $316,000 in bonus pay. The disparities between white men and men of color grew to almost $400,000, a substantial margin that is larger than most paychecks earned by general counsel. In fact, white men make more than women, minorities, or the combined average. They also account for 90 percent of the "Top 100 Most Highly Paid General Counsel," but only 80 percent of the number of Fortune 500 senior legal officers.

While ethnic and gender diversity may be increasing in corporate law departments, perhaps the salaries are not keeping up? According to this survey, diverse general counsel trail their white colleagues by substantial margins in earnings, and are not represented among the elite commensurate with their proportion of the Fortune 500 general counsel.

In 2005, there were 28 minorities and 76 women, who together comprise one-fifth, or 20 percent, of the general counsel in the most profitable companies in America. Yet only 10 made the "Top 100 Most Highly Paid General Counsel." This represents a decline from 2004, when there were five minorities and 11 women. In addition, there is not one minority woman on the list, nor has there been in the last two years, even though there are several Fortune 500 companies whose law departments are currently headed by women of color. The lack of representation of women of color and the decreasing presence of minorities stands in sharp contrast to the increase in diversity in Fortune 500 legal departments.

In 2005, there were 28 minorities and 76 women, who together comprise one-fifth, or 20 percent, of the general counsel in the most profitable companies in America. Yet only 10 made the "Top 100 Most Highly Paid General Counsel." This represents a decline from 2004, when there were five minorities and 11 women.

How Do We Explain the Disparities?
How are we to interpret the findings that the minorities listed among the most highly paid general counsel make almost 45 percent less than whites, or that the white women lag behind their white male colleagues by more than $250,000? Attempting to answer these questions means stepping into a proverbial mine field. There is not sufficient information to assume racial or gender discrimination. It is likely that there is not a single explanation for the disparity between people of color and whites or between men and women, but several overlapping factors. Diversity & the Bar interviewed recruitment experts, as well as general counsel, and asked them what they thought of these disparities.

Paul Williams, former general counsel at Cardinal Health and now at Major, Lindsey & Africa, an established legal search firm where he is managing director and director of global diversity search, noted that the average tenure of minority and women general counsel may influence the size of their salary and earned bonus. It is true that in just six years, the number of both women and people of color at the most senior position has increased by 33 percent. The four minorities on the list had an average of 4.2 years of experience in the position, and all but one was appointed to the top after working elsewhere. It may be that diverse general counsel do not have the long tenure at their companies that white men have, or that for the diverse general counsel, their current position is their first as chief legal officer of a Fortune 500 company. But it is doubtful that "time" is an adequate explanation for the almost $400,000 difference between white men and minorities. Unfortunately, the tenure of each general counsel on the list was not available from the survey, so it is not possible to compare with more precise detail.

Martha ("Marty") Fay Africa, managing director and founder of Major, Lindsey & Africa, wondered if minorities and women are not asking for more money as aggressively as white Caucasian men, assuming, "They like me. Of course, they are going to pay me as much as everyone else," or "I got the job so I am not going to complain."

White men, on the other hand, may be doing a better job being very clear and persistent in getting what they want, knowing that there is always more than what is offered or using third-party lawyers to negotiate for them. Africa noted that previous research has shown that women frequently do not ask for the best assignments and are often less aggressive, and, consequently, they receive routine work that does not develop their skills or give them a chance to shine. When these attorneys come to the negotiating table, perhaps they may not be aggressive, preferring to focus on other factors or to keep the conversation as pleasant as possible without conflict.

The failure of women and minorities to aggressively pursue what they are worth can add up over the course of a career. "If women start out being underpaid and not asking for the maximum compensation or pushing for more during salary negotiations, there is a cumulative disadvantage that can amount to almost $750,000 between women and their male coworkers at the same level," Africa adds. She recommends that all women executives read Women Don't Ask, Negotiating and the Gender Divide by Linda Babcock and Sara Laschever, a book that includes several interviews that document how women are not aggressive in looking after their own interests.

On the other hand, factors other than money might be more important to them. Women and minorities often go into negotiations with concerns about the ethnic or racial diversity of the company and nearby residential areas, being recognized based on their work, not being pigeonholed into matters or assignments due to their gender or ethnicity (for example, diversity committee), upward mobility within the company, maintaining a positive self-image in their living communities, and educational opportunities for their children. Consequently, they may not push for the highest compensation possible, placing more priority on the aforementioned factors or assuming that what is offered is the same for all candidates. Africa advises all prospective employees to know their worth and ask for it; do not assume that what is on the table is all that is available, especially when being aggressively recruited.

Michele Coleman Mayes, general counsel and senior vice president at Pitney Bowes Company, says that too many lawyers, both majority and minority, are not as skilled or prepared as they should be when it comes to negotiating their compensation packages. She agrees that there are always more options than what is presented and one has to know what to ask for and how to get it. As a lawyer who once oversaw human resources for the North American division of a Fortune 500 company, she witnessed numerous mistakes and underbidding by candidates who were not familiar with how salaries and bonuses are determined. However, she went into her negotiations armed with the facts and her experience to maximize her opportunities for getting the most rewarding package.

Whether there is an attitude of "I am happy that I got the job. I am not going to ask for more than what they offer" is an open question, Mayes remarks. "Hopefully, by the time you have arrived at the GC level, you should not be as reticent or hesitant to ask for what you want. You will need to know how to negotiate." However, she knows many successful in-house counsel of color, some of whom are poised to ascend to the highest level, who have never mentioned compensation during any hiring meetings or when accepting a promotion. Mayes urges people to find out what their peers within the company are making and to do their own research to establish what benchmarks exist in order to evaluate the offer they receive. Do not assume that the company is offering what the position is worth or that other options are not available.

"Too many people are asking, 'What am I making? And how does what is offered compare to what I was making before?'" Mayes observes. "Those are the wrong questions or at least not the only questions that need to be on the table. They should be asking 'What should I make?' or 'What are others who are similarly situated in the position earning?'"

At least we have established a preliminary reason for additional research into why white Caucasian men seem to be making almost $400,000 more than minority men and more than $250,000 more than white women in the exact same position. The focus on greater numbers of people of color and women in corporate law departments has to include making sure that they are fairly compensated on par with their white male peers.

"Some people even believe that bringing up how much they make is uncomfortable, especially for those who are promoted from within and may know the individuals involved in hiring decisions," Mayes continues. "It is more difficult and can appear almost unseemly in what is otherwise a straightforward conversation about job responsibilities and expectations."

According to Mayes, by comparing the offer they received from their prospective employer with their current or former salary, they set themselves up for a cumulative disadvantage in comparison to their colleagues that could last throughout their career.

The verdict is still out if the differences found in this article represent a disparity that pervades the entire in-house community. At least we have established a preliminary reason for additional research into why white Caucasian men seem to be making almost $400,000 more than minority men and more than $250,000 more than white women in the exact same position. The focus on greater numbers of people of color and women in corporate law departments has to include making sure that they are fairly compensated on par with their white male peers.

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Scott Mitchell is a freelance writer based in Washington, DC.

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NOTES

1. See "2004 Salary Survey" NAFE Magazine, XXVII, Number 4, pp. 20-21. (NAFE Magazine and the National Association for Female Executives.)
2. Patti Chang, "An Agenda for Women, Girls and Families," at www.SFGATE.com. These numbers were determined by the San Francisco Gate based on the U.S. Census Bureaus' data.
3. Eriq Gardner, "A Very Good Year: The 2005 GC Compensation Survey," Corporate Counsel, Aug. 2005, pp. 71-89.
4. Survey results should note the fact that there may in fact be other members of color and women who are highly paid and belong on that list but whose companies do not list them as one of the top five most highly paid officers in their annual proxy statements to the Securities and Exchange Commission. In fact, the list itself may not be accurate since they are only listed in the company's annual proxy statement—the source of the data for this report—if they are among the five most highly paid executives in the company.
5. Ibid.
6. In 2005, there were five women of color among the Fortune 500 general counsel, or about one percent, so this would suggest that at least one woman of color should make the list of top 100 paid general counsel.

 

Chart 1: Average Cash Compensation in 2005 of the Top 100 Most Highly Paid General Counsels
Category	Average Salary (2004 List)	Average Bonus (2004 List)	Total Cash Compensation (2004 List)
All General Counsel	$561,738.00 ($516,682.09)	$784,539.00 ($599,715.50)	$1,346,277.00 ($1,116,397.59)
White General Counsel	$565,612.89 ($518,378.55)	$796,080.46 ($607,710.21)	$1,361,693.35 ($1,126,088.76)
Minority Men General Counsel	$495,373.00 ($484,449.40)	$480,158.75 ($447,816.00)	$975,531.75 ($932,265.40)
White Female General Counsel	$496,600.00 ($395,035.00)	$621,349.00 ($502,433.09)	$1,117,949.00 ($897,468.09)
All Male General Counsel	$564,991.29 ($531,717.10)	$793,044.82 ($611,739.17)	$1,358,036.11 ($1,143,456.27)
All White Male General Counsel	$569,238.22 ($534,530.65)	$805,594.33 ($621,495.60)	$1,374,832.55 ($1,156,026.25)
*Averages are based on figures appearing in the article titled, "A Very Good Year: The 2005 GC Compensation Survey" by Corporate Counsel in the Aug. 2005 issue.

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From the March/April 2006 issue of Diversity & The Bar^®