When Internet retailer IAC/InterActiveCorp’s profits soared by a cool 431 percent last year, it rewarded its general counsel accordingly. Much of the company’s growth came from the high-profile acquisition of Ask Jeeves Inc. (renamed Ask.com) and the spin-off of Expedia.com — two deals that IAC’s GC, Gregory Blatt, helped seal.
What was surprising about Blatt’s pay package, however, was that the New York-based company opted to award him nearly $6 million in restricted stock grants (the biggest grant on our 2006 GC Compensation Survey), in addition to his already impressive $442,500 salary and $2 million bonus. For his cash compensation alone, Blatt landed in the ninth spot on our roster and earned the distinction of richest newcomer this year. Blatt, who declined to comment for this story, is not the only GC on our list who received big — if restricted — grants of company shares. But he is leading the charge.
Companies are embracing these stock grants — which come with certain conditions, like vesting only after a number of years — in an effort to compensate and retain top-performing chief legal officers. While we still saw some notable stock option grants — Occidental Petroleum Corp.’s Donald de Brier received nearly $7.2 million in stock options in fiscal year 2005, and MGM Mirage’s Gary Jacobs got a sweet $5.5 million — they continue to fall out of favor overall. Just 73 of the 100 GCs on our survey were awarded options as part of their total compensation package — six fewer than last year.
While that may not sound like much, the decline in options is mirrored by a surge in restricted stock grants. Sixty-one GCs on our list received some amount of restricted stock in 2005, and the average award rose by 35 percent, to nearly $1 million. “It is the echo of a trend that started last year,” says Jannice Koors, managing director of the New York-based compensation consulting firm Pearl Meyers & Partners. Koors and other compensation experts say restricted stock grants have only one trajectory — up.
Every year since 1994 we’ve reported compensation for the chief legal officers of the nation’s Fortune 500 companies. And apart from the thrill of finding out what the nation’s top in-house lawyers earn, the survey has also revealed trends in corporate counsel and executive compensation. We charted the rise of stock options in the mid-1990s as the key to luring top legal talent to hot startups. And we’ve tracked the decline of options in the last few years as Silicon Valley lost its luster. After Sarbanes-Oxley was passed in 2002, cold, hard cash in the form of big-time bonuses made a serious comeback.