A Peek Inside Sullivan & Cromwell Partner Pay
A financial disclosure form gives us hints about the wealth of S&C partners.
Unlike several of its peer firms, like Cravath and Cleary Gottlieb, Sullivan & Cromwell does not use a lockstep or even quasi-lockstep scheme for compensating its partners. Instead, the firm takes a more individualized approach to partner pay — meaning that there’s greater variability, and less transparency, when it come to how much S&C partners earn.
Every now and then, we get individual data points. For example, back in 2012, we learned that former Sullivan & Cromwell partner John J. O’Brien earned $2.3 million in his last year at the firm. (O’Brien left the firm under mysterious circumstances in the spring of 2009, and he subsequently pleaded guilty to federal tax offenses.)
Today’s peek inside S&C partner pay arises out of much happier circumstances. Veteran dealmaker Jay Clayton has been nominated by President Donald Trump to serve as chair of the Securities and Exchange Commission. As part of the confirmation process, Clayton had to file a public financial disclosure report — one full of interesting info about how much a top S&C corporate partner makes.
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What’s the bottom line? Per Benjamin Bain and Elizabeth Dexheimer of Bloomberg:
President Donald Trump’s pick to lead the Securities and Exchange Commission has earned $7.62 million since 2015 representing some of Wall Street’s biggest firms, including Goldman Sachs Group Inc. and Bill Ackman’s Pershing Square Capital Management, according to a federal disclosure form.
Jay Clayton, the Sullivan & Cromwell partner tapped by Trump, outlined his clients — and his potential conflicts — in a filing to the U.S. Office of Government Ethics that he signed in January. The breadth of Clayton’s legal work is likely to provide fodder for Democratic lawmakers, who have already criticized the SEC chairman nominee over his ties to the financial industry.
Jay Clayton
If confirmed, Clayton will have to recuse himself for a year from matters involving S&C and companies he represented while at the firm — which has led some critics to complain that he’ll basically have to take off for his first year on the job. But in fairness to Clayton, this is not a new issue for incoming SEC chairs. For example, Mary Jo White, President Obama’s pick for SEC chair, faced similar complications and controversies relating to her work defending companies while at Debevoise & Plimpton, plus her husband’s work for corporate America while at Cravath. Conflicts are just the trade-off for picking an SEC chair with deep industry knowledge and experience.
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Now, a caveat about that $7.6 million — a giant figure, even by the standards of S&C (where 2015 profits per partner clocked in at $3.87 million). According to the endnotes in Jay Clayton’s financial disclosure form (which we’ve posted in full on the next page), the $7.6 million reflects his “partnership share for 2016 and 2017 received up to the date of filing.” We were chatting about this with a partner at a rival firm, and as this source pointed out, “The issue is when bonuses are credited as income. The distribution isn’t flat across all 12 months.”
So it’s possible, then, that this $7.6 million could overstate Clayton’s typical annual income. Let’s say Clayton received a bonus for 2015 work at some point in calendar year 2016, and then received a bonus for 2016 work early in calendar year 2017, before he filed his disclosure form (on January 24, 2017). That would generate a figure significantly higher than what Clayton makes in a single year; one of the bonus distributions should be backed out of the total.
But don’t feel too bad for Jay Clayton. The $7.6 million isn’t all his income; the report reveals that he expects an additional $500,000 to $1,000,000 in “estimated undistributed partnership share for 2016 and 2017.” And the $7.6 million doesn’t include income generated by a number of special S&C investment vehicles that, as explained in the endnotes, “are not sponsored by Sullivan & Cromwell LLP but are available to partners of Sullivan & Cromwell LLP and administered by the Firm.” (You can find these funds in the report by looking for the words “125 Broad Street Fund.”)
If — or really when, given the Republican majority in the Senate — Clayton wins confirmation as SEC chair, his annual income will plunge into the low six figures. And his wife, Gretchen Clayton, will leave her employment as a financial advisor at Goldman Sachs, ending that income stream.
But again, there’s no need to shed tears for the Claytons; they have a nice nest egg put away. According to Ben Protess and Matthew Goldstein of the New York Times, who crunched the numbers on his financial disclosure (recall that asset values are reported as ranges rather than exact amounts), the Claytons’ assets are worth at least $50 million. Wow!
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At the time of Mary Jo White’s nomination to lead the SEC, she and her husband John had amassed assets with a potential maximum value of $41 million. But the minimum value of Jay Clayton’s assets, at $50 million, handily beats out Mary Jo and John White — who were longtime partners at Debevoise and Cravath, respectively.
Have we heard of Biglaw partners with bigger net worths? Sure — like the late Joe Flom, who had a fortune estimated in the low nine figures. But Flom was a name partner at Skadden Arps — Skadden, Arps, Slate, Meagher, & Flom — and he passed away at the age of 87, giving him nine decades to amass all that wealth. Jay Clayton, who’s just 50, is a spring chicken by comparison.
Congratulations to Jay Clayton on his distinguished career and robust net worth, good luck to him in the confirmation process, and thanks for his willingness to serve the nation. Leaving S&C for the SEC will involve a financial sacrifice, but one that Clayton is more than able to bear.
(Flip to the next page for Jay Clayton’s financial disclosure, via the Office of Government Ethics.)
Trump SEC Pick Made Millions Representing Banks, Hedge Funds [Bloomberg]
SEC Chairman-Designate Pretty Much Gonna Take His First Year On The Job Off [Dealbreaker]
Trump’s S.E.C. Nominee Disclosure Offers Rare Glimpse of Clients and Conflicts [New York Times]
Earlier: Just How Rich Is Mary Jo White, Debevoise Partner and Likely Future SEC Chair?
More Sullivan & Cromwell Lawyers Joining The Trump Administration
Another Sullivan & Cromwell Partner Has Left the Building
Just How Rich Is Mary Jo White, Debevoise Partner and Likely Future SEC Chair?
How Much Was Joe Flom Worth? Some Clues From His Will
David Lat is the founder and managing editor of Above the Law and the author of Supreme Ambitions: A Novel. He previously worked as a federal prosecutor in Newark, New Jersey; a litigation associate at Wachtell, Lipton, Rosen & Katz; and a law clerk to Judge Diarmuid F. O’Scannlain of the U.S. Court of Appeals for the Ninth Circuit. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook, and you can reach him by email at dlat@abovethelaw.com.
