Presidential-elect Barack Obama's nominee for attorney general will be taking a salary hit when he moves from his white-shoe law firm to become the highest law enforcement official in the land. But Eric Holder will be entering the $186,000 a year job with a multi-million cushion from his law firm.
According to documents disclosed Tuesday to Congress as part of his nomination, Holder will receive a $2.5 million payment in 2009 from his law firm, Covington & Burling. This figure comes on top of the $2.1 million he earned from the firm in 2008.
That sum alone makes Holder one of the highest paid members of the law firm, where partners' average profits were $1.17 million in 2008, according to a survey by Legal Times.
Much of the $2.5 million payment comes from standard compensation: $632,767 in capital payments he invested in the firm when he joined in 2001; $680,820 in deferred compensation from the previous fiscal year; and $484,073 in partner compensation work and pension contributions for the current fiscal year, according to the disclosure record.
But Holder will also receive $1.3 million as a "separation payment" which will be paid "prior to or immediately following" his separation.
The firm said in a statement that such payments are routine for partners leaving to go anywhere but another law firm and are calculated "based on a standard methodology that would be applied to any similarly situated partner." It continued, "the methodology has been established and applied by our firm for many years and was in place well before the parties knew that Mr. Holder was being considered for a Federal appointment."
But law firm management experts said that separation payments are not standard operating procedures when partners leave law firms, although they said such an arrangement wasn't unheard of. "It's not common to get something on top of all that," said Peter Zeughauser, a law firm management consultant.
A spokesperson for the Obama transition team did not respond to comment.
Holder, who served as deputy attorney general in the Clinton administration, first joined Covington in 2001 and has worked there continuously since. In that time he had handled a variety of cases, including representing companies such as UBS Financial Services, Chiquita Banana and Global Crossings.
Holder also states that he has consulted the Office of Government Ethics and the Justice Department ethics officials to identify potential conflicts with his work at the firm and noted that should other conflicts arise he will consult the department's ethics officials.
According to the disclosure records, Holder will remain vested in the firm's benefits and retirement plans, but will no longer contribute any money.
In addition to interest on his retirement and other accounts, Holder disclosed that he earned $5,534 in dividends from Verizon stock in 2008. In total, according to disclosures, Holder's net worth is $5.7 million.
Holder was an early supporter of Obama and one of his top advisors on the campaign trail, where he coordinated the vetting of the vice presidential pick.