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The Daily

Study: CEOs Paid More When Company Insiders are on Board

Chris Gaetano
Published Date:
Mar 11, 2016
PayScaleA recent study conducted by consulting firm Institutional Shareholder Services has found that CEO pay balloons if the board chair is someone from inside the company. Analyzing data from S&P 500 companies, the study found that CEO pay was an average of 42 percent higher than if the chair was an independent outsider. If the CEO and board chair were the same person, they paid themselves 29 percent more than if the chair was someone from outside the company. This observation held true regardless of indexed shareholder return performance. 

“While many studies have examined the impact of financial, economic and operational measures on CEO pay, the effect of board leadership structures has to date not been a significant part of the body of analysis,” said Carol Bowie, ISS’ head of Americas research. “These findings suggest that companies with a greater level of independent oversight are able to provide a more effective check on CEO compensation.”