Research firm Equilar recently released a report that stirred-up the investment community by virtue of its report that CEOs who serve on two outside boards earn median income of $13.6 million while CEOs who serve on one outside board earned 5.6% less, and those who did not serve on an outside board earned 12.9% less. More interesting, and troublesome to shareholders, was the performance of companies where the CEO served on two outside boards. On average those companies saw median one-year total return of 8.2% versus 15% for companies where the CEO was sticking to his knitting and not serving on an outside board.
There are a lot of variables when evaluating CEO performance, but these statistics are of real concern with investors and they are now voting against CEO’s who serve on too many boards. Stay tuned on this issue, as it’s likely to command more attention over the next couple of years.