Inter-board pay differentials for directors with multiple appointments

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Authors
Farrell, Kathleen
Hersch, Philip L.
Advisors
Issue Date
2012
Type
Article
Keywords
Board of directors , Director compensation , Connected boards , Overlapping directors
Research Projects
Organizational Units
Journal Issue
Citation
Farrell K., and Hersch P.L. 2012. "Inter-board pay differentials for directors with multiple appointments". Applied Economics Letters. 19 (14): 1401-1404.
Abstract

We analyse uniformity in the market's valuation of director human capital by comparing director compensation across firms with and without director overlaps. We find that although there is less variation in director compensation for connected boards, which share a common director, than for unrelated boards, there remains a high variation in director compensation for directors with multiple directorships. We also find that active Chief Executive Officers (CEOs), on average, command higher total director compensation in subsequent board appointments. This result holds for appointments where the individual already holds two or more directorships and is counter to the prediction of a busy director effect. Overall, our evidence suggests that active CEOs are high-quality directors or have a high disutility of additional board work and are able to command higher compensation when added to subsequent boards.

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Publisher
Taylor & Francis
Journal
Book Title
Series
Applied Economics Letters;2012:, v.19, no.14
PubMed ID
DOI
ISSN
1350-4851
1466-4291
EISSN