US chief executives with no external board directorships earn better returns for their shareholders than those with seats on external boards, according to new research.
Research firm Equilar studied the S&P500 and found that, of the 37 companies where CEOs held outside directorships, the one-year total return on stocks was 8.2%. For CEOs who held a single or no additional board position, that figure was a little more than 15%.
The research also found that CEOs with two or more external directorships made $13.6m from their main employer, while those with a single additional board position, or none at all, took home 5.6% and 12.9% less respectively.
The results were published in The Wall Street Journal.
Zach Oleksiuk, head of BlackRock’s Americas corporate governance and responsible investment team, told the WSJ that the problem was not necessarily performance, “but rather the time that it takes to serve.”
