Most sitting CEOs and other C-suite executives who serve on an outside board will tell you that they find great value in their experience. At their board companies, sitting executives face new challenges and develop solutions that they can bring back to their primary company. Yet, a recent Equilar study raises the question: Is this board experience at the expense of primary company performance?
In the August 2017 report titled, CFOs on Boards: Higher Pay, Lower Performance, Equilar examined CFO pay and company performance at nearly 300 large-cap organizations. The data revealed two key findings:
- CFOs serving on at least one outside board were awarded higher pay, and
- Companies with CFOs serving on outside boards saw lower performance when it came to total shareholder return (TSR), revenue and net income, which was amplified for companies where CFOs served on two or more outside boards.
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