Chief executives hired externally made far more than their counterparts with
at least two years’ tenure as CEO, according to an analysis conducted by
executive compensation research firm Equilar. At small-cap firms, externally
hired CEOs received a median pay package that was 79.8 percent higher than that
of tenured CEOs. Large-cap companies paid external hires 51.1 percent more and
midcap companies paid 10.2 percent more.
By contrast, CEOs who were promoted from within at mid-cap companies received
median pay packages worth 22.5 percent less than chief executives with at least
two years’ tenure. Internally hired CEOs were paid 19.6 percent less at
small-cap companies and 14.2 percent less at large-cap companies, the
researchers said.
The difference in compensation reflects the premium that companies must pay
when they don’t have a solid pool of internal candidates ready to step in and
run the company, said Equilar research manager Alexander Cwirko-Godycki.
clipped from workforce.com
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