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The Price of a CEO's Rolodex

Joseph Engelberg, Pengjie Gao, Christopher A. Parsons

The Review of Financial Studies · 2013 · Volume 26 · Issue 1

DOI: 10.1093/rfs/hhs114

Abstract

CEOs with large networks earn more than those with small networks. An additional connection to an executive or director outside the firm increases compensation by about $17,000 on average, more so for “important” members, such as CEOs of big firms. Pay-for-connectivity is unrelated to several measures of corporate governance, evidence in favor of an efficient contracting explanation for CEO pay.

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