Just last week, we discussed how public company board membership comes with increasing personal risk these days, yet executives are still doing their best to secure those coveted positions.
You might be asking, “Why?” Why would a well-paid executive spend extra time “on the clock” for a company other than their own? According to a recent study, there may be a clear answer: board membership helps advance executives’ careers and enhances their earnings.
The study, which was conducted by four academic researchers, utilized a sample set of 2,140 high-level executives at S&P firms from 1996-2012.
The researchers matched the executives who were serving on boards with executives in similar positions at comparable companies who had not served on a board.
The results were definitive. In the researchers own words, “We found that serving on a board increases an executive’s likelihood of being promoted as a first-time CEO to an S&P 1500 firm by 44%–and even if they weren’t promoted, we found that serving boosts an executive’s subsequent annual pay by 13%.”