CEOs recruited from outside the company are much more expensive than those hired from within, indicating the high cost of poor succession planning, according to a study released today by The Corporate Library.
The “average total compensation of outside-appointed CEOs was 2.6 times more than inside-appointed CEOs” in 2005, according to a statement about the analysis. “One of the main causes of the gap is the notoriously excessive 'golden hellos' that companies offer in order to lure outside candidates.”
The Corporate Library’s analysis is based on 52 CEOs of S&P 500 companies — 32 appointed from inside positions and 20 appointed from outside the company.
