A new study by the University of Texas has found that CEO’s at companies whose directors sat on numerous other boards were paid 13% more than CEO’s whose directors did not sit on other boards.  The study is a reflection of sorts of outside directors, most of whom often sit on several boards.

There are several possible explanations.  Some argue this is evidence of the power of "friend of friend" networks that facilitate mutual back-scratching.  Others argue that it is evidence of a viral spread of self-serving practices.  Simply put, it allows a board member, with a reputation for supporting CEO’s, to get other jobs.  An outside director that is friendly to CEO’s on one board gets selected by other CEO’s for other board positions. 

This study, involving 3,000 companies, shows that companies lavishly pay CEO’s even while performing below expectations for such high pay.  This has also been noticed by more than 80% of Americans (evenly divided between the well-off and those making under $100,000-a-year) who agree that CEO’s are paid too much.  The greater the bond between CEO’s and board members creates greater compensation packages, plain and simple.