The strategic value of CEO external directorate networks: Implications forCEO compensation

This study examines the relationship between CEO external directorate netwo rks and CEO compensation. Drawing on previous research showing a link betwe en executives' external networks, firm strategy, and performance, the study argues that executive external networks are strategically valuable to firm s; thus, they should be reflected in executive compensation. The study furt her examines whether firm diversification, with its elevated demand for str ategic resources, moderates the relationship between CEO external directora te networks and pay. Hypotheses are tested using a sample of 460 Fortune 10 00 firms. Analyses reveal that the rewards to CEO external directorate netw orks are contingent upon the firm's level of diversification. Implications for future research and practice are discussed. Copyright (C) 2001 John Wil ey & Sons, Ltd.