Network connections, CEO compensation and involuntary turnover: The impact of a friend of a friend

We show that hard to observe, indirect connections between a CEO and independent board members are associated with higher CEO compensation. While we find this result for the friend of a friend connection, we do not find it for direct connections, i.e. friends sitting on the board. We postulate that this differential result is caused by directors with readily observable connections to the CEO being wary of provoking outrage. In contrast we find both types of connections associated with reduced involuntary CEO turnover, suggesting that outrage is not as big a concern, e.g., compensation is the foci of stakeholders. (C) 2017 Elsevier B.V. All rights reserved.