Companies Pay a Premium for Outside CEO Talent Finds Equilar(R)

REDWOOD SHORES, Calif.--(Business Wire)--
Equilar, the market leader for executive compensation benchmarking
solutions, today published an analysis comparing the pay of chief
executives promoted from within a company to chief executives hired
from the outside. The study, covering nearly 1,300 Large-, Mid- and
Small Cap companies found that companies paid externally hired CEOs
far more in their first year than tenured chiefs and CEOs promoted
from within.

For example, at Large-Cap companies (S&P 500), externally hired
CEOs received a median total compensation package of approximately
$12.1 million in 2007, or 51.1 percent more than CEOs with at least
two years of tenure, who made approximately $8.0 million.
Internally-promoted CEOs made less than both groups in 2007, pulling
in a median pay package of approximately $6.9 million.

According to Alexander Cwirko-Godycki, Research Manager at
Equilar, "This study highlights the costs of poor succession planning
by Boards and senior executives. When companies don't have a solid
pool of internal candidates, they often pay extra to new executives by
offering signing bonuses, large initial equity grants and make-whole
payments."

Additionally key findings are presented below:

-- Higher Pay for External Hires. In 2007, chief executive
officers hired externally received the highest median total
compensation package in all three segments of the S&P 1500
index. CEOs hired externally at Small Cap companies enjoyed
the largest premium in pay, receiving a median pay package
that was 79.8 percent larger than the median pay package for
tenured CEOs at the same companies. Mid Cap companies paid the
smallest premium for outside talent, paying 10.2 percent more
to externally hired CEOs. Large Cap companies paid a 51.1
percent premium for external hires versus tenured CEOs.

-- Lower Pay for Internally Promoted CEOs. CEOs promoted from
within a company received the lowest median total compensation
in 2007 in all three segments of the S&P 1500 index. However,
the gap in pay between internally promoted CEOs and tenured
CEOs was typically much smaller than the gap in pay between
tenured CEOs and externally hired CEOs. At Large Cap
companies, CEOs promoted from within a company received a
median compensation package that was 14.2 percent smaller than
the median pay package for tenured CEOs. The gap was 22.5
percent at Mid Cap companies and 19.6 percent at Small Cap
companies.

-- Lower-Performing Companies (by TSR) Tend to Hire From Outside.
In each of the three segments of the S&P 1500 index, median
three-year total shareholder return for companies that hired a
CEO from outside was lower than for companies that internally
promoted a CEO. Additionally, companies with tenured CEOs had
the highest median three-year total shareholder return in each
segment of the S&P 1500 index.

-- COO Position Acts as Best Stepping Stone to CEO. In all three
segments of the S&P 1500 index, over 50.0 percent of all
executives promoted to CEO from within a company held the
chief operating officer position in the year before they
became CEO. The next most prevalent stepping stone position
was CFO, in each segment of the S&P 1500 index.

Equilar clients can read the full CEO new hire analysis online. If
you are not an Equilar client, please email info@equilar.com or call
(877) 441-6090 to learn more.

About Equilar, Inc.

Equilar(R) is the leading independent provider of executive and
director compensation data and research. Equilar enables corporations,
consulting firms, law firms, investors, individual executives, and
members of the media to accurately compare and benchmark pay packages
across public companies using SEC data. Equilar's products include an
award-winning suite of online tools for analyzing compensation and
corporate governance trends and custom research services. Equilar's
research is frequently featured in Bloomberg, BusinessWeek, CNBC,
Fortune, The New York Times, Reuters, The Wall Street Journal, and
other leading media publications. Equilar, a NASDAQ strategic alliance
partner, is based in Redwood Shores, Calif.

For Equilar, Inc.
Sean Passanisi, 650-286-4567
press@equilar.com

Copyright Business Wire 2008