Comment: Re:Why does this happen? (Score 1) 261
I was always under the assumption it was for a few reasons:
- - The former-CEO doesn't share the company's secrets with competitors (not sure if there would be some kind of non-compete clause) or create a competing company.
- - It allows them to try to attract someone else. While you would think it would be a high risk/high reward situation ("save this troubled company, and you will be richly rewarded, if you don't you get nothing"), perhaps they are scared of scaring people off if they have a reputation for not paying out, which kind of makes sense from the perspective of someone who would consider coming in.
- - The people that sit on these boards are all friendly with each other, share similar work/social circles. So, they are just rewarding their circle, and it will eventually come back to them. They're kind of paying it forward with other people's money. I remember reading an article several years ago that discussed diversity on boards. This article claimed that there were instances where an individual might be on multiple boards (not sure if this is possible), but a single woman or African American might be on several boards, and this gives a greater perception of diversity from the outside, but the truth is there are fewer people on these boards and those that are on the boards probably think along similar lines.
Just a few thoughts.