How much does the CEO matter? The role of managerial discretion in the setting of CEO compensation
Article Abstract:
The idea that managerial discretion - defined as latitude of action - may be an important determinant of CEO compensation has been recognized for some time. However, in spite of considerable work that has implicitly invoked related ideas on the sources of potential managerial contribution, a formal test of the discretion hypothesis has yet to be conducted. In addition, few studies have tested the performance consequences of CEO pay. In a sample of Fortune 1,000 firms, we found support for both a main effect of managerial discretion on CEO pay and a contingency effect, whereby firm performance is higher when discretion and pay and a contingency effect, whereby firm performance is higher when discretion and pay are aligned than when they are not. (Reprinted by permission of the publisher.)
Publication Name: Academy of Management Journal
Subject: Business, general
ISSN: 0001-4273
Year: 1998
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Diversification strategies and managerial rewards: an empirical study
Article Abstract:
The relationship between diversification and managerial reward systems in 20 large industrial companies is studied through interviews with 89 compensation specialists, strategic planners, and line managers. The interviews provide information on performance issues, including performance definition, evaluation and feedback, as well as on formal rewards, such as bonus, salary, stock, perquisites and promotion. Three types of industrial management reward systems are identified, with it shown that the compensation of the systems is explained by the distinction between steady-state and evolutionary processes, and with it concluded that the diversification process itself has a greater influence on the reward system design than the cumulative extent of diversification at a particular time.
Publication Name: Academy of Management Journal
Subject: Business, general
ISSN: 0001-4273
Year: 1985
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