The effects of ownership structure on conditions at the top: the case of CEO pay raises
Article Abstract:
A study was conducted to examine the impact of a firm's ownership structure on CEO compensation management. Specifically, it sought to explore the differences in the determination of CEO pay raises in externally-controlled organizations, those in which a significant percentage of the stock is held by a non-manager, and in management-controlled companies where no single shareholder owns a considerable portion of the stock. Data for the study were obtained from a sample of 188 companies over a five-year period. Results revealed that CEO compensation management in the two types of organizations does differ. Management-controlled companies appear to work according to the principle of CEO pay maximization, provided that the pay hike seems justified. In contrast, externally-controlled firms appear to operate according to the principle of pay minimization, subject to the ability of the company to recruit and keep qualified chief executives.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 1995
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Effects of strategic orientation and environmental change on senior management reward systems
Article Abstract:
Research was undertaken to investigate how senior management compensation systems are affected by strategic orientation and environmental change. A model was developed linking the differences in strategic orientations and environmental changes to the availability of multiple options, behavior nonprogramability, cause-effect ambiguity, and outcome unpredictability. It was proposed that these four factors cause monitoring expenses and managerial risk to rise. It was also argued that these conditions are likely to result in an executive compensation package that is large and outcome-based. These hypotheses were tested using data gathered over a period of 10 years from 50 investor-owned electric utility firms that chose to participate in the study. Results lent support to the research hypotheses.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 1992
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Chief executive compensation: a synthesis and reconciliation
Article Abstract:
Researchers can improve their understanding of organization symbol and substance by examining chief executive compensation. The controversial and conflicting literature on chief executive compensation has been reviewed and integrated. The determinants and consequences of chief executive compensation have been explored. Chief executive pay is more 'sensible' than its critics believe and it is less 'sensible' than its proponents contend. Chief executive compensation can only be understood from the multiple perspectives of economic, political, social, and individual variables.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 1988
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