Who Gets the Lion's Share? Top Management Team Pay Disparities and CEO Power

Abstract

While the distribution of pay across the hierarchy of corporations has received considerable attention, until recently the disparity of pay within top management teams has received comparatively little focus. This paper contributes to the evolving literature by moving the debate beyond extant tournament theoretic explanations and towards a power-specific theory of disparate pay in top management teams. The theoretical model is tested in the context of a cross-section of 604 publicly-traded firms using hierarchical least squares regression. Results are supportive of the theory and indicate that CEO power plays an important role in determining the disparities of pay within top management teams.

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