The DOI matches its Crossref record; 86 of the 86 references it cites were found in a registry or an index.
Overpaid CEOs and Underpaid Managers: Fairness and Executive Compensation
Abstract
In this study we propose that norms of fairness are salient to top decision makers and show that over- or underpayment of the CEO cascades down to lower organizational levels. Moreover, it appears that CEOs use their own power not only to increase their own salaries, but also those of their subordinates. One implication of such a process may be that the overpayment of a top executive has higher costs than have previously been realized. We also find evidence suggesting that CEOs serve as a key referent for employees in determining whether their own situation is “fair,” and this influences their reactions to their own compensation. More specifically, we find that when lower-level managers are underpaid relative to the CEO—that is, underpaid more than the CEO or overpaid less—they are more likely to leave the organization. Results obtained from testing our hypotheses on a sample of more than 120 firms over a five-year period demonstrates the importance of considering fairness in the setting of CEO pay. Implications for the design of executive compensation packages are discussed.
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Cites
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8 Social Hierarchy: The Self‐Reinforcing Nature of Power and Status
Magee, J. C., & Galinsky, A. D. (2008) · Academy of Management Annals · doi:10.5465/19416520802211628 · Cited by 2,385
Organizations Gone Wild: The Causes, Processes, and Consequences of Organizational Misconduct
Greve, H. R., Palmer, D. A., & Pozner, J. (2010) · Academy of Management Annals · doi:10.1080/19416521003654186 · Cited by 800
Why resource‐based theory's model of profit appropriation must incorporate a stakeholder perspective
Barney, J. B. (2018) · Strategic Management Journal · doi:10.1002/smj.2949 · Cited by 685
Goals Gone Wild: The Systematic Side Effects of Overprescribing Goal Setting
Ordóñez, L. D., Schweitzer, M. E., Galinsky, A. D., & Bazerman, M. H. (2009) · Academy of Management Perspectives · doi:10.5465/amp.2009.37007999 · Cited by 655
The functions and dysfunctions of hierarchy
Anderson, C., & Brown, C. E. (2010) · Research in Organizational Behavior · doi:10.1016/j.riob.2010.08.002 · Cited by 395
Metadata
- Authors
- Wade, J. B., O'Reilly, C. A., & Pollock, T. G.
- Venue
- Organization Science
- Published
- 2006-10
- Volume
- 17
- Issue
- 5
- Pages
- 527-544
- ISSN
- 1047-7039 (ISSN-L)
- 1526-5455
- OpenAlex
- W2146360602
- Cited by
- 441
- References
- 86
- FWCI
- 17.94
- Type
- journal article
- Language
- en
- Open access
- closed
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
