CEO compensation: A resource advantage and stakeholder-bargaining perspective
Article first published online: 12 JUN 2012
Copyright © 2012 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 34, Issue 1, pages 22–41, January 2013
How to Cite
Pandher, G. and Currie, R. (2013), CEO compensation: A resource advantage and stakeholder-bargaining perspective. Strat. Mgmt. J., 34: 22–41. doi: 10.1002/smj.1995
- Issue published online: 29 NOV 2012
- Article first published online: 12 JUN 2012
- Accepted manuscript online: 24 MAY 2012 08:13AM EST
- Manuscript Revised: 21 MAY 2012
- Manuscript Received: 3 NOV 2010
- CEO pay;
- resource perspective;
- corporate strategy;
This paper studies how CEO pay and its composition is shaped by strategic factors related to the firm's capacity to generate rents and value, the uncertainty of its resource advantage, and the competitive interaction between firm stakeholders and top management. This is done using an analytical framework in which the CEO and other firm stakeholders interact over the firm's resource surplus as utility-maximizing claimants based on their relative bargaining power while providing shareholders their market-based required return. Results from the model yield a number of cogent strategic insights and predictions on the causal interplay between CEO pay, firm growth and risk characteristics, stakeholder management, corporate strategy (e.g., offshoring production), and behavioral biases such as CEO optimism and overconfidence. Copyright © 2012 John Wiley & Sons, Ltd.