Top Management Group Pay Disparities: CEO Power and Firm Performance

The issue of pay equity within publicly-traded firms has been a question of growing interest in recent years. Academics, policy-makers, and the general public have become increasingly concerned about the extent to which pay at the highest levels of American business exceeds that received by other workers. Recent studies show that the ratio of CEO pay to that of the average worker grew 380% from a ratio of 107-to-1 in 1990 to a ratio of 411-to-1 in 2005. While attention has been paid to the distribution of pay across the hierarchy of corporations the question of the distribution of pay within top management groups has gone little-studied. Yet, a growing cadre of researchers across multiple disciplines has yielded interesting insights into the antecedents and consequences of pay disparities in top management groups. This book expands on this tradition by introducing a power perspective that seeks to spur further investigation into this strategically relevant phenomenon and to move the current debate beyond extant economic explanations by showing that pay disparities within top management groups arise as a function of the distribution of power with implications for the firm.