Purpose: This paper aims to elaborate upon the work of Aguinis and colleagues (this issue), who showed that there is almost no overlap between the chief executive officers (CEOs; of American publicly traded corporations) who are in the upper tail of the CEO pay distribution and the firms that are in the upper tail of the performance distribution. Design/methodology/approach: This paper is an essay/commentary regarding the merits and implications of the paper by Aguinis and colleagues. Findings: Drawing upon prior work, the author proposes that CEOs’ tenure-long pay patterns are established – essentially baked-in or hardwired – when CEOs first get hired. For various reasons, some CEOs receive ultra-grand pay packages at the outset of their tenures, and nothing – including mediocre performance – brings about subsequent diminishment of those sweet terms. Research limitations/implications: This paper sheds new light on the work by Aguinis and colleagues, in turn contributing new insights about the fairness (or lack thereof) of CEO pay determinations. Originality/value: This paper integrates Aguinis and colleagues with prior works on CEO over- and underpayment.
All Science Journal Classification (ASJC) codes
- Business and International Management
- Strategy and Management