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Strategic Organization
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Influences of relative rewards of top managers on firm performance

Peter Wright

University of Memphis, USA, pwright{at}memphis.edu

Mark Kroll

Louisiana Tech University, USA, mkroll{at}cab.latech.edu

Augustine Lado

Clarkson University, USA, alado{at}Clarkson.edu

Detelin Elenkov

University of Tennessee, USA, delenkov{at}utk.edu

In this work the impacts of top managers’ relative rewards on firm performance are examined. What is suggested and empirically found is that greater disparities in interrank values of salary streams may lower the performance of more focused firms (such as single-product firms or related diversifiers). It is also suggested and found that higher gaps in interrank values of salary streams may boost the performance of less focused firms (unrelated diversifiers). In contrast, it is proposed and found that expanded differentials in interrank values of stock options may improve performance, regardless of the strategic profile of the enterprise. Moreover, it is contended and found that intrarank disparities in salary streams or options may adversely influence the performance of the more focused as well as the less focused firms.

Key Words: executive rewards • firm performance • strategic profile • top management team members • tournament theory

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Strategic Organization, Vol. 3, No. 3, 311-335 (2005)
DOI: 10.1177/1476127005055794
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This Article
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