Abstract
This study examines the CEO pay and firm performance link from two competing perspectives managerial power and board vigilance. From the managerial power perspective, a powerful CEO dominates the board and decouples the pay-performance link. In contrast, board vigilance maintains that boards represent shareholder interests by effectively tying the CEO's pay to firm performance. Consistent with the board vigilance perspective, the link was stronger when CEOs were older or longer tenured and when more committee members had CEO experience. The authors found no support for the managerial power perspective.
Published Version
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