Abstract
How does the complexity in CEO compensation affect firm performance? With unknown consequences, the complexity of executive compensation contracts is rising. In this study, we explore how the complexity of executive compensation relates to ?rm performance. We conceptualize and operationalize the objective constituents of complex compensation contracts and find negative outcomes on both accounting- and marked-based measures of firm performance for CEOs. Based on these findings, we furthermore offer and explore theoretical explanations for the relationship, namely multitasking and cognitive limitations. We link these findings to the top management team (TMT) and suggest that compensation complexity is an important extension for the TMT pay dispersion and behavioral integration literature. We discuss these findings and close with potential research opportunities in the nascent research field of compensation complexity.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.