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Changes in executive compensation following an environmental shift: the role of top management team turnover

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  • Theresa S. Cho
  • Wei Shen

Abstract

In this study we examine the changes in executive compensation at the top management team (TMT) level following an environmental shift. Using the context of deregulation in the airline industry, we find that: (1) a dramatic environmental change that heightens managerial discretion leads to greater pay level and performance sensitivity of TMT compensation; and (2) the greater the magnitude of turnover among TMT members following the environmental shift, the greater the compensation change. Copyright © 2007 John Wiley & Sons, Ltd.

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  • Theresa S. Cho & Wei Shen, 2007. "Changes in executive compensation following an environmental shift: the role of top management team turnover," Strategic Management Journal, Wiley Blackwell, vol. 28(7), pages 747-754, July.
    • Handle: RePEc:bla:stratm:v:28:y:2007:i:7:p:747-754
    DOI: 10.1002/smj.600
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    Cited by:

    1. Hutzschenreuter, Thomas & Kleindienst, Ingo, 2013. "(How) Does discretion change over time? A contribution toward a dynamic view of managerial discretion," Scandinavian Journal of Management, Elsevier, vol. 29(3), pages 264-281.
    2. Bendig, David, 2022. "Chief operating officer characteristics and how they relate to exploration via patenting versus venturing," Journal of Business Research, Elsevier, vol. 140(C), pages 297-309.
    3. Adam L. Steinbach & Tim R. Holcomb & R. Michael Holmes Jr. & Cynthia E. Devers & Albert A. Cannella Jr., 2017. "Top management team incentive heterogeneity, strategic investment behavior, and performance: A contingency theory of incentive alignment," Strategic Management Journal, Wiley Blackwell, vol. 38(8), pages 1701-1720, August.
    4. Victor Esteban Jarosiewicz, 2019. "CEO Compensation after Harvester Director Departure," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 9(01), pages 1-21, March.
    5. Baixauli-Soler, J. Samuel & Sanchez-Marin, Gregorio, 2011. "Organizational governance and TMT pay level adjustment," Journal of Business Research, Elsevier, vol. 64(8), pages 862-870, August.
    6. Guoli Chen, 2015. "Initial compensation of new CEOs hired in turnaround situations," Strategic Management Journal, Wiley Blackwell, vol. 36(12), pages 1895-1917, December.
    7. Nuscheler, Daniela & Engelen, Andreas & Zahra, Shaker A., 2019. "The role of top management teams in transforming technology-based new ventures' product introductions into growth," Journal of Business Venturing, Elsevier, vol. 34(1), pages 122-140.
    8. M. K. Chin & Matthew Semadeni, 2017. "CEO political ideologies and pay egalitarianism within top management teams," Strategic Management Journal, Wiley Blackwell, vol. 38(8), pages 1608-1625, August.
    9. Deepak K. Datta & Martina Musteen & Dynah A. Basuil, 2015. "Influence of Managerial Ownership and Compensation Structure on Establishment Mode Choice: The Moderating Role of Host Country Political Risk," Management International Review, Springer, vol. 55(5), pages 593-613, October.
    10. Danielle Cooper & Pankaj C. Patel & Sherry M. B. Thatcher, 2014. "It Depends: Environmental Context and the Effects of Faultlines on Top Management Team Performance," Organization Science, INFORMS, vol. 25(2), pages 633-652, April.

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