IDEAS home Printed from https://ideas.repec.org/a/eee/advacc/v70y2026ics0882611026000143.html

Rewarding a top leadership team: CEO pay slice and pay dispersion among the CEO's top team

Author

Listed:
  • Anderson, Mark
  • Ma, Yan
  • Zhao, Rong

Abstract

Rewarding a top leadership team (TLT), a diverse group of executives working collaboratively to guide the organization, presents a complex challenge. We adopt a team-based perspective that recognizes complementarities between two pay dimensions that have been examined largely in isolation: (1) CEO's unique leadership role, as reflected in the size of the CEO pay slice; and (2) collective versus individual rewards for the CEO's top team, as reflected in the degree of pay dispersion. We posit that CEO leadership (high CEO pay slice) may work through different channels - executing vision and strategy through high team cohesion (low pay dispersion) or through harnessing strong individual performance (high pay dispersion). We find that firms with high CEO pay slice combined with low pay dispersion outperform firms with low slice and low dispersion and that firms with high CEO pay slice and high dispersion outperform firms with low slice and high dispersion on return on equity (ROE) and return on assets (ROA). DuPont decomposition reveals that these performance advantages stem primarily from higher profit margins rather than asset turnover or financial leverage. Cross-sectional analyses demonstrate that TLTs characterized by a high CEO pay slice and low pay dispersion (High-Low profile) achieve higher performance in settings characterized by greater innovation intensity and more competitive product markets, environments where team cohesion is vital in executing the CEO's vision. We also document that the High-Low profile generates significantly positive cumulative abnormal returns over 18 to 36 months.

Suggested Citation

  • Anderson, Mark & Ma, Yan & Zhao, Rong, 2026. "Rewarding a top leadership team: CEO pay slice and pay dispersion among the CEO's top team," Advances in accounting, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:advacc:v:70:y:2026:i:c:s0882611026000143
    DOI: 10.1016/j.adiac.2026.100879
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0882611026000143
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.adiac.2026.100879?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:advacc:v:70:y:2026:i:c:s0882611026000143. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/advances-in-accounting/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.