Do CEOs encounter within-tenure settling up? A multiperiod perspective on executive pay and dismissal

Adam J. Wowak; Donald C. Hambrick; Andrew D. Henderson

doi:10.5465/AMJ.2011.64869961

Do CEOs encounter within-tenure settling up? A multiperiod perspective on executive pay and dismissal

Adam J. Wowak, Donald C. Hambrick, Andrew D. Henderson

Management and Organization

Research output: Contribution to journal › Review article › peer-review

95 Scopus citations

Abstract

We consider a central puzzle surrounding CEO accountability: What explains the payoffs and penalties that CEOs receive? Invoking Fama's concept of "settling up," we examine how a CEO's entire performance record and history of prior over- or underpayment affect current pay and the odds of dismissal. We find that some parts of a CEO's historical track record work to remedy prior over- or underpayment, whereas other aspects result in greater imbalances, as rich CEOs get richer while poorer ones get poorer. History matters when boards reward or punish their CEOs, but such reckoning is relatively complex.

Original language	English (US)
Pages (from-to)	719-739
Number of pages	21
Journal	Academy of Management Journal
Volume	54
Issue number	4
DOIs	https://doi.org/10.5465/AMJ.2011.64869961
State	Published - Aug 1 2011

All Science Journal Classification (ASJC) codes

Business and International Management
General Business, Management and Accounting
Strategy and Management
Management of Technology and Innovation

Access to Document

10.5465/AMJ.2011.64869961

Cite this

@article{ad07a44d43db49abaf013f9c4b9eba6f,

title = "Do CEOs encounter within-tenure settling up? A multiperiod perspective on executive pay and dismissal",

abstract = "We consider a central puzzle surrounding CEO accountability: What explains the payoffs and penalties that CEOs receive? Invoking Fama's concept of {"}settling up,{"} we examine how a CEO's entire performance record and history of prior over- or underpayment affect current pay and the odds of dismissal. We find that some parts of a CEO's historical track record work to remedy prior over- or underpayment, whereas other aspects result in greater imbalances, as rich CEOs get richer while poorer ones get poorer. History matters when boards reward or punish their CEOs, but such reckoning is relatively complex.",

author = "Wowak, \{Adam J.\} and Hambrick, \{Donald C.\} and Henderson, \{Andrew D.\}",

year = "2011",

month = aug,

day = "1",

doi = "10.5465/AMJ.2011.64869961",

language = "English (US)",

volume = "54",

pages = "719--739",

journal = "Academy of Management Journal",

issn = "0001-4273",

publisher = "Academy of Management",

number = "4",

}

TY - JOUR

T1 - Do CEOs encounter within-tenure settling up? A multiperiod perspective on executive pay and dismissal

AU - Wowak, Adam J.

AU - Hambrick, Donald C.

AU - Henderson, Andrew D.

PY - 2011/8/1

Y1 - 2011/8/1

N2 - We consider a central puzzle surrounding CEO accountability: What explains the payoffs and penalties that CEOs receive? Invoking Fama's concept of "settling up," we examine how a CEO's entire performance record and history of prior over- or underpayment affect current pay and the odds of dismissal. We find that some parts of a CEO's historical track record work to remedy prior over- or underpayment, whereas other aspects result in greater imbalances, as rich CEOs get richer while poorer ones get poorer. History matters when boards reward or punish their CEOs, but such reckoning is relatively complex.

AB - We consider a central puzzle surrounding CEO accountability: What explains the payoffs and penalties that CEOs receive? Invoking Fama's concept of "settling up," we examine how a CEO's entire performance record and history of prior over- or underpayment affect current pay and the odds of dismissal. We find that some parts of a CEO's historical track record work to remedy prior over- or underpayment, whereas other aspects result in greater imbalances, as rich CEOs get richer while poorer ones get poorer. History matters when boards reward or punish their CEOs, but such reckoning is relatively complex.

UR - https://www.scopus.com/pages/publications/80052101332

UR - https://www.scopus.com/inward/citedby.url?scp=80052101332&partnerID=8YFLogxK

U2 - 10.5465/AMJ.2011.64869961

DO - 10.5465/AMJ.2011.64869961

M3 - Review article

AN - SCOPUS:80052101332

SN - 0001-4273

VL - 54

SP - 719

EP - 739

JO - Academy of Management Journal

JF - Academy of Management Journal

IS - 4

ER -

Do CEOs encounter within-tenure settling up? A multiperiod perspective on executive pay and dismissal

Abstract

All Science Journal Classification (ASJC) codes

Access to Document

Other files and links

Fingerprint

Cite this