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Changes in executive compensation following an environmental shift: the role of top management team turnover
Author(s) -
Cho Theresa S.,
Shen Wei
Publication year - 2007
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.600
Subject(s) - executive compensation , deregulation , compensation (psychology) , context (archaeology) , discretion , business , turnover , economics , psychology , management , social psychology , political science , geography , market economy , archaeology , law
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.