GWSB Research on CEO Pay Makes Worldwide Impact

May 23, 2018

An article on CEO pay published by Dr. Herman Aguinis, Avram Tucker Distinguished Scholar and professor of management, is having an impact worldwide.

The research, published in the journal Management Research and co-authored with colleagues from Indiana University and Arizona State University, shows that the top-earning CEOs are not the top-performing CEOs. Their study was based on more than 4,000 CEOs in 22 different industries including agriculture, forestry, mining, air travel, banking and basic manufacturing. They found that none of the top one percent performing CEOs are among the top one percent paid CEOs regarding salary or bonus. Only five percent of the top five percent performing CEOs are also among the top five percent paid CEOs and only 20 percent of the top five percent performing CEOs are also among the top five percent paid CEOs. 

The article by Aguinis and colleagues was published in a special issue devoted to their work and accompanied by commentaries written by 18 scholars from the Wharton School of Business at the University of Pennsylvania, University of Michigan, University of Southern California, Notre Dame, Penn State, Texas A&M and other universities. Aguinis and colleagues also wrote a follow-up article in the same issue explaining economic and socio-psychological reasons why CEO pay and performance do not go hand-in-hand.

This research suggests that important changes are needed in how boards of directors, consulting firms, and compensation committees set CEO pay. Their study is currently being discussed worldwide and has already been covered by the Wall Street Journal, the Houston ChronicleLes Echos (France), and many other outlets.