Asymmetric benchmarking of pay in firms |
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| Affiliation: | 1. Lally School of Management, Rensselaer Polytechnic Institute, Troy, NY 12180, USA;2. Fordham University, New York, NY 10019 USA;3. Bank of Finland, FI 00101 Helsinki, Finland;4. Stern School of Business, New York University, NY 10012, USA;5. Long Island University, NY 11548, USA;1. Department of Accounting, Cleveland State University, United States;2. Department of Finance, Florida Atlantic University, United States;3. Department of Economics and Finance, West Chester University of Pennsylvania, United States;1. Department of Information and Finance Management, College of Management, National Taipei University of Technology, Taipei, Taiwan;2. Department of Money and Banking, College of Finance and Banking, National Kaohsiung First University of Science and Technology, Kaohsiung, Taiwan;3. Department of Risk Management and Insurance, College of Management, Shih Chien University, Taipei, Taiwan |
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| Abstract: | This paper examines whether asymmetric benchmarking of pay exists for vice presidents (VPs). Using ExecuComp data for 1992–2007, we find that companies reward VPs for good luck but do not penalize them for bad luck. However, asymmetric benchmarking of VP pay is mitigated by governance, CEO power, gender, and industry factors. The presence of asymmetric benchmarking of pay could suggest that managers are involved in skimming, or it could mean that firms insulate managers from poor firm performance to prevent them from accessing outside opportunities. We find that unlike CEOs, asymmetric benchmarking of pay for VPs is not consistent with the skimming hypothesis. |
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