Top Management Compensation and Corporate Performance

Abstract

The article looks at the findings of studies on executive salaries in the U.S. using individual executive reward and top management group as variables. The author seeks to determine whether executive salaries are more closely correlated with a firm's scale of operations than its profitability. The studies discussed are those of McGuire et al., and of Lewellen and Huntsman. Both McGuire and Lewellen-Huntsman employed individual executive compensation as the dependent variable. While McGuire found a significant correlation between corporate sales and chief executive compensation, Lewellen and Huntsman did not.