The Price of Change: The Role of CEO Compensation in Strategic Variation and Deviation From Industry Strategy Norms

This research tests the proposition that changes in CEO pay will be reflected in strategic change—viewed as variation in firm strategy and deviation from industry strategic norms. Changes in total CEO pay, long-term pay, and long-term pay structure were found to affect strategic change in a sample of large U.S. firms. However, the effects of pay on change were positive when firm performance was low; the relationships were negative among the highest performing firms.