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It is common to thank the anonymous reviewers of a paper. In this case, we want them to know that they added in a very significant way to this study. Their comments provided helpful guidance that made a nice study a much better article. Their comments helped both of us learn a great deal about a theoretical domain with which we were unfamiliar. The way they dealt with this project could well be a tutorial for everyone who serves as a reviewer. This paper examines the extent to which monitoring and incentive alignment of Chief Executive (CEO) compensation and influence patterns of various actors on CEO pay vary as a function of ownership distribution within the firm. Based on the reports of 175 chief compensation officers in manufacturing, it was found that the level of monitoring and incentive alignment was greater in owner-controlled than management-controlled firms. For both types of firms, there was a direct relationship between monitoring and the risk level to the CEO of annual bonuses and long-term income, although the relationship was stronger among owner-controlled firms. In the owner-controlled firms, there was more influence over CEO pay by major stockholders and boards of directors. In management-controlled firms, the CEO pay influence was separated from major stockholders and boards. The results suggest that a behavioral approach to measuring agency theory concepts can provide some new insights into the process used to determine CEO pay.'
Tosi et al. (Thu,) studied this question.