TOP EXECUTIVE PAY - TOURNAMENT OR TEAMWORK

Tournament mechanisms suggest the need for ever larger rewards to moti vate those at the highest organizational levels. But arguments for the efficiency of executive pay compression have also been made. This stu dy reports the results of an empirical investigation of executive comp ensation using over two-hundred firms and in excess of two thousand ex ecutives per year over a 5-year period. Results are consistent with th e operation of tournaments but fail to find support for the empirical importance of considerations of pay equity at the top of corporations.