ARE BOARD MEMBERS PAWNS OR WATCHDOGS - THE LINK BETWEEN CEO PAY AND FIRM PERFORMANCE

This study examines the CEO pay and firm performance link from two com peting perspectives--managerial power and board vigilance. From the ma nagerial power perspective, a:powerful CEO dominates the board and dec ouples the pay-performance link. In contrast, board vigilance maintain s that boards represent shareholder interests by effectively tying the CEO's pay to firm performance. Consistent with the board vigilance pe rspective, the link was stronger when CEOs were older or longer tenure d and when more committee members had CEO experience. The authors foun d no support for the managerial power perspective.