The tide that lifts all boats? Acquisitions and CEO-TMT pay disparity in the Netherlands

P. Rao Sahib, Gerwin van der Laan, H. van Ees

Research output: Contribution to journalArticleScientificpeer-review

5 Citations (Scopus)


The purpose of this paper is to examine how firm growth, and its decomposition into acquisitive and organic growth, can serve as an antecedent to the disparity in pay between the CEO and other top management team (TMT) members.

Drawing on tournament theory, the authors argue that acquisitive and organic growth strategies have different effects on CEO-TMT pay disparity.

The authors find that acquisitive growth, measured through the number and size of acquisitions, increases CEO-TMT pay disparity while organic growth has no effect on CEO-TMT pay disparity.

Practical implications
The findings, based in the context of the Netherlands, imply that boards in their monitoring activity may need to take into account the potential incentive effects of acquisitive activity as CEOs may have a greater motivation to engage in acquisitions than their fellow TMT members.

This paper contributes to the literature on relative compensation and incentives and the literature on managerial compensation and firm strategy. To investigate the role of firm growth in increasing CEO-TMT pay disparity, the authors adopt a fine-grained approach along two dimensions. First, the authors disaggregate firm growth into organic and acquisition driven firm growth. Second, the authors disaggregate pay disparity in these components.
Original languageEnglish
Pages (from-to)2038-2059
JournalManagement Decision
Issue number9
Publication statusPublished - 2018


  • organic growth
  • acquisitions
  • executive compensation
  • CEO-TMT pay disparity


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