Faculty Scholarship 1994 - Present

Effect of Diversification on Executive Compensation

CEO compensation has always been a topic of interest, both in the academic and business arenas. Although extensively studied, the never-ending search for explanations of why CEOs are paid so much has not led to many conclusions. The conclusion that "top level compensation doesn't make much sense" (Crystal, 1988: 68) is probably the only conclusive finding from the plethora of studies that have been conducted on the subject that is widely accepted. The present study seeks to add to this body of knowledge and hopefully alleviate some of this difficulty. We propose the introduction of diversification, both international-and product-based, as a critical variable in understanding CEO compensation.