Pay harmony
Subtitle: peer comparison and executive compensation
By: Claudine Gartenberg, Julie Wulf
Contributors: Wulf, Julie, 1956- author; Harvard Business School
Edition: Revised edition
Series: Working paper / Harvard Business School -- 13-041; Working paper (Harvard Business School) -- 13-041.
Publisher: Harvard Business School
Published: 2014
Place of publication: Boston]
Language: eng
Number of pages: 61
Description: This study suggests that peer comparison affects both wage setting and productivity within firms. We report three changes in division manager compensation following a 1991-1992 controversy over executive pay. We argue that this controversy increased wage comparisons within firms, particularly those with geographically dispersed managers--managers with the greatest information frictions. Following the controversy, pay in dispersed firms co-moves more and is less sensitive to individual performance. Relatedly, pay disparity between managers located in different states decreases relative to that of co-located managers. Finally, division productivity falls in dispersed firms, particularly among managers at the low end of the wage distribution.
Notes: "November 2012. (Revised May 2013, March 2014.)"--Publisher's Web site.

Includes bibliographical references (pages 51-53).