Abstract
To achieve multiple goals and enhance their performance, organizations have implemented executive compensation packages which have grown ever-more complex. Yet, despite their prevalence, little is known about the efficacy of ‘complex’ executive compensation packages on the organizational outcomes which they are designed to achieve. To address this gap, this study examines the relationship between CEO compensation, complexity, and growth in firm-level productivity. Drawing on behavioural theory rationales, we propose that the more complex CEO compensation packages become, the more they impede managerial focus on a given organizational goal, hindering firm productivity. We explain that the relationship between executive compensation and firm performance outcomes, goes beyond the manager’s appetite for strategic risk taking. We test our hypotheses on a set of over 1,146 individual firms for the period of 2013 - 2020. Among the principal contributions of this study, we advance our understanding of the efficacy of executive compensation complexity.