Executive Compensation: The Role of Human Capital and Geographic Preferences

Human capital is crucial for sustainable competitive advantage, and certain workforce groups have a greater impact than others. The top management team, responsible for directing firm strategy and structure, is one such group, and executive turnover can be detrimental for a firm. While existing lite...

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Bibliographic Details
Published inCompensation and benefits review Vol. 57; no. 2; pp. 87 - 102
Main Authors Giannakis, Panagiotis, Roumpi, Dorothea, Aydinliyim, Lauren E., Delery, John E.
Format Journal Article
LanguageEnglish
Published Los Angeles, CA SAGE Publications 01.04.2025
SAGE PUBLICATIONS, INC
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ISSN0886-3687
1552-3837
DOI10.1177/08863687241299191

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Summary:Human capital is crucial for sustainable competitive advantage, and certain workforce groups have a greater impact than others. The top management team, responsible for directing firm strategy and structure, is one such group, and executive turnover can be detrimental for a firm. While existing literature often suggests that executives change jobs primarily for higher pay, this is not always true. Drawing on human capital research and the geographic preference theory, we examine how an executive’s human capital and geographic preferences affect changes in compensation during job transitions. Using a sample of 351 executives who moved among S&P 500 companies from 2000 to 2015 (378 inter-organizational moves), we find that education (a proxy for human capital) and area desirability (a proxy for geographic desirability) correlate with changes in executive compensation. Additionally, a higher density of geographically proximal executive pay packages increases an executive’s compensation premium when changing jobs.
ISSN:0886-3687
1552-3837
DOI:10.1177/08863687241299191