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We investigate the relationship between top management team compensation disparity and corporate social performance. We argue that pay structures with high disparity are reflective of transactional, individualistic organizations that foster a shareholder orientation. In contrast, pay structures with low disparity are indicative of relational, cooperative organizations that foster a stakeholder orientation. Examining the effect of these attributes on corporate social performance, we find that corporate social performance is higher in low pay disparity firms than in high pay disparity firms. We discuss our contributions to executive compensation and corporate social performance research and suggest directions for future research. [ABSTRACT FROM AUTHOR]

In this work the impacts of top managers' relative rewards on firm performance are examined. What is suggested and empirically found is that greater disparities in interrank values of salary streams may lower the performance of more focused firms (such as single-product firms or related diversifiers). It is also suggested and found that higher gaps in interrank values of salary streams may boost the performance of less focused firms (unrelated diversifiers). In contrast, it is proposed and found that expanded differentials in interrank values of stock options may improve performance, regardless of the strategic profile of the enterprise. Moreover, it is contended and found that intrarank disparities in salary streams or options may adversely influence the performance of the more focused as well as the less focused firms. [ABSTRACT FROM AUTHOR]