August 2004
Academy of Management Proceedings;2004, pE1
Conference Proceeding
This study draws on theories of managerial power and compensation to examine executive compensation in entrepreneurial teams. It uses a pooled dataset of 529 technology start-ups and 1,218 CEOs, CFOs,and CTOs collected in 2000, 2001, and 2002 to test hypotheses about whether the founders, CEOs, and inside board members of new ventures receive higher compensation than other members of the top management teams of new ventures. The results support the hypotheses that founders make less than non-founders and that executives who are also members of the board of directors make more than nondirector executives, even after controlling for human-capital and equity-holding differences. The results also suggest that the impact of formal positions on compensation is greater in older private companies than in younger private companies and that executives who achieve critical operating and financing milestones gain increased compensation. Although some of the results are consistent with those in past managerial-power studies and in large-company compensation studies, other results diverge from thos ein past studies, suggesting paths for future research on new ventures, managerial-power theory, and the evolution of executive compensation as companies grow.


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