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The Impact of CEO Status Diffusion on the Economic Outcomes of Other Senior Managers

University of Georgia, Athens, Georgia 30602
McDonough School of Business, Georgetown University, Washington, D.C. 20057
Kaufman Management Center, New York University, New York, New York 10012
Rutgers Business School, Newark, New Jersey 07102
sgraffin{at}terry.uga.edu
jbw42{at}georgetown.edu
jporac{at}stern.nyu.edu
rmcnamee{at}andromeda.rutgers.edu

In this paper we develop and test predictions regarding the impact of CEO status on the economic outcomes of top management team members. Using a unique data set incorporating Financial World's widely publicized CEO of the Year contest, we found that non-CEO top management team members received higher pay when they worked for a high-status CEO. However, star CEOs themselves retained most of the compensation benefits. We also show that there is a "burden of celebrity" in that the above relationships were contingent on how well a firm performs. Last, we found that, when compared with the subordinates of less-celebrated CEOs, members of top management teams who worked for star CEOs were more likely to become CEOs themselves through internal or external promotions.

Key Words: CEO celebrity; status; top management team; compensation; status leakage

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