Purpose: The purpose of this paper is to extend discussions in the CEO compensation research domain. Specifically, this paper provides a critical analysis of the power law conceptualization and pay injustice contribution by Aguinis, Martin, Gomez-Mejia, O’Boyle and Joo....

We develop theoretical arguments from the efficiency wage model (Shapiro & Stiglitz, 1984) to provide better understanding of Fama’s (1980) seminal notion that executive labor markets contribute to the alignment of executive and shareholder interests. We show how the efficiency wage model can...