Abstract
This study examines the relationship between CEO compensation packages and firm performance. We suggest the optimal compensation contract is partially dependent on the technological intensiveness of the industry in which the firm competes. We argue that firm performance will be stronger when CEO compensation is incentivized in line with CEO preferences. Our results indicate that firms in high-tech industries perform better with greater proportions of incentive-based compensation while firms in low-tech industries perform better when offering greater proportions of guaranteed pay. These findings suggest firms should evaluate the preferences of their CEOs prior to designing the compensation package, recognizing the relative risk aversion of low-tech CEOs and risk tolerance of high-tech CEOs.