This study investigates how social class background may lead to shifting standards of performance expectations that differentially affect the careers of CEOs from different social class backgrounds. On the one hand, we theorize that CEOs from lower-class backgrounds who have displayed considerable social mobility from positions of disadvantage are subject to greater board standards given their humble backgrounds. Thus, they will be rewarded with higher initial compensation and higher subsequent compensation when performance is exceptional. On the other hand, we posit that CEOs who come from higher-class backgrounds may be shielded from such board standards because of their similar rank to those of other executives. However, these differences in board standards may ultimately be a double-edged sword. Because stereotyped groups are subject to higher standards, instances of inability to meet this standard will be more swiftly penalized. We hypothesize that lower-class CEOs will be punished more harshly than their upper-class counterparts when performance is poor, resulting in lower compensation and a greater likelihood of dismissal. Using a novel dataset on the social class backgrounds of 790 CEOs over 4,925 firm years supplemented with board interviews, we find considerable support for our hypotheses.
