Executive Incentives and Strategic Talent Acquisition: Evidence from Poaching
Working Paper Author/Authors
Key Finding
Firms Use CEO pay incentives to poach top talent from rivals and boost their own performance
Abstract
We examine the relation between relative performance evaluation ("RPE") in executive pay plans and labor talent poaching of rank-and-file employees. Using resume data, we document that RPE-using firms hire significantly more labor talent away from their RPE peers than from their other industry rivals. This effect is most pronounced among hard-to-replace employees (i.e. higher skilled and longer tenured employees). Collectively, the evidence suggests that firms poach hard-to-replace labor talent away from their RPE peers in order to harm the peers’ performance outcomes, thereby improving the focal firm’s relative performance (and thus the CEO’s compensation).
© Matthew J. Bloomfield, Thomas Bourveau, Xuanpu Lin, Guoman She, Haoran Zhu, 2025
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