This study was designed to examine the links between top
managers’ compensation and a firm’s strategic orientation as
well as to identify the performance implications of the fit
between these two elements. In this paper, situated within
the new trend of seeking non-economic explanations for the
executive’s compensation, we presented arguments from the
agency theory and the managerial discretion concept to develop
a more complete explanation for top managers’ compensation
systems. A sample of Spanish firms from a crosssection
of industries provided data to evaluate propositions
concerning such links. Overall, the results of this study partially
support the theoretical argument exposed and reveal
two groups of firms with behaviors clearly differentiated