This study examines whether top managerial executive envy plays an important role in merger waves. Since managerial benefits, especially compensation, always increase with firm size, the envy hypothesis conjectures that top executive officers rush into acquisitions due to their envious psychology once other executives initiate them. Six empirical predictions of the envy hypothesis concerning – bidder (target) size, transaction size, value creation for bidders, compensation increases for top managers, likelihood of bidding, as well as total gains (synergies) from mergers – are tested in the context of the banking industry and find that merger waves are motivated by envy‐pay.