| dc.description.abstract | This master’s thesis studies the link between ownership structures and CEO compensation in
unlisted Norwegian shipping and sea transport firms. The objective is to examine differences in
total pay and pay-performance sensitivity between owner and non-owner CEOs, and we test the
predictions of CEO pay from two theories; agency theory and the managerial power perspective.
We find evidence that non-owner CEOs receive significantly higher compensation than owners,
between 39 % and 47 % on the average. Furthermore, compensation decreases with the
ownership percentage, which indicates that ownership shares can be used as a substitute for
cash compensation and to reduce agency problems. There is some evidence that firm
performance, measured by EBIT growth, affect the compensation of non-owners. This indicates
that non-owners have a higher pay-performance sensitivity than owners. Overall, predictions
from agency theory fits our data better than the managerial power perspective.
To get additional insights into the dynamics of top executive compensation, we surveyed the
CEOs in the dataset. The survey reveals that non-owners to a greater extent receive
performance-based pay compared to owners. Most non-owners believe the compensation gap
is due to the owners’ possibility of replacing their salary with dividend payments. However,
owners mostly claim that they rarely or never pay out dividends instead of salary. They believe
that inner motivation, cautiousness, and commitment to the firm can explain the pay gap. There
are some findings from our survey that highlights differences in motivation. Owners score
somewhat higher on intrinsic motivation, while non-owners are more motivated by extrinsic
factors. | en_US |
