CEO Compensation in Founder-Controlled Firms: A Comparison Between Family CEOs and Non-Family CEOs

When the founder is no longer CEO of firm he controls, can entrust position either to a family member or professional non-family CEO. Our study examines how founder-controlled firms compensate CEOs versus CEOs. Using regression analyses on sample large Canadian listed Toronto Stock Exchange (S&P/TSX) over 7-year period (2002 2008), we find that total compensation lower than CEOs, especially when does not have excess voting rights. On other hand, there difference in incentive component and Overall, our results tend support “optimal contracting” approach as opposed “rent extraction” explaining founders’ behaviour regard excess-voting rights are involved.