Determinants Of CEO Cash Compensation In Small, Young, Fast Growing Firms

Abstract

This study examines factors related to CEO cash compensation for a sample of publicly-held firms that are small, young, and growing. Our key finding is that founder CEOs accept lower cash compensation than non-founder CEOs. This evidence suggests that, for small, young, and growing firms, founder CEOs do not extract unusually large private benefits that harm outside shareholders. Weaker evidence suggests: firms with greater growth opportunities pay higher cash compensation to CEOs; firms with greater outsider representation on the board pay lower cash compensation to CEOs; and firms with greater inside director share ownership pay higher cash compensation to CEOs.