CEO-Compensation and the Incentives Created:: A Study Comparing Swedish PE-Backed and Public Companies

Abstract: This thesis investigates possible significant differences in CEO-compensation between Swedish PE-backed and public companies, using both qualitative and quantitative data where paired t-tests, rank-sum tests and regression models are applied. The qualitative research – based on a survey among Swedish PE-firms – indicates that the overall structure of the CEO-compensation package in public companies is similar to that in PE-backed companies. The quantitative data – containing a sample of 58 Swedish public companies which have been size- and industry matched to a unique data sample containing CEO-compensation statistics from 40 Swedish PE-backed companies and 18 IPO prospectuses – show that (1) the total cash compensation is higher for CEOs in public companies than in PE-backed companies, (2) the ratio of variable salary to total cash compensation received by the CEO is higher in public companies than in PE-backed companies and that (3) CEO-ownership is higher in PE-backed companies than in public companies. The implications for CEO-incentives are ambiguous and further research on the topic is needed.