Master Thesis in Business Administration, School of Business Administration, Linaeus University, Finance 4FE03E, Spring 2011 Authors: Benni Hansson, Axel Sandquist Tutor: Christopher von Koch Examiner: Sven-Olof Collin Title: Compensation as a means of monitoring or recruiting – a study on ownership structure in Swedish listed companies. Keywords: CEO compensation, compensation structure, ownership structure, ownership types, ownership concentration, agency theory, resource dependence theory, managerial theory Background: There has been extensive research on CEO compensation, however not a lot on Swedish listed firms. Many studies have an agency theoretical perception on CEO compensation. In accordance with this, compensation is used as a means to solve monitoring and incentives problems. Purpose: The aim of this study is to examine the role of CEO compensation, by studying ownership structure. Method: To examine the role of CEO compensation we use a multi-theory approach, based on agency theory, resource dependence theory and managerial theory. The companies examined are Swedish listed firms the in years 2005 to 2009. The data has been gathered from annual reports, Fristedt and Sundqvist’s books “Ägarna och makten i Sveriges börsföretag”, and the Datastream database. The data has been statistically analyzed to reach our conclusions. Conclusions: We find a correlation between ownership structure and compensation and the use of options. Families use the lowest level of compensation and have the lowest use of options.  Institutional investors offer the highest level compensation while foreign investors have the highest propensity to use options. We do not find a relationship between industrial investors and level of compensation. We argue that both compensation and options first and foremost is a result of the level and quality of the monitoring. The compensation policy is used as a means to solve monitoring problems. We also argue that the CEO gains power with absent owners, and can thereby influence the salary.

Forskningsproblem          Under 2006 infördes en lagändring kring att ersättning till VD måste specificeras i tilläggsupplysningar i årsredovisningen. Reglerna infördes från politikernas håll för att se en mer återhållsam ersättning till VD och återupprätta de senaste årens minskade förtroende för näringslivet. Dock har åsikter riktats mot lagändringen som menar att den har motverkat sitt syfte och istället trissat upp ersättningen till VD. Syfte                                   Syftet med studien är att förklara om det finns ett samband mellan utvecklingen av ersättningen till VD och kravet på tilläggsupplysningar. Metod                                Studien har en kvantitativ utgångspunkt och en poolad ansats. Två hypoteser har härletts ifrån befintlig teori och tidigare forskning. Hypoteserna testades gentemot data inhämtad ifrån 573 årsredovisningar utspritt över tre år. Slutsats                              Ett signifikant samband har identifierats som säger att ersättningen till VD har ökat sedan 2006. Resultatet styrks av tidigare forskning och de teorier som studien bygger på. Målet med lagändringen har således misslyckats. / Problem                             In 2006, a change in the law was introduced regarding disclosure about CEO compensation. The CEO compensation now had to be specified in the disclosure. The law was introduced by politicians who wanted to restrain the CEO compensation, which had affected the business community negative. However, opinions made against the change in the law claim that it is counterproductive and instead of decreasing the compensation, the law has increased the CEO compensation. Purpose                              The purpose of the study is to explain if there is a connection between the development of the CEO compensation and the requirement of disclosures. Method                              The study is based on a quantitative method and a pooled approach. Two hypotheses were derived from existing theory and previous research. The hypotheses were tested against data collected from 573 annual reports, spread over three years. Conclusion                         A significant connection was found and it says that the CEO compensation has increased since 2006. The result is supported by previous research and theories that the study is based on. The aim of the legislative change has therefore failed.