Are Company Founders Underpaid?

29 Pages Posted: 9 Nov 2011 Last revised: 1 Jul 2013

Date Written: November 8, 2011


This paper examines the relation between founder status and CEO compensation in publicly listed US firms. The results suggest that CEO/founders receive lower cash pay and total compensation compared to professional managers. In contrast, CEOs who are relatives of the founders receive similar cash pay and total compensation to that of professional managers. Different compensation levels also emerge in terms of stock option awards. The findings underline the importance of distinguishing among these three CEO types when examining the determinants of executive compensation.

Keywords: Founders, Relatives, CEO compensation, Repricing

JEL Classification: G30, J33, M52

Suggested Citation

Tzioumis, Konstantinos, Are Company Founders Underpaid? (November 8, 2011). Applied Economics, Vol. 45(18), 2013, Available at SSRN: or

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