Paid to Perform

The aim of this work is to study the relationships between CEO compensation and organizational performance to achieve a better theoretical understanding of this phenomenon and to examine these relationships in publically traded Nordic companies. Theory on CEO compensation and firm performance was studied to develop a CEO Compensation-Performance Model, from which testable hypotheses were derived, focusing on the link between performance and compensation and the links between fixed compensation and short-term performance and contingent compensation and long- term performance. These hypotheses were then tested to examine the validity of the CEO Compensation- Performance Model. No significant relationships were found. There is a lack of a significant relationship between CEO compensation and firm performance in publically traded Nordic firms. This implies that the CEO Compensation-Performance Model does not hold true in the Nordic context.