Abstract
This thesis examines whether, or not, powerful Chief Executive Officers (CEOs) in New Zealand are able to rig their own pay. Using a sample consisting of all eligible firms listed on the NZX from 1997 to 2012. I investigate three hypotheses with the goal of understanding the dynamics of the relationship between CEO compensation and power in the remuneration environment of New Zealand. First, I discuss the motivation for this thesis and develop the primary research question. Second, I review the existing literature on Agency Theory, Corporate Governance, and Human Capital and Ownership Determinants. Third, I develop a lagged fixed effects specification and an Auto Regressive (AR) specification to test three hypotheses. After performing the regressions I find that increased CEO compensation is positively associated with increased CEO power. Furthermore, I find that CEOs are able to extract excessive levels of compensation from the board. Rigging is more prevalent in firms with weak governance practices and in firms where institutional shareholdings are low. A CEO who has a seat on the board of directors, or when the total number of directors exceeds the median size, has the ability to rig their pay.