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Although previous literature has focused on managerial compensation differences between family and non-family firms, the examination of differences in the compensation structure of family directors versus their non-family counterparts within family firms has received much less attention. We analyze several contingencies related to directors� kinship ties to the owning family that may influence directors� total compensation levels and their incentive compensation in family firms. The empirical evidence is provided by a sample of publicly listed family firms from the United States. Our results show that family-member directors receive a lower share of variable pay and a lower level of total compensation than non-family directors within the same firm. In addition, a high family ownership concentration and a large proportion of family members on the board impact negatively on the use of incentive compensation among board members with kinship ties to the owning family.
