Narcissistic CEOs and executive compensation

Abstract

Narcissism is characterized by traits such as dominance, self-confidence, a sense of entitlement, grandiosity, and low empathy. There is growing evidence that individuals with these characteristics often emerge as leaders, and that narcissistic CEOs may make more impulsive and risky decisions. We suggest that these tendencies may also affect how compensation is allocated among top management teams. Using employee ratings of personality for the CEOs of 32 prominent high-technology firms, we investigate whether more narcissistic CEOs have compensation packages that are systematically different from their less narcissistic peers, and specifically whether these differences increase the longer the CEO stays with the firm. As predicted, we find that more narcissistic CEOs who have been with their firm longer receive more total direct compensation (salary, bonus, and stock options), have more money in their total shareholdings, and have larger discrepancies between their own (higher) compensation and the other members of their team.

Teaching Leadership Critically: New Directions for Leadership Pedagogy

“…In turn, this can feed a narcissistic mind-set that encourages the quest for even higher levels of remuneration and wider differentials between those at the top and the rest of their organizations (O'Reilly et al, 2014). The effects have been damaging.…”

CEO Personality and Firm Policies

“…We develop this predictive scoring approach by statistically linking linguistic features of the CEOs during the question-andanswer (Q&A) portion of conference calls to their known personality traits from Kaplan et al (2012) and Kaplan and Sorensen (2016). We validate our measures of CEO personality traits by showing that they exhibit substantial out-of-sample predictive ability using an independent sample obtained from O'Reilly et al (2014b).…”

“…The personality data come from two sources: data on 28 CEOs of U.S. technology firms from O'Reilly et al (2014b) and data on 91 CEOs of public firms from Kaplan et al (2012) and Kaplan and Sorensen (2016). We refer to the data from these sources as the O'Reilly and ghSMART samples, respectively.…”

“…As discussed in Appendix A, O'Reilly et al (2014b) collected Big Five data from 246 current employees who completed the Ten-Item Personality Inventory (Gosling et al, 2003) for the CEOs at their respective firms. The O'Reilly et al (2014b) data are coded on a Likert scale ranging from "disagree strongly" (1) to "agree strongly" (7) for each of the five traits.…”

“…The O'Reilly et al (2014b) data are coded on a Likert scale ranging from "disagree strongly" (1) to "agree strongly" (7) for each of the five traits. For each trait, we rescale the scores so they range from zero to one.…”