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Narcissistic CEOs and Executive Compensation

Listed author(s):
  • O'Reilly, Charles A. III
  • Doerr, Bernadette
  • Caldwell, David F.
  • Chatman, Jennifer A.
Registered author(s):

    Narcissism is characterized by traits such as dominance, self-confidence, a sense ofentitlement, 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 allocatedamong top management teams. Using employee ratings of personality for the CEOs of 32 prominent high-technology firms, we investigate whether more narcissistic CEO’s 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, stock options), have more money in their totalshareholdings, and have larger discrepancies between their own (higher) compensation and the other members of their team.

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    Paper provided by Institute of Industrial Relations, UC Berkeley in its series Institute for Research on Labor and Employment, Working Paper Series with number qt6dt7p2pm.

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    Date of creation: 14 Mar 2013
    Handle: RePEc:cdl:indrel:qt6dt7p2pm
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    1. James B. Wade & Charles A. O'Reilly & Timothy G. Pollock, 2006. "Overpaid CEOs and Underpaid Managers: Fairness and Executive Compensation," Organization Science, INFORMS, vol. 17(5), pages 527-544, October.
    2. Paul Gompers & Joy Ishii & Andrew Metrick, 2003. "Corporate Governance and Equity Prices," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 107-156.
    3. George P. Baker & Brian J. Hall, 2004. "CEO Incentives and Firm Size," Journal of Labor Economics, University of Chicago Press, vol. 22(4), pages 767-798, October.
    4. Charles A. O'Reilly & Brian G. M. Main, 2010. "Economic and psychological perspectives on CEO compensation: a review and synthesis," Industrial and Corporate Change, Oxford University Press, vol. 19(3), pages 675-712, June.
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