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Narcissistic CEOs and Executive Compensation

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  • O'Reilly, Charles A. III
  • Doerr, Bernadette
  • Caldwell, David F.
  • Chatman, Jennifer A.

Abstract

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.

Suggested Citation

  • O'Reilly, Charles A. III & Doerr, Bernadette & Caldwell, David F. & Chatman, Jennifer A., 2013. "Narcissistic CEOs and Executive Compensation," Institute for Research on Labor and Employment, Working Paper Series qt6dt7p2pm, Institute of Industrial Relations, UC Berkeley.
  • Handle: RePEc:cdl:indrel:qt6dt7p2pm
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    References listed on IDEAS

    as
    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.
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    3. John Antonakis & Samuel Bendahan & Philippe Jacquart & Rafael Lalive, 2010. "On making causal claims : A review and recommendations," Post-Print hal-02313119, HAL.
    4. 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.
    5. 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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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
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      by ? in Stumbling and Mumbling on 2014-02-11 14:12:00
    2. The economic base of virtue
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    3. Narcissism, hubris and "success"
      by ? in Stumbling and Mumbling on 2014-10-05 11:56:00
    4. This Is Your Brain on Money: Why America's Rich Think Differently Than the Rest of Us
      by Sean McElwee in Huffington Post Business on 2014-10-18 22:08:22
    5. This Is Your Brain on Money: Why America's Rich Think Differently Than the Rest of Us
      by Sean McElwee in Huffington Post Money on 2014-10-18 22:08:22
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      by ? in Stumbling and Mumbling on 2016-08-09 13:14:00
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    Business; Executive Compensation;

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