Why Narcissistic CEOs Earn More

From time to time, a new list of the highest paid CEOs is published by various media sources, and there are often some surprises on that list. Oracle Corporation (NYSE:ORCL) co-founder and CEO Larry Ellison frequently ranks at the top of the lists, raking in $78 million in compensation last year. Overall, 65 CEOs in the study earned over $20 million last year. So why do some boards of directors hand out such big salaries? Apparently it’s about what type of personality executives have.

Why Narcissistic CEOs Earn More

Highly paid CEOs are persuasive

Charles A. O’Reilly, a management professor at Stanford, has published a new research study that he co-authored with Bernadette Doerr, a doctoral student at U.C. Berkeley, David F. Caldwell, a professor at Santa Clara University, and Jennifer A. Chatman, a professor at U.C., Berkeley. It shows the highest paid executives are very aggressive, put themselves first and are extremely persuasive. CEOs with narcissistic personalities tend to get compensation than those who aren’t narcissistic and are simply self-confident.

The study also found a bigger gap between the compensation packages of narcissistic CEOs and how much their top management earns Also the longer these CEOs have been in the top position, the bigger difference. The research was published in The Leadership Quarterly.

O’Reilly said narcissistic CEOs don’t care what others think and are often “impulsive and manipulative.”

CEOs and “grandiose narcissism”

The study surveyed employees from 32 large public companies to determine which have the most narcissistic CEOs. Employees filled out assessments about their CEOs, rating their degrees of self-centeredness, arrogance and being conceited. Participants also filled out a Ten Item Personality Inventory about them, and researchers looked over their shareholder letters and the transcripts from their companies’ earnings calls. They looked for a lot of pronouns like “I” and others that refer to self. Narcissists tend to use first person and personal pronouns more frequently than non-narcissists.

Researchers found that narcissistic CEOs don’t necessarily perform better than non-narcissist ones. They also learned that CEOs who also founded their companies earned more than non-founders.