CEO charisma, compensation, and firm performance

Abstract We examined the relationships among CEO perceived charisma, CEO compensation packages, and firm performance in a sample of Fortune 500 companies over a 10-year period. CEO charisma ratings obtained from company CFOs and VPs for HRM were directly related to total CEO pay but not to any firm performance measures. CEO perceived charisma also was related to shareholder value, under highly uncertain conditions. In essence, charismatic CEOs seem able to influence their compensation packages and stock prices but not other indicators of firm performance. Implications for future charismatic leadership research and CEO compensation–firm performance work are discussed.

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