Machiavellianism boosts CEO pay, study finds

In an extensive study examining the relationship between personality traits and executive pay, CEOs who exhibit more Machiavellianism, characterized by motivation to achieve personal goals and 'win' social interactions, are more likely to have higher total pay and severance pay and to secure higher pay for those on their top management team. 

Aaron Hill, Ph.D., an associate professor at the University of Florida Warrington College of Business, and his co-authors determined that CEO's who scored higher on Machiavellianism were more motivated and successful in their negotiations. 

The team used a longitudinal sample of S&P 500 firms to compare compensation data with the executives' personality traits collected by expert clinical psychologists’ analyses of public video recordings. 

“Broadly, we find that CEO Machiavellianism positively relates to their own pay, their severance pay and the pay of their C-Suite or top management team,” Hill said. “The latter effect – on top management team pay – we find then predicts CEO pay raises. Our findings suggest that in this way, CEOs higher in Machiavellianism may pay their top management team members more to set up their own pay raises.”

The team’s research highlights an underlying bias in how this trait can affect pay decisions. In response, those who set pay, such as boards of directors, should work on policies that reinforce the behaviors they want in their executives. They should also place leaders in a position to succeed and accentuate the positive aspects of their innate tendencies.

“We all have tendencies that present tradeoffs in terms of having some positive aspects and some negative aspects,” Hill said. “Hopefully, as managers, we can acknowledge those and work to accentuate the positives and limit the potential downsides – in effect, take advantage of the positives and work to mitigate the negatives.”

This research is published in the Journal of Applied Psychology.