A narcissistic personality has its merits. Steve Jobs’ narcissism, for example, helped instill cult-like loyalty from employees. Such a leader might take dizzying risks that others wouldn’t.
But narcissism has a darker side, too, which is easy to see in the pending $2.7 billion buyout of Delphi Financial by Tokio Marine Holdings of Japan.
As CEO of Delphi Financial, Robert Rosenkranz controls a nearly 50% voting interest. At the start of buyout negotiations, he asked for $110 million more than other shareholders. When that didn’t work, he attempted to work out some side deals that would have given him $57 million extra in payouts.
Because of both moves by Rosenkranz, which were restricted by Delphi Financial’s, all parties have been sued by shareholders.
Just what makes a powerful chief believe he should be so excessively compensated, even at the expense of shareholders? Perhaps it is the narcissistic belief that the company would be far, far less valuable without him.
Courts have signaled their disdain for the ugly side of narcissism, calling out chief executives’ misconduct in takeovers.
For example, Millard S. Drexler, the chief executive of J. Crew, was called out by court for taking “icky” steps during the company’s buyout that would have benefited him at the expense of other shareholders.
But boards have a role to play, as well. Spiraling salaries are often blamed on a chief’s narcissistic belief that he shouldn’t be paid a penny less than his peers.
Beware the curse of narcissism.
— Adapted from “A Mirror Can Be a Dangerous Tool for Some C.E.O.’s,” Steven M. Davidoff, The New York Times.