Sarah Anderson examines CEO pay in a report she co-authored titled, Executive Excess 2010: CEO Pay and the Great Recession.
Sarah believes extreme gaps between CEO compensation and rank & file worker compensation is bad on several levels. First, it negatively impacts morale. Second, it reeks of unfairness. Third, it indicates that the Board of Directors that determine pay for CEOs may not be independent enough. Fourth, in an economic crisis—such as the one we are experiencing—it amplifies reckless behavior.
The problem started when CEOs were given stock options as part of the incentive package. Consulting firms hired to help determine CEO compensation may not have been impartial for fear of losing the consulting contract.
Listen to this critical interview on CEO pay below: