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Did Excessive Executive Compensation Play a Role in the Current Economic Crisis?

A new Institute for Policy Studies report, Executive Excess 2010: CEO Pay and the Great Recession, examines the role of excessive executive compensation in the current economic crisis.  Co-authors Sarah AndersonChuck CollinsSam Pizzigati and Kevin Shih‘s report includes an interesting finding on the compensation of the top layoff leaders and encourages principles for executive pay that promotes economic fairness and stability.

“The main finding was that the CEOs of the firms that have cut the most jobs during the current crisis are making more money than their peers.  Specifically, the top 50 layoff leaders made $12 million on average last year.  That was 42 percent more than S&P 500 CEOs as a whole,”  reports co-author Sarah Anderson on CSRwire Talkback.

The gap is shocking, but as Anderson explains, it is not enough just to raise concern or “public blood pressure” over this statistic.  The report also includes a rating of recently passed and promising executive pay reforms based on the following five principles to encourage economic fairness and stability.

While the average American struggles to make ends meet in the current economic crisis, I hope this report serves as a catalyst for further research and discussion regarding excessive executive compensation and its effect on workers, innovation and the economy as a whole.

Image Credit: GDS Infographics via Flickr under CC license.

Written by Emily DeMasi

Emily McKinin DeMasi is a 2011 MBA/ MA Public Policy candidate and Peace Corps Fellow at Duquesne University in Pittsburgh, PA. Her thesis work concerns Corporate Social Responsibility in the United States. She also works as a Research Fellow at Bridgeway Capital, a Community Development Financial Institution (CDFI) in downtown Pittsburgh. Emily has worked as an Associate in a Private Equity Placement Firm in NY and as a Water and Sanitation Volunteer in Ivory Coast, West Africa. She hopes to combine her business background with her passion for development and inspire others in the fields of Sustainability and CSR.

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