Research: Whistleblowing Is More Common When CEOs Are Overpaid

CEO pay has skyrocketed by 1,460% since 1978, and the gap between CEO and average employee has grown wider over time. New research finds that employees’ loyalty toward their organization is reduced when they perceive a larger disparity in pay or external stakeholder treatment, making them more likely to blow the whistle to external authorities. From this research, the authors recommend three actions: CEOs and top executives should consider taking a pay cut, and balance stakeholder treatment. Boards should ensure they prioritize and safeguard employee well-being. And policymakers should use effective tax policies to curtail excessive executive pay and incentivize firms who treat their employees well.