Income inequality starts with executive pay, according to one well-known economist.

Left-leaning economist and Columbia professor Joseph Stiglitz appeared on CNBC’s Squawk Box Monday to talk about his new book “The Price of Inequality,” but he also got into a heated argument with host Joe Kernen on the nature of capitalism and the state of income inequality during the appearance.

“One of the problems we're talking about...is that we have large corporations where the CEOs often run the corporation for the benefit of them and their group around them and not for the benefit of the shareholders. That's 21st century capitalism,” Stiglitz said.

“You look at what happened in the banks, the executives did very well,” he added. “The shareholders have done miserably.”

It seems shareholders may feel the same way.

After his pay package was rejected by shareholders, Citigroup CEO Vikram Pandit was hit with a lawsuit over his past pay, which alleges that his big paychecks weren't justified given the bank's poor performance. Likewise, shareholders at Credit Suisse, Barclays and FirstMerit, among others, have been critical of executive pay packages.

Meanwhile, the average pay of CEOs increased 15 percent last year, according to a study by GMI Ratings, cited by The Guardian.