Are CEO pays justified? Fmr. SEC Chair Jay Clayton weighs in on the CEO pay debate

Former SEC Chairman and Apollo Global Management non-executive chair Jay Clayton joins 'Squawk Box' to discuss Sen. Bernie Sander's bill to target CEO pay, whether CEO pay figures are justified, and more.

[@ISpitHotFiyaa]

Well stated by Andrew. The difference between CEO hiring and ordinary employee hiring is that when you interview candidates for ordinary jobs each of the candidates give a salary requirement knowing that if they ask for too much it could cost them the job. That isn't happening for CEOs. As mentioned, COOs or ExecVPs routinely get promoted to CEO and get a 5x (or more) pay raise in the process. Clearly that isn't the minimum they would have taken the job for. Nobody is going to ask for 5x when they'd be willing to take the job for 1.5x. And it's not like the ExecVPs are getting lots of outside CEO offers because there's generally maybe one CEO job for every five or six ExecVP jobs. So CEO hiring should be very competitive and lead to a small premium between the CEO and ExecVPs. But the wage data is saying otherwise. It definitely seems like there's a "club" situation going on with the CEO and the board like Andrew alleges.

[@ThousandIslands]

Andrew, shut up to let the guy talk! Whats the point of interviewing him when we only hear your voice

[@wilzdegreat]

I would suggest another spin off. IF the company takes a loss for a particular year, why does the CEO still needs to be compensated millions of dollars!? Case and point - State Farm Insurance. They lost 8 billion dollars last year, why the hell the CEO deserve 22 million dollar?!??

[@goldmansachs8881]

Andrew my god let the brother took holy. Why even have him on?

[@numitumi8806]

This problem is one of timescales. I have zero problem with outsized stock based comp for long term stock gains. Unfortunately annual salaries of $22m isn’t incentivising that at all. It is instead a perverse incentive to money grab short term and escape with even more generous severance terms before you have delivered the anticipated outsized results that justified the outrageous pay package in the first place. These elites have gamed the system, shareholders be damned.

[@bojan1999]

Talking about sanders why don't you ask him where the book is that his wife got paid over 100k to write years ago

[@soloape15]

I wish they would let guests speak. Why bring people on to simply cut them off and not allow questions to be answered

[@zo9fg]

Just give employee stock options

[@steveguynup5441]

I worked for an online For Profit University, one year they took out breaks between semesters. No breaks = more money was the idea. We went from 16,000 thousand students to 12,000. Students (and employees) need breaks. Huge loss... Their action - do a stock buyback during bonus session. Shareholders didn't punish this... There's a gaming the system side of all of this that needs to be touched on. Consider that if you have to cut employees and /or freeze - lower wages - shouldn't "serious" shareholders reward leaders who take some of the burden on themselves?

[@EricBrown]

Andrew Ross Sorkin is normally a fantastic interviewer; I've never seen him steamroll a conversation like this before.

[@kyle7574]

Pretty interesting points from both sides on this

[@diamondlion47]

Andrew is 100% correct, when have you seen a CEO poached or traded like an NBA player lmao. As an investor I want my companies to maximize their profits, not overpay these old boys club members. This bill is great for all stockholders, instantly makes your company more cost efficient. Let's be honest, CEO's are human beings they make mistakes and get replaced all the time just like the rest of us but their salaries keep skyrocketing unlike the vast majority of us. It's a rigged game.

[@Backtothecryptoverse]

It’s crazy that people making over a million a year talk about other people making millions per year

[@codymoseley946]

Reducing CEO pay only adds more to the bottom line, thus increasing shareholder value. It doesn’t add more to the pockets of lower waged workers at the company, only to the wealthiest shareholders. This fantasy that somehow this will benefit the working class is nonsense.

[@numitumi8806]

Joel Embid delivers outsized performance every day, 82 games per regular season plus postseason series. He can’t lie, cheat, steal, obfuscate for three quarters until “analysts” begin to realise that he might be overpaid, incompetent, or both. Again, timescale mismatch is the real outrage of CEO pay. You cannot provide ridiculously outsized short term salaries when true performance is only really measured in the long term.

[@ronsilva7394]

Have the representatives not received campaign contributions yet ?

[@rgen28]

Of course not. Pay should be voted by the employees. Not the board.

[@the_investor9836]

Why tax the companies? They are the ones suffering the CEO expense i.e the victims. It makes no sense.

[@konagroup7273]

No wonder he is just a reporter.

[@Dustinchanse]

People are more upset about the bonuses the banks gets 🤷‍♂️

[@Twestliw]

CEOS should make a significant amount it’s a though job with no where to hide and no one to point to. That said they have gotten used to rigging the game in their favor that they now take most of the pie that wouldn’t be there without the workers. It also depends on the firm. If the average salary at your company is 48k and you make 100 million there is something massively wrong with that.

[@Yakitak]

CNBC host interrupted and interjected own thoughts too much.

[@zacharythomas9306]

I think both sides have a point to make, i believe everyone should be paid based on the value they add to a company. The way that is measured has been muddled. Stock price is not an accurate measure of a company’s performance because it is speculative. Company earnings growth (excluding the sale of assets)vs debt load would be a better metric when determining CEO pay.

[@teebone2157]

If the CEO gets a pay raise every year and workers never benefit from the record profits that they are producing something needs to change bottom liperiod. The CEO should not make almost $1500. For every $1 it worker makes.

[@cozyslor]

Uh, which one is more easily replaced? Lots off people can make a widget. Not many can run a large corporation.

[@distantyahoo]

the answer is no, they are not.

[@Sanataniglobal200]

Jai shree Ram from himachal pradesh ❤

[@barkinsaritas]

Is Andrew's pay justified?

[@harrychu650]

Becky and Andrew both laughed at Elon Musk's pay package when it was announced and said he would never meet the market cap milestones and therefore wouldn't be paid a dime. Now they are insinuating that he is over paid b/c the company he runs met the market cap milestones set out by his compensation package. You cannot make this stuff up. This is why I buy buy buy Tesla stock while the discounts last.

[@diamondlion47]

Deluded Elon fanboy

[@justinleemiller]

Pretty sure an AGI could be a CEO within a decade. Just saying

[@HTHAMMACK1]

CEOs are hideously overpaid, and they're often paid egregiously even when they failing badly. Why should a bad CEO who drove his company in the ground get a golden parachute worth tens of millions when all he should have gotten is shown the door.

[@williammcconnell8141]

only 30 of the s&p are profitable companies. Am I right ? Yet ALL of the CEO's make 100x the normal employee EACH YEAR Seems fair and equitable to me !

[@idrearamacirmtamta1293]

No.

[@bryansutton9942]

Andrew’s politics frequently negatively impact his ability to interview objectively.

[@face4me]

Sounds like they are trying to justify the ridiculous pay it just sounds silly to pay someone that much and pay your workers little

[@hussienalsafi1149]

❤️❤️❤️❤️❤️

[@charlielipthratt7291]

I still would like to hear the guest answer the questions. Can he be rescheduled when Andrew is on vacation?

[@mrobinson]

Just ask any whiners if they'd like Jamie Dimon's job for a month. For the dolts wo accept, see if they last a week! You can bet they'll stop winning then!

[@ak102986]

complete and total propaganda