This is a flawed philosophy. As a manager I have had a few critical pulling in higher salaries than my own. If you are a superviser who is artificially holding an employee back from reaching their full potential (seeking compensation that matches the demand person's talent in the open market) than you are doing your company (yourself) and that employee a major disservice.
Just because you are a manager doesn't mean you can do what your employee does (and vice versa). Artificially holding a sub-employee back is a sign of fear for one's own ineptitude.