"When you're the janitor, reasons matter," Jobs told his newly-minted VPs. "Somewhere between the janitor and the CEO, reasons stop mattering."
"In other words,' (Jobs continued,) "when the employee becomes a vice president, he or she must vacate all excuses for failure. A vice president is responsible for any mistakes that happen, and it doesn't matter what you say."
I've heard some economic analysis that indicates that this is why executives are paid so much. As an exec, you're responsible for company performance, and if the company underperforms, you will get fired, and this could be for a number of reasons that have nothing to do with anything you did. To get people who actually understand & respect the risks (you don't want anyone who doesn't in an exec position), you have to pay them enough that they're basically set for life after a few years in the job, because in a few years they may find themselves unemployed and unemployable.
(Of course, this creates another moral hazard issue, where once you've paid them all this money and given them this generous severance option, they have no incentive to actually do well, because they're already collecting their retirement plan. C'est la vie - this is why you get execs that make superficial changes while the company lumbers on to its demise, and then cache out with 9-figure parachutes when everything goes bankrupt.)