This is a re-invention of the wheel. Many companies in the past had non-managerial career paths for technical people, and for some reason this fact, along with many other things, becomes "an innovation" by the current generation.
Imagine a little start-up with a 'Distinguished Engineer' and slew of Principals and Staffs, it'd seem a bit weird wouldn't it? Even if they distinguished themselves elsewhere. Maybe it's just me.
No weirder than a little young startup with a CEO, a CTO, a CMO, etc. etc.
Titles in general aren't that meaningful without context, no?
Have you ever seen/heard of one with a DE? My starting point was that it basically/presumably doesn't happen - 'imagine' - and that it would seem weird if it did. If it is fina and normal as you suggest then ok, it is just me (as I said it might be), and I haven't come across it.
Hell you don't need any C levels at all. The legal structure doesn't require it, corporate directors is not tied to title ... there are few things that have to exist, and it's mostly about who can sign contracts that bind your company.
Fundraising is probably easier if you go out as "CEO" just because expectations are met, but that's a separate issue.
It's a bit like making sure the characters in a game are balanced so the game "works".
If managers are paid more you're putting a price on how much someone has to dislike managing people or prefer spending their time ICing for someone else. I don't think many people will pay much (in opportunity cost) for that.
And probably more significant than the initial bump for many is when they're looking for the next job elsewhere, and can say 'led a team of x many' vs. not.
In most companies that's definitely the case. You can make way more as a mediocre manager than as an outstanding IC.
Most technical people I've met who bemoan the "fact" that they would make more at their company as a manager (mediocre or otherwise) would also have the option of moving companies and/or industries to a technical role that pays better. And yet, they don't. Mostly because it turns out the preference isn't just about $$, but about all the other factors (I don't want to move, I don't want to work on X, I only want to work on Y, it's too big, it's too small, they don't give enough holiday, whatever).
So what it really comes down to is that they disagree with the company about how it values their relative contributions. Which is obviously fine, but do you really think the average IC has the data or experience to evaluate this well? Many of the rants I've heard along these lines were pretty naive about the business.