> If you offer too little compensation, you may not attract the talent that you need to be successful. But if you offer too much compensation, management and employees may begin to feel fat and happy and lose the motivation to maximize long-term value for shareholders.
> Salary is a measure of how much value one is adding to a company, and that information should not be a secret.
> If companies are consistently paying management teams 30% away from these averages in either direction, there is likely a problem at the company.
This runs the gamut from superstition (paying people more may make them less 'hungry') to untrue as a matter of fact (salary is an equilibrium of supply and demand, not a measure of value added), to playing to the middle ground fallacy (you should pay upper management within this range dictated by an average).