It's his money, he's the capital-holder, he can do what he wants with it. If he thinks it's better for his business to do this, that's entirely up to him.

Capitalism doesn't mean "pay your employees out according to some made-up scheme of who's-worth-what," though the weird calvinist pseudo-capitalism we love in the U.S. sure likes that kind of ranking.

It's absolutely capitalistic, but there are many people who would call it economically inefficient or irrational. After all, a capitalist can choose to freely exchange his capital for higher-priced goods of the same quality as lower-priced goods instead of those lower-priced goods.

He hasn't limited upper cap he has imply set a higher base salary.