There's a book I remember reading - I can't remember, but it may have been The Dictator's Handbook - which talked about how this is a common management pattern in authoritarian dictatorships (although typically somewhat more extreme in its implementation). The dictator ends up weeding out most people of exceptional talent and competence, but it consolidates his personal power. Bad for the state when it faces a crisis, but good for him personally. Easy to see how this applies to senior management at a public company.