For example, it would make perfect sense if a dean made less than one of their Nobel-prize winning professors. Or a coach that makes less than their olympic athletes.
i'm sure there are other examples.. Stating "Your direct reports should never make more than you" as fact seems a little overreaching :)
Generally, a manager is a force-multiplier and should get compensated for making everyone better. This generally means that managers get paid more, and directors more, and c-suite even more. This is just a generality though. It falls apart all over the place.
> How can you be the boss of someone who is defacto more valuable then you (even as they lack the responsibility you bare)
Easily? Your role as a manager is to enable your direct reports to do their best work. That is orthogonal to pay differentials. I've seen business founders work on teams under a manager. Strange power differential there! And the pay difference was insane - the founder _owns_ the business and can be worth millions. But it works. It is the same reason why a younger person can manage an older person, or someone less skilled in programming can manage a programmer.
Also, in many professional sports, coaches make less than the members of the team they coach.