1) So that even the lowest paid workers can afford to live comfortably.
2) To improve fairness to employees. This will also lead to a better work environment as the company has money to invest in itself and better longterm strength and stability. The average annual household income is ~$50,000. With executive pay capped at 25x that still allows executives to make $1.25 million YEARLY.
Put a mild to heavy tax on stock awards and such. So for example instead of cashing in and getting $100 million you will only get $75 million. I trust they can live comfortably on such amounts. . .