This makes an interesting claim.
High CEO Pay –> Extravagant Lifestyle For CEO –> CEO That Is Out Of Touch –> Bad Business Performance
So paying your CEO too much can harm your company? I don't buy it. I mean, I think it happens, but the solution isn't to cut back on the big paychecks. The solution is not to hire a self absorbed sociopath to run your company.
I'll share with you my hiring secret. Granted, I've only hired about a dozen people in my entire life, so take it with a grain of salt. Hire people who play the game because they love it. Believe it or not, there are people in this world that think it is infinitely more fun to get their hands dirty running a large company than to rub elbows with Hollywood stars at big parties or trade jokes with cronies at a political fundraiser. Hire people like that. Whether they are humble or boastful is, in my opinion, less important than what they like to do with their time.