The UK coalition government apparently has a moron quota and Vince Cable is filling it nicely. He apparently can't figure out why someone would need a million pounds income. The obvious answer that they have a million pounds of expenses does not seem to occur to him. The second obvious answer, that they have the imagination and desire to improve humanity by that figure yearly and would like to make the world a better place also seems to be beyond him.
A third situation exists (not exactly on point but much more common), where the person in question is very competent and regularly achieves much more than that princely sum in value added for their firm. They could do the same in any number of other firms as well.
So the smart employer pays them highly as a means of keeping them around. The employee doesn't actually care about the money per se but likes the idea of being valued and uses money as a yardstick for that. Some other yardstick could be used but money is actually very convenient as it makes comparisons easy.