Comment by brightball

One way of looking at it is paying for mindshare. Sometimes companies want your brainpower only focussed on one programming problem. They might not want you at work, thinking about items in your side project.

Focus is a big deal. Doesn't make it right but it's the only business justification I've ever heard that actually seemed legit.

At the same time, there should be an expectation of compensation to give something like that up.