It doesn't have to be that way, and indeed many orgs are moving away from that. Where I work, individual contributors who are talented and want to put in the work can attain a level comparable to a Director or Senior Director, and often even make quite a bit more money than their level-peers on the management track.

There's still a cap, of course; you can't remain an IC and have the level equivalent of a VP or C-level. The theory there is that the higher you climb the IC ladder, the more difficult it is to have increasing levels of impact without leading groups of people larger than just yourself. (And indeed, our higher-level IC positions often involve some amount of non-management leadership outside of heads-down coding all day.)

I'm not 100% sure I agree with the reasoning behind the IC ceiling, but things can be awesome for you outside of management, with plenty of career and salary growth opportunities, if you find a company that understands and values individual contribution. I wouldn't say this is a lot of companies, likely not even a majority, but it's a number that seems to be growing, at least in technical fields.