I would even argue that as long as the students who did most of the work have their name listed as first author, there is nothing wrong with this arrangement. I dropped out of my master's program after the first semester because I was being pushed to publish, but wasn't being plugged into any research existing programs. Every "unique" idea that I thought of turned out to have already been studied exhaustively back in the 70's or earlier. All the favorite students in the grad program were people who ignored this inconvientent fact and managed to get rehashed bullshit accepted into conferences.
Several years later I went back to school at a large state U that plugged me into the work they were doing, showed me what the state of the art was and where there were gaps that hadn't been researched in detail. Without building off the ideas of my advisor I would have never been able to do meaningfull research that progressed the state of the art, and would have had nothing worth publishing. He deserved to have his name on my papers.