Consider the opportunity cost of your teens working for their uncle rather than for anyone else. Babysitters make $10-$15 per hour (at least adults in the Los Angeles area do) so they could be making quite a bit if they were working for someone else. It's not fair to shortchange them just because they're babysitting for a relative. If he's a CEO, he can likely afford this much, and if he can't, then he'll have to hire someone else to babysit for him.
Presumably, this is just for the summer, and your daughters will be going back to school in the fall. What are your brother's plans for September? Is he going to put his child in daycare then?
What would your daughters be doing this summer if they weren't babysitting for their uncle's baby? Would they have another summer job? Take summer school classes? Work at a camp? Go to camp? Hang out with friends? There's an opportunity cost to them for what they're missing over the summer while they have to babysit for a relative rather than doing what they want for the summer.
I think it's fair for your daughters to be paid fairly for their work. It's not easy caring for a 3-month-old, as you know. Babysitting is a great job for teenagers, so they realize how much work and responsibility is involved in raising a child. They're much less likely to become teenage parents if they know how much work is involved.
When I was a teenager (25 years ago!) I made $1/hour, but times have changed since then...
I hope this helps!