EDIT: My main responsibility is to keep the team happy and productive. If this developer would leave the team our productivity would drop and we wouldn't achieve our goals we set for ourselves this year. It would have a direct impact on my bonus as well and it is in my highest interest to keep great people at every possible cost. If I think I don't earn enough then I will have that chat with my line manager, but I will never try to destroy my team based on some personal ego crap.
Which is better for the company? (A) Leader acts in such a way to make him or herself 150% effective, or (B) Leader acts in such a way as to make all of his or her direct reports 115% effective?
If a leader can't make their team more effective, then why have them in leadership?
(Edit: Essentially, what dustinmoris said!)