I want to preface this by saying that I'm not implying there is any problem with the Ive/Apple situation, I'm merely arguing against the idea that you can stop an ambitious person from climbing as far as they want to climb.
You can never compensate a person what they would make if you actually promoted them. I.e., you can't pay your CEO less than or equal to your Chief Engineer. If I'm wrong on this feel free to speak up and/or down vote me.
I think you're making some assumptions here that are not necessarily correct, 1) that by being CEO you don't get to do the fun stuff, we only have to look at Apple's own former CEO to know that's not the case, and 2) that a person at this level is going to reflect on the choice and not think they would be good at the higher position. I'm no John Ive, but even my little ego has never allowed me to think I won't be equally good at some higher position than my current one.