100% agree. I look back to several situations in my own career as a manager where I did have this case arise and went looking around the org for other opportunities that might give my employee what they wanted. Some of those worked out, but many did not. The ones that did not would be indistinguishable to the employee from a manager just "stringing along" the employee to get a few more months out of them. (There are other cases where I was able to be more upfront as there was an obvious mismatch analogous to your CTO's direct report case.)