This is a false dichotomy. I see this kind of language frequently in discussions. In my experience, it does not tend to invite more thinking. On the contrary, it tends to polarize and discourage discussion of other options.
So, please, let's move away from overly simplistic arguments. So instead of false dichotomy, let's explore a range of options.
Consider this proposal: First, reduce the CEO's compensation (call it C) by multiplying by X (where 0 < X < 1). Second, use what is left, C(1-X), to increase compensation of the other employees. For various allocations [1], what are the possible outcomes?
One would hope [2] that companies operating in a relatively free and somewhat capitalist system like the US would directly or indirectly explore the values of X in order to find better and worse results.
As for me, I would bet there are values of X that lead to better outcomes for both the company and the satisfaction of its employees.
I would be interested in models and studies that examine this question. Would anyone like to share some they have read?
[1] Some (e.g. libertarians) might call this a "redistribution" and look at it with a negative light. I suggest calling it an "allocation" because I think of it as an optimization problem. The goal is not to maximize CEO pay. The goal is to maximize company success and overall employee satisfaction. (We might define success as (i) profit or (ii) or accomplishing some mission.)
[2] I say "hope" but I do not expect it. There are many market failures and organizational factors that may get in the way.
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