I would argue executives should receive stock with long vesting schedules (as in 30 years) not options. However, options are nominally cheap up front so they tend to look more appealing for boards.
I wonder what situations this would apply well to? It doesn't greatly bother me that CEOs of oil companies are profit-driven, but the concept of rewarding someone's work by enriching the people that they love, rather than just creating short-term incentives, would fit especially well with nonprofits and NGOs, which oftentimes seem like their primary mission is to justify their continued existence.
Maybe the best thing to do is to abandon performance-based compensation entirely, because it can't be done over long timescales and over short ones it is an abomination.
Note that plenty of founder CEOs are happy to accept near-infinite delays in payment. 90% of Jeff Bezos's wealth is still in Amazon stock despite being there 20 years. And Amazon has been kicking the asses of its competitors for decades precisely because it has been willing to make very long-term investments.
With Bezos, we are talking about amounts of money so large that I (and I assume you) can't truly conceive of them. If 90% of his net worth is Amazon, Jeff Bezos has ~$3 billion dollars invested in companies other than his own. He's plenty diversified and if that 3 billion is properly managed, he'll never want for anything, ever. Even if Amazon stock falls to 1/10th of its value, Bezos's life won't appreciably change, he'll just have slightly less leeway when building his multi-million-dollar cave clocks.
I'll note that the companies of the post-war economic boom (1946-1980) did well enough even though median CEO compensation (cash, stock, and options) was around $1m annually in real terms. So it's reasonable to think that we'll still be able to attract decent talent for the merely 2x that CEOs are getting in cash. The long-term stock would be an incentive for long-term behavior.
Caring about future generations on one hand, and making sure that one's own children will be very well off financially (as opposed to merely debt-free) on the other hand, are very different things. I don't think that effectively giving shares to a CEO's children incentivizes that CEO to make decisions that benefit future generations as a whole. It might, however, drive her/him towards a long-term thinking.
If she/he has children, that is.
You don't need CEO money to escape the bonds of debt. I went to prep school, where most of the parents were stock brokers, lawyers, doctors, or sub-C-level executives. Annual salaries in the hundreds of thousands, but not millions. Between merit scholarships (which are easier to get when you're well-off) and family money, every student there that I still talk to graduated college with little or no debt whatsoever.
CEOs get the big bucks because, supposedly, they are making wise strategic decisions that have an impact for decades. They are, in theory, building to last. I'm generally suspicious of incentive pay, but we're going to use it the time scales should match the results we are trying to incentivize.
(Of course, I think the pay system we have exists because CEOs get paid the big bucks for entirely different reasons. If a system consistently produces a given result, then whatever the nominal purpose, the result generally reflects the actual purpose.)
Even if it were, it's still not a good argument: even if shareholder value necessarily imposes (opportunity) costs in terms of profitable projects not taken (what's the difference between the lost returns and the second-best choice, anyway? probably negligible), you have to compare this to the costs of alternatives. Countries with "stakeholder" involvement in the governance system tend to have marginal q < 1, i.e. they undertake negative NPV projects, destroying capital.
It might even be the case that shareholders today aren't really any better than other "stakeholders" in terms of alignment of incentives. If I'm just arbitraging a stock, do I really care how the company actually performs in real life? Probably not. I care about the popular perception of the company in the market at the point at which I want to sell (or buy, I suppose, depending whether I'm long or short, but whatever, same difference).
The crucial difference is that, according to the article at least, the short-termism leads to them not taking +NPV projects, instead returning money to shareholders. This money can be redeployed productively, so even if it's not earning the NPV of that theoretical project, it's earning something very close to it. The opportunity cost is very small.
Stakeholders undertaking -NPV projects is a whole other ballpark. Just consider the growth implications when this happens economy-wide.