[marbletimes]

"My theory is that he’s too valuable where he is, and that they don’t want to move him elsewhere."

Assuming the "they are too valuable here to be promoted elsewhere" hypothesis is true, and it may be true in some cases (and not true in the majority of cases), there is always an increase in compensation in the form of increased base salary, bonus, or equity, depending on the company, available. A promotion is both a reward and a belief that the person would have a greater impact in another position. More money is also a reward.

[mooreds]

And why does he have to move elsewhere if he is promoted? Can't he remain where he is, with a new title and more money?

Even if he has to move to a different section of the company if promoted, I'm sure there a plan can be put in place to hire and train a replacement.

We're all speculating in the dark here, but from what has been written, it certainly seems that this person has given the company a lot and deserves to be compensated.