The correct solution would be for him to work half days and continue with job rewards to be identical: he gets more free time and a better life, while the company gets a more loyal employee who is more relaxed and would be more willing to go that extra mile on projects which actually are important.

It's really just one of those cases where human nature and the desire for him not to get 'paid for doing nothing' is actually hurting everyone involved. Humorous and very sad.