Indeed, with a big BUT: you don't want to overvalue loyalty in respect of competence. You don't want to have a boss that is not good but "is here since forever".

Instead, reward them economically. Everytime the company takes a leap forward, make clear to them that they were important for the process, and share some profit.

And make clear that being important in a moment doesn't automatically mean they will be important in the future: they will have to compete on results, like everyone else.

Not everyone is great at the level above and even if they are, sometimes it is not always a good fit for them. I've had more a good few engineers ask to go backwards when they've been promoted - each for their own reasons but nearly always around the theme of being in a position of leadership / seniority.

But if you reward loyalty over skill then don’t expect skill to stick around.

Some people have 5 years of experience and some people have 1 year of experience 5 times.