How I imagine it went:
Dev Team Member 1: We're all very upset that our friend and co-worker died. He deserves to be remembered by our team and as someone who contributed to this game we spent so much time together making.
Dev Team Member 2: I know, let's put him in the game so he'll always be part of this project!
Dev Team Member 1: Great idea! Let's go get approval from our manager so we can commit some assets and get this done!
*Later*
Dev Team Member 1: So that's our idea, we want to put him in the game.
Manager: I like it! But we have our dev cycle packed pretty tightly as is, especially this close to launch. To be able to assign resources to this, I'm going to have to justify the cost to upper management because it will effect their team utilization and they're pretty touchy about that this late in development. They are after all a business, and any addition to the game's code-base right now has to go through QA assets. Our QA team is already being pushed hard making sure the game's launch isn't a buggy mess, which would be a launch disaster, especially with our increased PC sales.
*Later still*
Manager: Great news team, I managed to convince upper management to allow us to do this as long as we compensate the team development hours by making it a small DLC. Since it's a relatively small line item and they can book it under as a charitable donations for tax breaks, they offered to commit over half of the sales to his family as a show of condolences for the first two years of the game's life! Since the majority of sales in a game are in the first 2 years, this should be a good chunk of the DLC's purchases! Only in America though, since it'd be prohibitively expensive to set up the legal framework for overseas donations and the budget can't justify it. Still, it's nice to know we managed to memorialize our friend and colleague. Surely everyone would appreciate a company with no legal or moral imperative to do this helping us achieve this, and they definitely won't ruin this with a weird cynical idealism where a family suffering a tragedy is bad for receiving a momentary condolence despite not being a poor, 3rd world cancer survivors.