I'm pretty sure that Sakaguchi is referring to Tetsuo Mizuno, who was Square's president from 1993-1996 (and remains the founder/president of Alpha Dream, which develops Mario & Luigi. The name itself is a jab at Final Fantasy). He was ousted the year after Chrono Trigger and replaced by Tomoyuki Takechi.
With Takechi in charge, Sakaguchi could probably have greenlit anything. However, Square USA and Final Fantasy: The Spirits Within were the new goals, which eventually led to both their departures.
Conclusion: Square management was historically unstable and agenda-driven.
Sakaguchi wasn't like that when he was CEO. He wanted to create new IPs and let them grow.
What Sakaguchi may have wanted differed from what happened in reality. He and Takechi fell into the trap of relying too much on Final Fantasy, which was ironically used against them during their ousting. Most of the teams in Tokyo were collapsed to make way for FFX, XI, and XII.
Monolith Soft (1998) and Brownie Brown (2000) were formed in opposition to this direction. Personally, I think the biggest problems at Square were set as soon as they went public. Every management team struggled under those conditions, even if they had the right intentions at the outset.
BTW, Chrono Trigger was always a problematic game with multiple people claiming ownership.
There's Sakaguchi and his friend Kazuhiko Aoki.
Yuji Horii (who re-negotiated scenario rights and royalties in 2008; check the new copyright info)
Masato Kato (who ultimately created Chrono Cross; Yasunori Mitsuda backs him as the series visionary)
There was never any way to satisfy everyone.