We play quite a few corporate gigs and wedding receptions and this comes up from time to time.  Our policy is that we will accommodate them but they must attend a rehearsal and work on their songs with us.  This gets them comfortable with playing with us and gives us a chance to see if they are going to embarrass us all.  Those who can't cut it have realized this and decided not to sit in.  Those who can cut it have been very happy with a performance they were proud of.  No walk-ons are allowed.

This policy works well for us and in one case the bride's father got us some plumb gigs and actually did a few with us as an alternate.

I have a different take on this.  I look more at what the people want who are organizing the event.  Yeah, they might not play that well.  I don't think that matters as much as what you can gain out of this situation.  I am imagining that these execs would probably really dig seeing there buddies play.  The whole thing is about THEM having a good time.  Most non-musicians are not near as critical as we are of our music and they might not even notice or care if the quality of the music goes down.  We had several people sit in at a party recently which they paid us well for.  One guy sang very well, one guy played the congas poorly and others were marginal as well.  It didn't really matter, the people had a good time.  They loved playing with real musicians and yes the quality of the music went down for the most part when they played, or sang.  Anyway, I think you made the right decision and I don't think any mediocre playing by these people sitting in will affect how they view your band.  Have fun at your gig, Joe