Plutarch's Life of Julius Caesar notes:

"Arriving at Alexandria just after Pompey's death, he turned away in horror from Theodotus as he presented the head of Pompey, but he accepted Pompey's seal-ring, and shed tears over it."

Remember that Caesar was big on granting clemency to his defeated adversaries as a propaganda move to show both his power (this failed rival of mine could never pose a threat to me again) as well as his own magnanimity. Pardoning the washed-up, geriatric, and totally beaten Pompey the Great into a quiet retirement might defang the threat posed by those still loyal to Pompey (like Pompey's sons, who would bedevil the Caesarians for another 20 years).