Throughout the financial crisis, I've been emailing with an old friend of mine who works in the financial industry. I imagine that I'll be quoting him in the future, but he needs to be kept pseudonymous. So I'll call him by the name of a very smart Minister of Finance, in the original Irish -- Ó Coileáin. Here he explains why bad CEOs so often get enormous bonuses as they leave the company. Basically, boards are paying bad CEOs to go away, because they're so entrenched that there's no other way to make them leave. Often enough, it's worth it.
Firing executives is impressively difficult -- boards represent investor interests only imperfectly, CEO's are far better at the political side than any collection of investors and almost any board, so getting rid of the head of almost any company is crazy hard. Now, I've yet to be firmly convinced as an investor that there's more than a tiny number of CEO's/management teams that can actually add value to a company. On the other hand, I've been astounded how much value it is possible for a bad or misguided management team to destroy and how many new and different ways a CEO can throw your money down the toilet. I can think right now of more than a few management teams my firm would happily pay millions of dollars to replace if we could get them to leave without putting up a fight. You aren't giving away the company's money (or at least you're not trying to), you're making an investment, and often one that pays excellently very quickly. Carly Fiorina left HP and the then-$50b company returned 50% in the next year, which is totally worth $21m.
So if you're trying to stop the golden parachutes, the key step seems to be making it easier to fire CEOs. I don't know exactly how you do that, but I'd be very interested in hearing ideas.