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Personally I think it's exactly the reason why you don't want your CEO to have a cushion - he doesn't really care, it doesn't really matter to him that his former company is going down the toilet as he's cashed out long ago.

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Cashing out is not thesame as not caring. Didn't Steve Job cash out when Apple fired him, but when he returned, he still cared enough to do awesome things. Why would you want the CEO of a public or big company to be worrying about his personal finance instead of the business. There is a reason why even hired CEO's are well compensated.

You want a CEO's interests to be aligned with the company's, which is why most CEOs are given share options that will be worth something in 3 - 5 years, large bonuses based on success, and so on.

Steve Jobs cashed out when Apple fired him, but when they hired him back they also gave him large numbers of stock options [1], worth billions after he'd resurrected the company.

1 - http://en.wikipedia.org/wiki/Steve_Jobs#Wealth

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