My own theory is that executive compensation serves a purpose that generally isn't said out loud. Usually compensation comes mostly in the form of stock, and the real reason for the large amounts is to reassure investors that if the executive finds him or herself in a situation where they have to make a choice between what's good for employees or what's good for shareholders, they'll be strongly incentivized to choose the latter.

It follows that if a CEO were to refuse stock compensation they'd be at risk of being fired by the board of directors, because owning stock is an unspoken qualification for the job.