Coming from the finance world, there's a very good reason that doesn't happen. In situations where a company is spiraling, everyone is incentivized to leave for new work. The people who are most competent at work are also most capable of getting new jobs, so what used to happen before it was standard was as a company died, the best people left, and the company died faster.
If you axe the CEO's pay by 50% one year, what reason does he have to stay on and fix things? Why shouldn't he just go to some successful series A startup, get a bunch of equity, and retire in 10 years? He definitely could, if he wanted to.
