If there's anything worse than a CEO's failed tenure at a public company, it's the crazy amounts of shareholder money these executives often receive when they "retire." Last week's reports that Talbots (NYSE: TLB) is seeking a new chief executive turn out to be true, but as much as new talent's needed at the top, departing CEO Trudy Sullivan's getting an insultingly handsome goodbye package.

Shareholders pay for failure
Sullivan's pay has been outrageous compared to the retailer's lackluster performance, and this golden parachute should irritate long-suffering shareholders, too. (Remember, the folks on Talbots' compensation committee are responsible for such policies: They're listed here.)

According to an 8-K filed this morning, Sullivan will receive a cash severance payment of $5 million payable in installments over two years from her retirement date, which will occur by June 30, 2012. (The retirement date will come to pass once the company finds a new chief executive.)

In addition, Sullivan will receive a pro-rata bonus for the fiscal year in which she officially retires; continued medical, dental, disability, and life insurance for two years after retirement; accelerated vesting of stock options; and two years of continued vesting of restricted stock.

Shareholders shouldn't be amused by the costs associated with this outgoing executive. Talbots' nasty quarterly tidings last week were the rule, not the exception, over many years at Talbots. The last time Talbots reported an annual increase in sales was the year ended January 2006; although Talbots managed a pitiful profit of $0.11 per share in the year ended January 2011 after a string of annual losses, in the last 12 months revenue has decreased 7.4% and Talbots is running at an $0.89 per share loss.

Corporate history hardly lacks other examples of CEOs going out in style despite failures. Bob Nardelli's golden parachute at Home Depot (NYSE: HD) springs to mind, as does Carly Fiorina's departure package from Hewlett-Packard (NYSE: HPQ). When it's a relatively small, specialized retailer like Talbots that's struggling with dwindling sales and lack of profitability, though, shareholders should feel even more outraged.

Better shopping for investors than this
Talbots' shares had jumped about 8% at my last check today, so maybe some investors are entertaining hopes that a new CEO will finally turn Talbots around. However, given the possibility of about six months of what you could define as a "lame duck" CEO, a challenging holiday season, and a load of shareholder money earmarked for an outgoing executive, investors should steer clear.

It's not as if there are no other options in the retail space. Take Buckle (NYSE: BKE), which is solidly profitable and trades at just 13 times forward earnings. Although Aeropostale (NYSE: ARO) has hit hard times recently, it's still profitable and trades at 14 times forward earnings. Talbots' direct competitor, Chico's (NYSE: CHS), has generated 12.7% revenue growth and 21.9% per-share earnings growth in the last 12 months, and it's trading at an inexpensive 11 times forward earnings. Any of these would be far better, safer options than investing in Talbots today.

I'm keeping my "underperform" CAPScall on Talbots on My CAPS page. I suspect things will get worse for Talbots before they get better (and that's really saying something). Although Talbots' shares trade at a buck and change, they're too expensive on many levels.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.