Why is this type of payout allowed by the SEC or the corporate governance structure?
1) They did not have enough evidence to fight in court - the article claims Google thought the accusations were "credible", but not necessarily proven. This could easily be a disaster for Google which can easily go away with some money and a resignation.
2) Even if they had enough evidence, the damage to their public image from this would be substantial, which could be costlier than the "payout".
3) The majority of controlling shareholders(Brin, Page, Schmidt) want to remain on good terms with Rubin and are willing to sacrifice the money to do so, thus fulfilling the responsibility to the shareholders angle.
How would you ban this type of behavior?
Now make the assumption that a group of human beings were doing the right things at the right time in the right place to become mega rich, and then apply the same rules.
People aren't terribly different from one another on the fundamental level- the only different things are circumstances which determine 1) the number of restrictions, and conversely 2) the number of privileges.
The only valuable question is how to minimize this human dynamic as the size of the group grows, because leaving a 5-person group behind to find something different is a lot easier and a lot less consequential than leaving a 5000-person group.