Put yourself in DJ's shoes...

Do you resign?
When you know you will lose out on £800k and may not have another club to go to.

If West Ham have offered him the job, Take the job?
Wages will be a lot lower than he recieves here (£500k) and a poor start will almost certainly end up in him being sacked.

Stay at Cardiff knowing they can't afford to sack him?
Keeps his ridiculous wage. Still in a cushy job but owners unwilling to back him. If he is in the dugout come the new season perhaps face a fan revolt which he probably recieves near enough week in week out anyway.

At the moment the third option is definitely preferred. He is in a position of power he should not be in and unfortunately we may have to bare the brunt of it with another failed campaign next season. If you were in DJ Shoes would you do the same thing? because under contract he is entitled to compensation no matter how ridiculous the contract is.