Prof Trevor Purt was suspended from Betsi Cadwaladr University Health Board (BCUHB) after it was put into special measures.
BCUHB ran the much-criticised Tawel Fan ward at Glan Clwyd Hospital, Denbighshire, which closed in 2013.
A health and care union boss said the move would "do nothing" to address "deep-seated" problems at the board.
Jon Restell, chief executive of the Managers in Partnership (MiP) union, said: "This will only create more instability, which is not in the patients' interests."
A report found there was "institutional abuse" at the Tawel Fan mental health unit, where patients were allegedly treated like animals in a zoo.
Deputy chief executive of the Welsh NHS Simon Dean was appointed as interim head of the board on Tuesday.
The suspension of the chief executive of a troubled health board is "short-sighted", a union boss has said.