If you punish the CEO for every illegal thing done in a corporation (often without their knowledge), then no wise person would want to be CEO. In order to function, large companies would have to make the CEO position largely ceremonial and appoint desperate risk-takers, and do the actual executive leadership somewhere else.

So a strict rule like that risks setting up a formal scapegoat situation which could then lead to the opposite effect.

A CEO can’t be expected to know every single thing that happens in their company.