in general, employees are not held financially responsible for mistakes they make at work unless they are being criminally negligent/malicious. a CEO is just a very well paid employee. unless I'm mistaken, limited liability is about what owners of a company are liable for.

the goal of limited liability is not specifically to help startups, it's a common law concept that predates "startups" by hundreds of years. I would argue that it helps the little guy much more than the extremely wealthy. I personally could not invest at all if I couldn't limit my losses to the amount of money I put in. people with millions of dollars can take on a lot more risk without becoming homeless if one or two holdings goes belly-up.

There's a pretty big difference between "My holdings went belly up because our process wasn't efficient enough" and "My holdings went belly up because I was caught giving cancer to kids". Limited liability may be intended to protect in the former case, but it also protects in the latter case.

Part of the difficulty here is that ownership confers some power to shareholders (the ability to vote in some corporate matters) but doesn't confer any responsibility for those decisions. For the average investor, this is a good thing: I don't have time to vote in every shareholder election I hold the right to vote in, so it doesn't make sense to hold me liable for elections I didn't vote in.

A possible solution here is non-voting shares. Limited liability could easily apply only to those holding non-voting shares, and people could have the ability to convert voting shares into non-voting shares if they don't intend to vote in shareholder elections.