Shareholders use positive incentives, not negative ones. Because positive incentives generally lead to better results in this case.
You seem to be arguing that the C-suite can do anything it wants to. As long as it does it in an official capacity, it can cause whatever harm it wants.
That seems like a very strange argument. Do you believe corporations and corporate officers have no moral obligation to act ethically?
Because if so, I'm finding it hard to understand the difference between a corporation and a crime family.
You say this like it's crazy, but we literally already do this with Doctors and Surgeons, it's not as tricky as you make it sound.
There's no valid reason that CEO/C-Suite folks get to forever escape any responsibility and accountability.
There'd be a filtering effect where the best and brightest avoid industries where we need them to be. That standard would likely reduce the quality of the leadership and bias it further towards people who are delusional about safety.