I think there's an easier solution that would be less disruptive. Create a legal designation of "executive" and require that every company have at least one (ie the CEO). Anyone in that class bears legal responsibility for the actions of the people they manage. If you follow the standard hierarchy for CFO, CTO then decisions that require specialized knowledge fall on them instead (e.g. if your CFO is committing tax fraud and you didn't know and it's not reasonable that you as the CEO would be able to recognize it then it's only the CFO's problem). Then instead of criminal liability if you're found doing something illegal you are barred from holding any executive position.

I think this puts the incentives in the right place, being able to tell your CEO "no, I'm not willing to risk my career for that" I think would be a powerful self-regulating force and also provide cover from who can't afford to say no from being thrown under the bus. It's essentially professional licensure but reversed.

>If you follow the standard hierarchy

Are you mandating that as part of the law? Otherwise you've just incentivized "creative" non-standard hierarchies. Again, externalities

> You think CEO compensation is out of control now?

The other side of the coin of CEO compensation not being related to real-world concern is that CEO compensation isn't related to any real-world concern.

There is no reason to think it will increase or decrease due to such a change.

Ok then lighter version of it - pay it off their compensation (including stock and everything else, not just money), up to 5 years backward.

So if the fuckup is big enough they now owe 5 years of their pay. Should be motivating enough.

I'm good with the fallout from that. Everything will adjust.