If the share holders knew about it then yes they should get a hair cut. Since they didn't it makes much more sense to hold the CEO liable. In theory shareholder

If the share holders knew about it then yes they should get a hair cut. Since they didn't it makes much more sense to hold the CEO liable. In theory shareholders can replace a CEO but in practice it is just about impossible. The theory where the CEO skips all liability, as is sometime the case in the US, is a recipe for this behavior to continue.