When a CxO gets their 2nd or 3rd company broken up they'll find it very hard to find a ship willing to let them on board.
If you let the company get away with crimes over and over and only punish a CxO the company will simply hire a guy to take the fall for them. There's an endless number of people working minimum wage who would happily take a CxO title and salary for years knowing full well that there's a chance they might get fired eventually.
#1: If a guy breakes the rules so much he gets a 3rd strike, I think it is perfectly reasonable he should never have a CxO job again. It is too easy getting away with serial white-collar crimes.
#2: It is not the company to decide who to take the fall. It is the court/judge.
1st strike blocks you from working as CxO for 5 years, 2nd strike for 10 years, 3rd strike is forever.
Right now too many bad CxO jump from one ship to the next again and again.