Can a US citizen incorporate a company where he won't work and hire an H1B visa holder as the CEO?
A US citizen may incorporate any company. There has never been a need to work in a company you own.
An H1B has lower requirements than other visas. So that shouldn't be the problem. But it is company-specific and limited. So, only one can give you an reliable answer, the USCIS Service Center.
As far as I know the H1B visas for 2021 are gone already. Normally, you only have one week until they are all issued.