If I’m understanding correctly, a company at any given time has a fixed number of shares that split the ownership of that company, thus if a CEO is paid with shares someone else must be giving up their shares.
In: Economics
That’s the thing, it’s created out of nothing. If a company has 10 million shares and they give the CEO a bonus of 500,000 shares the company will either buy 500,000 shares on the open market to give to the CEO or they will just create 500,000 shares and now have 10.5 million shares.
To answer the question what prevents the company from printing money to pay executives, compensation plans need to be approved by the board of directors, and the board of directors can be sued if they are found to not have the shareholders best interest in mind.
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