Ok, explain something else to me about stocks: the company issues stocks, usually an an IPO, sometimes other times, basically taking out a loan, yes? Why does it then matter to the company how much those shares are worth in the future? Why does it care what it's trading at?
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Yeah - which is, in fact, a net loss of value to all the other shareholders, which is why it's generally treated as a tax deduction like other forms of compensation.
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But since it doesn't require any cash outlays, it's a way to give a LOT of value to executives, especially early when cash is scarce.
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