Sorry, what is the issue supposed to be? "The company is owned by shareholders" describes all employee compensation. (Indeed, it describes everything the company does.) Does the presence of shareholders mean we have to stop paying salaries?
The issue is that the shareholders have agreed to provide specific compensation to employees. But the shareholders own the company.
But here the employees gave themselves excess compensation, out of resources owned by the shareholders, and did not tell the shareholders that they did so.
That is the difference between receiving a salary from the company, and secretly adding to your salary by regularly using the corporate credit card on yourself. The first is what they agreed to, the second adds personal theft.
> The next question to ask is: are the increased compensation expenses created by options backdating clearly disclosed to the company's investors, or does the company misrepresent its compensation expenses to investors as being artificially low?
The issue is lying to shareholders about how much salary you're paying - particularly when it's to yourself. I'd draw an analogy with having fictitious employees on the books when the CEO is actually just trousering their salaries.
