But if the payout was in stock, how were the other stockholders hurt because of this? Are they saying the number of shares give to the board members could have been made available to the public for purchase which hurt the stockholders that could not buy them?
The claim has nothing to do with making the shares available to the public for purchase, by the shareholders or otherwise. Issuing stock is dilutes existing stockholders. An example with much simpler numbers to make things obvious.
I have company X, which you think is worth $15. Company X has 10 shares of stock. I happily sell you one for $1. You are excited because you have decided it is worth $1.50 ($15/10). I am happy because I have a dollar. Tomorrow, I issue myself 10 new shares of stock. I am still excited, more for me. You are sad because now your one share is worth only $0.75 ($15/20).
