Why might some shareholders prefer cash over stock as compensation?

Shareholders might prefer cash over stock as compensation primarily because cash is a tangible asset with guaranteed value. Cash provides immediate liquidity, allowing shareholders to use the funds as they see fit without the need to sell shares or wait for a stock price to appreciate. Unlike stock, which can fluctuate in value due to market conditions, cash remains stable in value and can be relied upon for immediate expenses, investment opportunities, or personal needs.

This preference for cash is particularly pronounced in uncertain market conditions where stock prices may be volatile. Shareholders may feel more secure receiving cash since it guarantees them a definite and usable asset rather than a fluctuating value represented by stocks. Additionally, cash can be reinvested or utilized in various ways, offering shareholders flexibility that stock compensation may not provide immediately.