I think the point is that the shares represent deferred compensation.  The benefit to the company is that it doesn't impact cash flow.  While the recipient will need to report the value of the shares received on their income tax that doesn't necessarily imply a "huge tax bill".   In fact in most cases because the shares represent deferred compensation the value will typically be considerably less than what would have been paid in salary.  In other words the expectation from the staff point of view is that over time the growth in value will be worth it.

Further, if it works out the recipient may actually end up paying less total tax (i.e. capital gains vs. regular income) than if they had received 100% cash compensation.

The scenario is essentially your typical stock option plan taken to an extreme.  I certainly wouldn't recommend it for your typical individual seeking a job - but for someone who is relatively secure financially it can be lucrative option.