[chakkop]

They can and they do. Here are some ways:

1. Management makes a share issuance, diluting all existing shareholders by X%. Management then turns around and distributes shares amongst themselves. Something like this can happen if management have majority control and can get approval from their VCs/preferred shareholders (who have reserved matters that can block share issuances). Often, the VC can work with management to get something like this done.

(A more complicated version of this happened with the Zuckerberg/Saverin saga).

2. An option pool--say 10%--is issued as part of an investment round. This dilutes all shareholders by 10%. The Board then distributes the option pool to key management. There's nothing a minority shareholder can do.