You could pay them in other means, but there were constraints there are obvious constraints that I did not spell out. We are assuming a non-growing company that now needs to pay extra cash to you top up employee comp with cash. Your margin will start to shrink, and so does your earnings (the premise was no growth, remember), continuing the downward trend of your stock.

Plus, your competitors are not sitting still. People will go work for the more exciting companies even if you pay them equal amounts anyway (to vary their type of work and grow their careers) rather than staying and watching the thing die and doing the same thing for 30 years.