> To answer my own question the story might leave out an important detail. That the CEO had the right to the money but said "disburse to the employees instead". That's the same thing but lacks the tax implication as the money was never received. But it would lean more toward your "cynical" view.
If it was possible for him to do that, it would have been wise and there's nothing cynical about it at all. Those employees would be on the hook for income taxes regardless, so it's all the same to them. If the CEO gets the money first, the total going to employees is reduced by the fraction represented by the taxes he pays, or he pays the taxes out of pocket. None of the parties involved benefit from that.
If it was possible for him to do that, it would have been wise and there's nothing cynical about it at all. Those employees would be on the hook for income taxes regardless, so it's all the same to them. If the CEO gets the money first, the total going to employees is reduced by the fraction represented by the taxes he pays, or he pays the taxes out of pocket. None of the parties involved benefit from that.