[matuszeg]

I have received equity as an employee. When I started, the company was very early and their evaluation was still very low. The way it worked was that I had to pay for the equity grant upfront. I forget exactly how much but it was<$200. This is also how it worked for me as a founder of a company.

That same company eventually raised a sizeable equity round and then began issuing options for new employees. If they were to continue issuing equity grants, the cost to purchase the grant would be much more than $200 (likely tens or hundreds of thousands of dollars). Alternatively, if the company were to give employees equity grants directly instead of having to buy them then that would count as income and the employees would owe taxes on the equity gained. The tax bill could also easily be tens or hundreds of thousands of dollars.

Options avoid all of that and defer the upfront costs that come with an equity grant.

Imo, the real problem is that options can be clawed back once you no longer work for the company.

[indoordin0saur]

IMO, the real problem with options seems to be that you have no idea what they are truly worth. You have the option for 10k shares and you know the company is worth $200 million, but you have no idea how many shares are outstanding. Meanwhile, shares are being diluted, or maybe they aren't. You're just kept in the dark as to what is happening. At least that was my experience.