[hga]

In your short essay above you left out the perverse incentive that equity presents if the company becomes worth something: getting fired before the IPO or other cashing out event. To rag on your favorite target (http://en.wikipedia.org/wiki/Brian_Reid_(computer_scientist)...):

"In June 2002, [Brian] Reid became Director of Operations at Google. He was fired in February 2004, nine days before the company's IPO was announced, allegedly costing him 119,000 stock options with a strike price of $0.30, which would have been worth approximately $10 million at the $85 IPO price."

Still being litigated....