That actually depends on if the options were ISO's (where you'd only have to account for the spread in AMT calculations) or non-Quals where yes you'd have to pay regular tax on the spread at exercise time.
If he's really a founding engineer though he should have filed an IRS 83B election and basically paid close to zero tax on all this
If he's really a founding engineer though he should have filed an IRS 83B election and basically paid close to zero tax on all this