[erichurkman]

Your edit: You can avoid registration through a variety of exemptions of the 1933 Act. One of those is the Rule 701 exemption at the federal level; it carves out exemptions specifically for employee compensation plans. It makes sense. The 1933 act is to primarily protect against fraudulent companies selling 'stock' and came about from the massive crash of 1929. It wasn't to protect against an employer voluntarily giving up a percentage of their equity ownership to employees in exchange for service.

There are limitations on this exemption to make sure companies are not using it to actually solicit stock.

So long as the grant was under the exemption, if they exercise their grant, it should not count toward the shareholder limit.