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The biggest downside to options is the tax treatment. The treatment by the IRS is absolutely asinine: you're taxed on the 'gain' between strike & current fair market value, or rather, you'll pay tax through the AMT. You can't sell the shares, so why are you taxed at exercise?

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If you were given stock you'd be taxed on the whole value immediately, because you are getting something of value whether or not it's liquid. Getting compensation tax-free at time of receipt, as options do, is already a pretty great tax deal.

Tax free at receipt is great. It should be tax free at exercise, too, and only taxed when the shares are sold. It's asinine to get taxed on something you cannot realize any actual gain from.

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