Stock options that allow the founder to keep control and to receive more significant profit for the extraordinary risk they take makes much more sense imo.
* Base salary that is very low risk because they have a “liquidity event” every pay period, and there are numerous legal protections that ensure that they get paid.
* Incentive Stock Options, which are very high risk because they backed by a company that might not succeed, might never experience a “liquidity event”, are not nearly as liquid, and have far fewer legal protections.
It seems that more than a few people have not considered that ISOs will be a part of their overall investment portfolio, and they should think about how much of their portfolio they want invested in high-risk assets.
Example of this happening IRL? I've seen right of first refusal and tag along rights that make it harder to find a buyer, but nothing that actually prevents sale of vested shares.
And think about it a bit further, who's going to go through any due diligence if their research and offer is going to first hit the board/company and potentially completely vanish for them? I certainly wouldnt invest time/resources to see if I wanted to buy shares from an employee to potentially find out the company decided to buyback those shares instead. This property would massively lower the price I'd be willing to offer. (as a compensation for my risk taken)
Once you enter into a an options contract with your employer you are bound to the terms of the contract. You can refuse to sign I suppose.
More important though is to understand that the limitations you mention lower the value (increase the risk) of the options.
Sometimes, a lot of the time hopefully, your loss would be negated by the combined efforts of everyone else. It would be the situations where enough people lose to result in a net loss that would require everyone to steer away from.
More or less why communism is unproductive, because it takes away the incentive for individual achievement.