Quick question: Why should a company give share options to employees, and not plain old shares? Is this just because it's better tax-wise for the company?
For the company, there isn't much difference either way as far as I am aware.
View it like the company giving you a cash bonus - not many people would turn down the bonus, even if it meant there would be tax due on it.
If you think the shares have future value, then paying the tax on their current price would seem a good deal. If you don't think the shares are value, then share options would be even worse.
Admittedly you've still got to pay the tax up-front...
If you think the shares have a guaranteed future value, then the shares are better than the options.
If you think the shares have a guaranteed lack of future value, then the options are free, whereas the shares will cost you.
If you think there is substantial risk that the shares will have no value, then getting options rather than shares mitigates that risk. You only pay for that mitigation if you actually exercise the options, in which case the cost comes off of a big payoff, rather than an upfront payment out of pocket.
For restricted-stock, you cannot sell the stock, and thus have to pay taxes out of pocket.
If the company is public, you can sell some shares to cover this cost (typical for stock bonus awards), but as many tech companies aren't public, their stock is restricted such that you cannot sell it to other individuals.