Worse, you’re penalized the longer you stay at a company pre-IPO if you ever want to leave. If you do decide to exercise your shares, you not only have to pay t

Worse, you’re penalized the longer you stay at a company pre-IPO if you ever want to leave. If you do decide to exercise your shares, you not only have to pay the cost of exercise, but you also have to pay taxes on the difference in strike price and presumed current market value. Despite there being no actual market, the high possibility that there will never be a market, and that “current value” may reflect extremely favorable investment terms not available on the open market. If your strike price is $1/share, you have 100,000 shares, and the last funding round closed at $20/share, you have to pay $100,000 to exercise and pay taxes on $2,000,000 that you’re still highly likely to never actually have the opportunity to turn into real dollars through a stock sale. The longer you stick around, the more you’re incentivized to stay waiting around for a liquidity event at a job you’ve outgrown and potentially hate at this point. While the company itself has incentives to delay IPO as long as possible, knowing full well that they’ll lose a sizable amount of their burnt-out senior talent within months of going public.