Comment by XCabbage

More importantly, employees with options are generally not sophisticated enough to realise liquidation preferences may exist and may dramatically devalue the common stock options they have, and even if they are sophisticated enough, they will often have no means to find out what liquidation preferences exist. (They theoretically have information rights that probably entitle them to that info, but companies simply find spurious excuses to refuse books and records requests, knowing no options holder is going to drop six figures on a lawsuit to exercise those information rights.)