Issuing them stock results in a taxable event for the employee as soon as the stock vests. For public companies this isn’t a big issue because the employee simply sells some of the stock to cover the taxes owed (actually most company RSU plans handle this automatically). However with a private company the stock is illiquid and unable to be sold (there are rare exceptions, but in general this is the case). So the employee would be forced to pay a potentially large tax bill out of pocket on assets they can’t liquidate (and likely have no idea if/when they will ever be able to liquidate). Not very employee friendly.

Options however are only taxable if/when you decide to exercise them.