Stock options in private companies often have negative consequences. Unless there is a commitment by management and the majority equity holders designed to achieve high, rapid growth resulting in a near term sale or IPO, options, warrants or other equity instruments can be serious problems.
Already noted, the inability to monetize the "award" is a drain on morale rather than a motivator, regardless of the value you attribute to the stock. Further, minority shareholders can become a legal burden if there is disparate treatment compared to the majority holdings.
Many studies have shown that incentives which can be realized only in the long term are poorly received. If the benefits of equity sharing are your objective, there are other proven models. But the benefits must be realizable at least annually if not more frequently.
Examples: Issuance of phantom stock, non-voting (or otherwise qualified stock) grants earned on a vesting schedule but when earned represent a realizable financial gain i.e. which pay dividends based upon stated financial metrics or if an LLC or S corp, grants that can be structured to provide the basis for future tax benefits.
Until equity awards are meaningful, I recommend annual plans (profit sharing, performance bonuses) that result in focus on the objectives agreed upon in the current business plan. A distribution of any future windfall equity transaction can always be made.