Stupidity is very dangerous in this situation because the CEO may completely believe that he's doing the best for the employees, but then get hoodwinked by institutional investors who will make the deal sweet enough for the CEO so he can be the one to tell you your options are worthless when the liquidation preferences come home to roost.
I would never join a startup where the founder wasn't razor sharp and forthcoming on all these details.
That's fine. I don't care if the Cxo is lying or stupid. The conclusion is the same: I don't trust them to deliver value on my shares.
It's like a doctor who opens up your gut to remove your appendix, but it turns out he doesn't know what an appendix looks like and has never performed surgery before. The distinction between stupidity and malice has kind of disappeared.
Given my experience of advising early stage startup founders on equity investment, dilution, cap tables, etc., I believe that ignorance is at least as likely as malice in situations where they seem unwilling to disclose all the information the potential employee needs to fully evaluate the potential value of any equity options being offered.