In better economic times, employers often feel tempted to do whatever it takes to keep good employees.  Employees who excel usually feel vested in the company's success, and sometimes those same employees want to be truly vested, i.e. they want to own some of the company.  Giving an employee stock can also seem like a good way to plan the succession of your business by grooming an employee to become the next owner.

But from the owner's perspective giving employees stock in the corporation (or interest in the LLC) can be a wrong move.  Once you make someone an owner, you give them a number of rights and powers.  For example, you have to include them in shareholders meetings and you must provide them access to the company's financial statements.  You can write a shareholder's agreement (sometimes called a buy/sell) so that you can buy the stock back or force the minority shareholder to sell her shares if you decide to sell the company, but you often will have to take a hit bigger than what the stock was worth when you transferred it.

There are alternatives to giving away membership in the limited liability company or stock in the corporation.  For example, there is "phantom stock".  This is an agreement which gives the employee money when the value of the company rises, either at a set time or when the company sells.  There are other types of deferred compensation agreements, from straight out bonuses based on profit to Employee Stock Ownership Programs (ESOPs).  In an ESOP the company's current employees are represented in a type of trust that owns a share of the company, but no individual employee controls or has special rights in the company. 

If it does seem right to give the employee stock, then at the very least make sure you have a comprehensive shareholder agreement to clearly state the employee's rights and duties as a stockholder.