He will have to pay income tax on both his untaxed income and any untaxed gains when he receives the distribution in the future according to the distribution schedule. Most people have not heard about NQDC because it is only available to "highly compensated employees" - your friend probably has to make around $200K per year in base salary in order to qualify.
Yes, it is a one of the most lucrative benefits for an employee if he qualifies. However he needs to be sure that his employer does not go bankrupt before he receives his money in the future. His salary is effectively lent to his employer as an unsecured loan, and in case the employer goes bankrupt, he will probably lose all of it.