I've been working with a co-founder for quite a while, and neither of us are actual employees of the company, we're just shareholders. We are finalizing a vesting agreement, but there are a couple of things we're not clear on. 1. If we've already signed a shareholders' agreement that didn't include vesting language, do we need to backdate the vesting agreement to before shares were actually allocated? We haven't distributed the physical shares yet, if that matters. 2. Vesting agreements generally keep someone employed. How does it apply if we aren't employees? E.g. if i suddenly stopped putting in any work, I still own 50%, it's not like I was fired or anything. What recourse would there be for me to give up my share of equity that I'm not earning anymore?
I'm going to talk from the perspective of a founder, not a lawyer. I also live in California and your state laws might defer.
I think if you are putting hours into your startup, you are also an 'employee' in addition to a founder.
Your board (ie. your cofounders) can decide at any time that you are not pulling your weight in the project and don't want you involved. Thus you can also be 'fired'.
In most vesting agreements there's a right to repurchase unvested shares that the company has. This is essentially how vesting works. The company decides that they don't want you anymore and they have the right to repurchase from you all the unvested shares at the price they were given to you initially ( not current market price ). You can only keep the vested portion.
I hope this helps
Answered 9 years ago