Additional vesting period after 5 years

Question

My co-founder and me founded a company about 9 years ago. Originally we had a 5-year vesting schedule, so now the vesting period is long over. Two years ago I started to only work half-time. The main reason for working less is a burnout-episode I experience about two years ago. We ensured that he gets double the pay. But we agreed, that we would also talk about our shares again and find a fair solution to rearrange or shares.Does anyboy here have experience with this? I think it is fair to honor the fact that he works more, but I am not sure how.Let me give as much data as possible:- We started the company 9 years ago.- We originally had a 5 year vesting schedule, that is now done.- One of our investors owns a single digit percentage of the company, the rest is evenly divided between us two.- The company has revenues in the (low) double digit millions and profits in the (low) single digit millions.- Our company has been profitable for the last 8 years.- It is very hard to estimate the current risk of the company. Corona was tough for us, but we came back stronger than ever. At the same time we sill have a lot of risk because of regulatory environments.- My co-founders works more than 60 hours per week for the company and earns a low six digit yearly wage.- I work about 20 to 30 hours per week for the company and earn half of this.- My co-founder has a lot more responsibilities and a lot more stress than me. He basically runs the whole company, while I help out with special projects.- Last two years were especially stressful and my co-founder did an outstanding job.- I think if would have devastating effects on the success of our company, if my co-founder would stop working full-time.We thought about three possible ways: - Give my co-founder about 10 % of the yearly profit in addition to his wage. - Give my co-founder additional bonus depending on yearly revenue growth - Transfer some shares of mine to my co-founder on a yearly basisI would love to hear examples on what people think is "fair".

pg_1234 · Accepted Answer

Think of you the owner and you the employee as 2 separate people. Same thing applies for your co-founder.
If you cease to work as an employee it has no bearing on vested shares held by "you the owner".
If your co-founder is considering leaving (as an employee) the share owning entities (which include "you the owner" and "co-founder the owner") need to decide how much (money from share sales or actual shares) they are willing to part with as added compensation so as to keep your co-founder on and protect the value of the remaining shares they hold.
Increased compensation to your co-founder as a employee should come proportionally from all shareholders (as it would in a dilution) as it is a negotiation between an employee and the company as a whole.
It is best not engage in a deal whereby employees extract compensation from specific shareholders, as, however well intentioned that starts out, it can too easily become a pattern of extortion (or a means to seize ownership).

andrewfromx · Answer

Since the vesting is done you own your shares and could work zero hours and still be entitled to them. The hard work you did over the 5 years as they vested means something.
But, if you want your co-founder to like his situation and work hard to make the company keep going I see this as like doing another round.
You need to raise X and valuation Y and dilute yourself accordingly. i.e. the company is in crisis because one of the co-founders is sort of leaving. To make up for that, raise some capital. Figure out the amount needed to raise and then work backwards from that number.