IMO, it's not about this person. It's about the rest of the team and the message you want them to take away. Letting someone go right before they vest will likely create distrust on the rest of the team.

Typically, vesting cliffs are designed to give some breathing room for new hires. If they turn out to be terrible, you can part ways with them without impacting your cap table. If this person had long term performance issues, it's kind of shitty to wait until just before they vest.

I don't know what your company's situation is, but this likely doesn't have to be an "all vesting" or "no vesting" situation. By default, it sounds like you can terminate this employee and provide "no vesting". You can make it clear that you'll be offering them some/most/all of their anticipated vested stock despite you terminating their employment prior to the vesting cliff. This lets you terminate the relationship right now while saving face with the rest of the team.

This here. If someone, even a bad teammate or poor performer, was let go a month before vesting and got nothing I would strongly consider applying to a new place.

It depends how the decision is made.

If: a) other employees did not think the fired person performed poorly b) the decision of firing without compensation just before the vesting period is made by the founder only

then this will be a nightmare for the founder.

If however the contrary is true, ie that most people think the performance of the person being fired was poor, and if the founder discusses compensation options with others who will also be vesting at some point, then it signals that the founder actually cares about and trusts their employees enough to associate them meaningfully to the decision process. It also shows not just a wish but an active effort to ensure fairness for all, both the person being fired, and the others staying on who would be that bit more diluted in the cap table if somebody who shouldn't have vested is allowed to.

Good on you, dear founder, to be seeking advice and to be trying to do the right thing. You don't have to be alone thinking about that decision or making it, and you don't have to be alone living with it afterwards. Allowing your employees to be stakeholders in this is really key.

There’s both a logical and an emotional component to this. Logically the team would understand why the employee was terminated right before vest. Emotionally however it will gnaw at them, wondering if that could happen to them.

In my opinion I’d make it clear that the termination and the equity decisions are separate, that it was a bad fit but that you are building a culture of doing right by people. That doesn’t mean eliminating vesting, it means that you approach these exceptions on a case by case basis. I’d say 6 months vest would be fair, given the performance management issues - and it strikes the right balance showing you won’t be pushed around and that low performers will not be treated the same way as high performers.

Making the rest of the employees complicit in getting someone fired a month before vesting is a pretty shitty thing to do. A manager should be able to take responsibility for their decisions and not foist them onto the team. It works, as the Romans would attest to, but it sets a pretty crappy culture imho.

It depends on if you’re a manager or a leader. A leader would, in fact, consider the whole team because they operate on trust. A manager wouldn’t give a fuck.

There is a big difference between considering the whole team and making them complicit in a decision that hurts someone. Framing escaping responsibility as the mark of a true leader is I feel a pretty crappy way to define a leader.

Leading your team to a decision that works for them, and the team member who should have been fired but wasn’t is the mark of a true team. Dude needs to get his head out of his ass and if he needs his team to pull it out, so be it. But yes, a leader will involve a team in a decision that affects the entire team, the won’t unilaterally make a decision.

I couldn't agree more. Most of the members of the team here will most likely vest as well, and the way employee performance can affect vesting is very much a relevant question to them.

To go back one step, saying a manager must decide alone otherwise it's an escape from responsibility is quite a bizarre claim to make. Making a decision without consulting your team, when your goal is to establish trust, will 100% backfire. It will come back to haunt you EVEN if people agreed with the decision, simply because that decision was taken arbitrarily. That such important decisions could be arbitrary, without meaningful involvement of the team, signals to the team that they are all at the mercy of such future arbitrary decisions. Finally, consulting the team does not mean that the decision is carried by everyone. A consensus should be sought, and the founder would be foolish to make such a decision against his team, but ultimately, the founder is in charge of the final decision and will bear the responsibility for it.

I wouldn’t consider. I’d be out of there as fast as I reasonably could.

I've been let go 3 times in the month before vesting. No one cared. Let him go.

3 times? that's an awfully high amount.

Depends on the dynamics of the team too.

If the rest of the team also thinks “this guy sucks” and trusts the leadership there could be no impact to trust.

We’re talking about a team of 10 here rather than 1000. It is possible there is a closer than usual relationship/ fair amount of trust compared to random HNers talking about a company they don’t know.

On the flip side i bet the team knows this person is terrible.

And letting them vest means you're telling them slacking off is fine, and you'll give them a piece of the company that could have gone to the people who actually work.

Sure, they'll be fired, so the others will see it's not acceptable. But still.

It'll be resentment either way.

It's going to depend on whether the team agrees that the person is terrible though.

In recent years our management let go of two people because of "bad performance". In one case that was probably a fair assessment. The other guy just got stuck with an impossible project with absent leadership and management blamed him when nothing was finished on time.

And here we're only hearing one side of the story.

IMO it does not send that message. The vesting is compensation for work done and time spent in the role. That is in the past. The "punishment" is losing the job, and that message is clear enough.

If I worked at a place where a coworker has clearly been underperforming, but getting stocks on their way out, then that would demotivate me.

> The vesting is compensation for work done and time spent in the role.

We don't know all the facts, and definitely not both sides, but it sounds like it could be overcompensating for work done. OP said this employee "has been an issue for quite a while".

Especially since I have worked for startups that gave me the "we've set the bonus/salary bump/stock budget for this year, so who do you think should get less if you get more?". This guy! This guy should get less! (is what I'd want to say in this situation)

Employers, especially startups, commonly present comp as a zero sum game. Even if this company doesn't, don't expect all employees to believe you if you say it's not the case here. Because they've been lied to before when it comes to money.

And frankly company leadership has an eventual profitability requirement, and even if they say it's not zero sum, it's not totally independent either.

Having spoken to corp lawyers a lot I also recognize this as a legal liability. It sets a precedent, and opens you up to discrimination suits for future firings.

>If I worked at a place where a coworker has clearly been underperforming, but getting stocks on their way out, then that would demotivate me.

That's a completely fucked up attitude. How does someone else lucking out with more than what they technically deserve influence you in any negative way?

Because you, as coworker, bear a part of the cost of their slacking?

Every dollar wasted on useless coworkers might cost you your future workplace (because the company goes bust).

In a 10 person company this may affect whether the company is profitable or not.

Which may affect if the whole company gets a year end bonus or not.

It's also insulting in salary negotiations. The company would rather piss away cash than give me what the market would pay me?

Reasons like these are why high performers leave.

If the company wants to encourage "above and beyond" performance, they should do that through a bonus. In all scenarios I'm familiar with, shares vesting are tied to duration at the firm, i.e. loyalty and "toughing it out". The employee forfeits the right to those shares either by leaving the firm early, or being bad enough at their job that they get fired. This is of course the latter, but the timing is the problem. Had they fired this employee five months ago, it would have appeared less like yanking the rug from under them. But as you show, perceptions differ

To be honest, it's probably best to just wait it out a few months.

One poor-performing employee isn't worth the risk of destroying the morale and trust of all the others.

A useless employee not being fired does not only breed resentment in coworkers, it also erodes trust in management: Other employees will lose their trust that leadership is willing to follow through with hard decisions for the good of the company (speaking from personal experience).

Management being capricious is basically "news at 11", but management being perceived as hesitant/incompetent can be MUCH worse EVEN from the PoV of an employee (=> because that indicates the company has no future)!

It sounds to me like the effects on the rest of the team has already set in. That is, anyone reasonable would already have questions about management / leadership.

Making the change now:

- won't save the situation

- it might, as others have mention actually undermine any trust the rest of the team has left

- invite legal action on the part of the dismissed employee.

All that aside, giving the rogue employee the benefit of the doubt, it feels like it might be health / mental health related issue. Random time off being the tell.

Sucks for the team. But dismissing someone who needs help is a tough call.

It’s not about cutting the employee. It’s about vesting and the timing of the firing.

I’d consider firing immediately and granting their vesting as if they stayed through the month as part of the termination package.

Every day a poor performer gets the same salary as you is morale-destroying.

There's no perfect solution to this problem.

10 employees doing the work and wondering "why is this guy getting paid the same as me?" hurts the company too.

Every action has downsides. Every day they're still there demotivates others, possibly making them look for "better" jobs, since clearly their own can be done by a slacker.

But every firing, even of someone clearly underperforming, will cause a bit of fear in even the best performer.

The perfect solution is to let them vest then terminate.

Agree that slackers ruin morale though. Currently going through this at my place. It’s especially difficult when merely being on the same team as slackers makes the external opinion of everyone on that team horrible. Some might know the better members but on average the reputation can be stained.

How do you mean that it is "the perfect solution" if the action has negative morale implications for every other employee?

I'll go with your opinion being that it may be the best solution, but perfect it is not.

The mere fact that I don't even think it's the best solution means that there may very well be employees here who also don't, which means it's not perfect.

There will be employees who will hear "this fired person's stock was taken out of your end of year bonus". Because it kinda was. Especially at a small company where one employee-month plus their stock can be a significant portion of company yearly profits.

They should have changed stuff up well before this point. If you want to question someone’s vestment then do that at least a year before that date and get serious about demanding results from the problematic employee at that point. That way they’ve got 3-6 months to perform and you’ve got time to terminate for lack of performance.

Doing it when the vestment date comes up just reeks of shortsightedness to the point of vindictiveness. Immaturity.

If it’s like the person quit but kept coming to work for the last month before vestment then talk to them and maybe offer to buy them out if they’ve got no good explanations.

> They should have changed stuff up well before this point.

Agreed. We don't have all the facts but management is not without blame.

> Doing it when the vestment date comes up just reeks of shortsightedness to the point of vindictiveness. Immaturity.

I've made my point repeatedly that the gains from paying it out are also shortsigted and may not be worth it, so no need to repeat.

Compensating people who don't deserve it pisses people off. Maybe those people are immature, but they do include your best performers too.

Like I said, no perfect solution. Management (arguably) caused the situation, and there's no perfect fix.

>Every day a poor performer gets the same salary as you is morale-destroying.

not really? if he is unjustly compensated more than he is worth it's kind of funny, but unless you're a child you shouldn't really care about it. this is way different than if you were compensated less than what you are worth.

There will be employees who will hear "this fired person's stock was taken out of your end of year bonus". Because it kinda was. Especially at a small company where one employee-month plus their stock can be a significant portion of company yearly profits.

As I pointed out in another comment that you replied to (though I'm not sure you read it properly, since I've already made this point and did not seem to incorporate it into your reply), while comp is not a zero sum game, it also isn't entirely not a zero sum game.

I would assume they could work out severance where the employee still gets vested but is no longer coming in to work.

The Titanic only hit one iceberg. One bad employee on a team can sink your entire mission.

This is the best solution. Shows you’re “extra generous” instead of just letting someone walk with their equity. Shows “the company will take care of me.”

Agree with above points. It sounds like it should have been dealt with a long time ago. Being this close to vesting is the cost of inaction. The equity issue feels like a sunk cost at this point.

Would initiate a conversation around performance to set expectations that performance needs to improve or their position is at risk.

Be the hero of the story: treat the employee fairly and raise performance expectations. Hopefully, the equity is a small price to pay.

> Letting someone go right before they vest will likely create distrust on the rest of the team.

I kind of doubt it'll even occur to the rest of the team, but even if it did I can't imagine that they wouldn't feel it's justifiable given this employee has been such a consistent issue.

IMO the time to fire someone is as soon as you've decided you're going to fire them.

That said, offering nice severance perks is a nice thing to do.

It will absolutely come up. And people will remember it. It will absolutely be perceived as "cheap ass founder didn't want to pay worker for their time."

And effectively they didn't, if that vest is a good portion of the pay

However paying them will be remembered too. It will be perceived as "why are you giving away profitability of the company (and thus my equity and/or end of year bonus) to someone you should have fired a long time ago?".

The answer to that is “they worked 50 out of the 52 weeks; it was a leadership mistake earlier to not hold everyone to the high bar we expect, but we still act ethically towards all of our stakeholders, even when doing so is inconvenient.”

Yeah, sounds best. I'd still run it past the lawyers to make sure it's fine to "badmouth" a former employee in your jurisdiction.

It means taking ownership of the mistake, even if it does mean that you're effectively apologizing for devaluing the company to the other stockholders and other stakeholders.

Still, there's a little bit of "oh, so when I leave I can expect management to talk shit about my performance", which wouldn't do wonders for my impostor syndrome.

The problem is the onlookers don’t know why you’ve fired someone; they’re free to assume whatever they want.

And anyone remotely suspicious of your good will should be mighty suspicious that anything you’ve said was just justification to deny compensation — when is my vesting date again..?

> The problem is the onlookers don’t know why you’ve fired someone; they’re free to assume whatever they want.

You can and should address this. It would be insane to fire someone and not explain why.

Really? I think it’s generally considered bad business etiquette to publicly speak about why someone was fired, beyond something very generic such as “performance-related reasons”. Once someone has left the company there is very little point in making critical comments about them, as it’s too late to change anything.

Yes but it gives the remaining people a mark on what is acceptable or not acceptable. If you fired someone for bad performance they now know that bad performance will not be tolerated (or at least not forever). If you fired them for being unprofessional or for bad behaviour the rest now know that there is a consequence for such behaviour.

They know that what you perceive as bad performance will not be tolerated. And that’s if they assume that you’re telling the truth.

If your team at a startup of <=10 people assumes you are lying or that you have no idea how someone performs (to the point of firing a good performer for bad performance) you've got much bigger problems than that employee.

I don't think so. There can be good reasons not to tell the whole truth about why someone was fired, and it's normal for managers to have only a rough idea of how well people are performing, even in a small company.

If you're the boss then "what you perceive" as poor performance and "what is" poor performance are effectively the same thing. Companies aren't democracies were the team decides on what the bar is. The role of the lead / manager / owner is to set that bar and help the team to reach it.

It's certainly possible for the boss to base their evaluation on mistaken beliefs. For example, they might think Employee A is largely responsible for a delay in releasing Feature X when in fact it was Employee B.

I have to say though, this whole discussion is a fascinating insight into what appears to be the thought process of many managers and/or founders.

Who was responsible for a delay isn't what's being asked at all. What's being asked is: "I have an employee who isn't producing the outputs requested of them in a timely manner, what should I do?" This has nothing to do with Feature X or Feature Y. They also highlighted behavioural issues. These are all within the scope of a leader to determine.

I understand that. The point is just that a boss isn't infallible in evaluating the performance of their employees. I wasn't expecting that to be a controversial statement, but you seemed to be challenging it. As to whether or not the person who asked the question is right, it's obviously impossible for us to know.

My response was in the context of "what your team members perceive" to be performance. My response was quite simply: "you get what you measure." Your team will respond to your perception by focusing on improving in areas that you perceive to be markers of good performance.

That certainly can happen. However, it depends on at least the following assumptions:

* Your perception of your employees' performance is consistent and predictable over time. Not all bosses evaluate based on consistent and predictable criteria.

* Your perception isn't significantly distorted by false beliefs about who has done (or not done) what.

(Needless to say, that's generic 'you', not you specifically.)

If you want, you can say "I hereby define 'good performance' to be any performance that I, the boss, think is good" – but that's just a semantic game.

None of that is relevant to my point.

"I hereby define 'good performance' to be any performance that I, the boss, think is good"

At its most basic level, that's _exactly_ what we as leadership do. All you're now saying is "some bosses suck." Well... yes, news at 11.

I wouldn't explain why in detail/ be critical, but I would have a meeting to address what happened. Having been in this position when someone gets fired people get nervous - they ask "are we doing OK on money?" and things like that, which you can address.

I think it's very rare to give reasons for firing someone.

If someone was a bad performer, they team knows it's because of bad performance, but reasons given will be "cost cutting", "personal matters", or "they've moved to a better project."

If someone was fired right before vesting, and the reason given was "bad performance", everyone "knows" that management is just being cheap.

    If someone was a bad performer, they team knows it's because of 
    bad performance, but reasons given will be "cost cutting", 
    "personal matters", or "they've moved to a better project."

If I fire someone for bad performance I will absolutely tell the team that's why i fired them. I may not tell people outside the team (I don't want to bad mouth my former employee) but the team deserves the truth.

When I see someone getting fired for performance, usually the team has been complaining about them (in performance reviews or 1-1). So it's no surprise to the team and the reason isn't given.

When someone has poor but not terrible performance, it's usually accompanied by a second factor (high salary, absence). In that case, the nicer reason is usually given even though we know they were not faring that.

There also tends to be a bit of theatre before someone is fired for bad performance. "Are you sure you fixed the bug?! Give me a video. Which PR? Which line?"

>> The problem is the onlookers don’t know why you’ve fired someone; they’re free to assume whatever they want.

> You can and should address this.

Except that you can't address this. You can say whatever you want, but it won't result in onlookers knowing why you did what you did. You were probably lying.

I am in the camp of: Fire people before they break the morale on the team. Nothing burns a team out faster than a bad colleague.

> Nothing burns a team out faster than a bad colleague.

Ever had a bad boss?

I've had both: a bad colleague who went dancing while we were struggling at 23 PM in the data center for a government project, and a really shitty PM whose incompetence ruined a lot of people personally. Both can have adverse effects on people, although a bad boss in an otherwise sane environment would probably strengthen the group for being perceived as an external "enemy".

That has not been my experience with a bad boss. They do things like play favorites and create a culture where people are competing rather than cooperating. Even if they are just shitty to everyone equally I find it far easier to deal with a bad colleague than a bad boss.

> a bad colleague who went dancing while we were struggling at 23 PM in the data center

If that's your definition of a "bad colleague" I would be a little concerned. There are situations where it may be necessary to do that struggle, but in my experience there are far fewer than you think, and people often fall into a trap of competing to be the last one standing rather than actually doing good work. If you're struggling in a data center at 2300 you may well be doing more harm than good and going home to sleep (or dance, or whatever you need to refresh yourself and come back focused...) is often a better choice.

I always try to be pro-labor but i had such a situation in my own company. A person I tried to make work for months, the situation just got worse the OP describes (it wasn't performance issues but more attitude/social/soft-skills related). I hesitated before firing them, fearing effects on team morale. After firing them morale improved immensely.

The best thing you could have done is fire them 6 months ago. The second best is firing them today. Don't hesitate.

Incompetent management is far worse than a bad colleague, imo.

> IMO the time to fire someone is as soon as you've decided you're going to fire them.

Life tip: This also goes for relationships. Don't wait until after xmas, their birthday, whatever…

It could go the other way too.

Employee coasted, did bad work and still gets a generous payout at the end? The team could very well be bitter about it, especially considering that it's such a small company and they certainly "know" about this employee's issues.

They might figure it out by reading this AskHN too.

Rather pick what you think is fair based on circumstance and let the team know your reasoning. It's your company after all, show leadership and set the standard that you want based on your values.

Edit. The "you" here is directed at the ask hn poster, not the person I'm replying to.

The employee spent the time at the firm that it took for the vest to happen. That time is mostly already served. Yanking the promised reward like that does not send a good signal to the rest of the staff. If the employee was so bad they should have fired them long ago, for the sake of the rest of the team if that was a concern. But a month ahead of the vesting? That is a shitty move. In this scenario, the eventual firing is sufficient signal to the rest of the team that the person was not living up to their paycheck.

Being fired is not a "generous payout"; colleagues will hopefully remember that the company got rid of an underperformer, without being bitter about their stock. The parable of the workers in the vineyard comes to mind.

On the other hand, a boss screwing an employee over stock, for any reason, would set a terrible precedent of greed and untrustworthiness.

> Letting someone go right before they vest will likely create distrust on the rest of the team.

Conversely, letting them vest will send a message that this behavior is tolerated.

And yes, firing + giving some percentage of what they would get from vesting corresponding to the time they made an effort sounds not unreasonable.

> Conversely, letting them vest will send a message that this behavior is tolerated.

These are colleagues not children. Using threats will not have a good effect.

Also OP seems to have been tolerating their behavior, which sends the message that behavior will be tolerated. This is the right message to send as well.

We (and possible OP) don't know what the employee was going through, giving them lots of slack and support shows to the other employees that they will be supported. As well as just being a good thing to do, it will improve employee retention, effort, buy in to the company etc.

> These are colleagues not children. Using threats will not have a good effect.

It's not a threat to fire someone when you pay them money and they don't work as expected. It's setting a standard.

> We (and possible OP) don't know what the employee was going through

That's a very fair point.

But is it unreasonable to request insight into why the person shifted?

Accountability comes at a cost.

> I don't know what your company's situation is, but this likely doesn't have to be an "all vesting" or "no vesting" situation.

Anything else may be hard to communicate to the team though (depending on the country/culture you are operating in of course).

Lots of people giving you advice vest or not to send a message of generosity or "no slackers". I'd encourage you to take the high road, good leadership is more about showing everyone you take care of everyone you're responsible for, more than you're a tyrant who sends hard messages.

Plus if this person is really all over the place, I wonder if they'll actually exercise anyways. (Unless they're RSUs in which case you're probably public, in which case your shares outstanding is likely way too large for the dilution to matter...)

I agree. You have to focus on the company, not those who are NOT going to be a part of it. It might seem like a dick move, but it is far less of a dick move than not making an effort.

I'm sure that there will be negative consequences. And you will feel bad. Nothing I/we can say will change that. But I think you'll just have to accept that and do what's right for the company and the people who will continue on.

(Of course, there will be two sides to any story, but you are asking what we would do in your stead, so I think it is okay to base this on your subjective point of view)

Is the opposite also maybe true? Allowing someone who has contributed so little to the team to have an equal share in the company may make people feel like their comparative effort isn’t recognized.

If it truly is under a month before vest, I’m sorry, but you need to pay it out. If the behavior is so egregious/borderline criminal/a legitimate HR crisis (think Andy Rubin stuff), that’s one thing. But being a poor performer and a bad fit, to me, isn’t enough of a reason to hold back someone’s vest at this stage.

The reality is, you should have fired this person months ago. You didn’t, for whatever reason, and that’s ultimately on you as the founder. That is your fault. Punishing someone who took a risk of joining your team early, even if you’re unhappy with their performance, by cutting their vest seems ridiculously petty and to me, is a sign of a bad manager.

Given the nature of startup options, it is likely the vest amount both won’t be substantial in the long run (if your company succeeds, you’ll raise further rounds that dilute early employee options) or, candidly, that none of this will matter at all because there will be nothing to vest.

This isn’t a co-founder. This is one of your first hires. You made a bad one. It happens. The time to fire pre-vesting was months ago. Taking away the vest mere weeks before it happens is something you would never do to an executive on your team if you were more established. Why would you do it for someone you made the poor decision of not just hiring, but keeping around long after it was clear their hiring was a mistake?

Pay it out. It’s a small thing in the grand scheme of things and hopefully can be a lesson to fire faster in the future when you bring on the wrong people.

Purely from a self serving point of view what message does it send. By the time it reaches every else the guy/gal was the best employee in the world and you fired them to save a few bucks. I'd never work there if I heard that story.

Absolutely. Moreover, usually in these situations, the person wasn’t fired earlier because the team thought either they needed the person to get things done or that disrupting things and hiring a replacement was more costly than keeping them on. Which indicates that even if this person was a poor performer, they were deemed valuable enough to keep on for quite some time. But now that it’s weeks from vest, suddenly it’s more valuable to let them go with nothing.

As an employee or an investor, that’s a red flag to me about management style.

This year has been a rough one for layoffs. In my now former company, one thing that helped keep survivors feeling better about the company was that it treated laid-off employees reasonably well, including accelerated vesting. It'll cost you the equity, but demonstrating that you treat people well will help the rest of the team.

"I’m sorry, but you need to pay it out" ...If the behavior is so egregious/borderline criminal/a legitimate HR crisis (think Andy Rubin stuff), that’s one thing"

It shouldn't be that black or white. I would say pay it out if they are just a poor performer but tried to work in Good faith because then it is your fault to not fire them for performance earlier.

However, I wouldn't pay anything if the employee acted in bad faith and was slacking off on purpose or doing anything that brings the entire team's morale down. I would fire them immediately and you don't owe anyone anything then. May be unpopular opinion but as founders, you don't have time to deal with bad actors. Startups are not charity.

They are not a charity. But the time to fire was months earlier. The failure of the founder to do that is on them. When you’re weeks away from a vest (under a month is what OP says), to me, that’s your fault. Again, a senior executive or senior leader would be paid out in almost every instance. Why should it be different for the first hire who took a chance on you and your startup?

If we’re talking 2 or 3 months, fine. But if we’re taking 3 weeks or less? Sorry, you waited too long and the employee shouldn’t pay for your poor choices. If they were good enough to stick around because you needed a warm body and it was too hard to hire, then they should be good enough to earn the 11.5 months or whatever they’ve put into your company.

Yes like I said, pay out if the employee was just a bad performer. But I wouldn't pay if they acted in bad faith and knowingly did a worse job (which we can tell as founders/managers). So it depends. I am not paying out a bad faith employee just because I kept them a bit longer than I should have.

> which we can tell as founders/managers

Honestly? No. No you can’t.

Unless you know everything going on in the employee’s life, and their every thought, you have no basis for being able to tell if an employee is acting in “bad faith” by “slacking”. Even just defining “slacking” is next to impossible.

By your standards? Maybe. But maybe you just have too high standards. Or maybe the employee is going through a particularity rough patch in their personal lives. Maybe they’re burned out. Maybe they lost a loved one and are still grieving. Maybe you never told them they’re underperforming and they have no idea. Maybe you just are so tunnel visioned on a particular thing you don’t realize the additional things the employee is doing outside their job.

There are a plethora of reasons for why someone’s performance may not match your expectations, and the amount that are in bad faith is already small and hard to differentiate from just being a bad performer. So no, unless you were an omniscient being, you likely don’t know what’s going on in the employees head, let alone if they’re intentionally slacking.

Where does it stop tho ? If one month before the vesting deadline means "only few weeks before the deadline, so it is not acceptable to fire without giving the vesting benefits", isn't 2 month before the deadline only "one month before the period on which you give the vesting anyway, so don't fire it's bad" ?. What about 3 month ? 6 ? a year ? Where is the cutoff ?

Actually, the vesting period is exactly that cutoff - and it's a known, agreed upon one ! It's the deadline after which you should benefit from the growth of the company even if you are fired, and the deadline before which is acceptable to fire without giving benefits. Simple and transparent for both parties.

If it has been going on for months, they should have already been on a PIP and fired. That doesn’t seem to be the case here.

If a PIP was in place, fine. Don’t pay out the vest. But if they weren’t because of your bad decisions as a leader, that’s on the founder.

And to me, the cutoff very clearly seems to be under a month. Weeks.

Agree. Someone who stopped working hard months before hitting the cliff has showed you how much he cares. If there was a personal issue that caused the problem that would be worth finding out. But if he just started phoning it in, don't feel bad about sticking to the terms of his employment.

Rule of three. That’s why it’s always 2 weeks notice, or 2 months severance etc

?

I agree with everything you said.

Vesting is part of compensation. Denying part of compensation after the fact is bad look. Keep in mind that they're options, and unless exercised, and there's a liquidity event, both of which are highly uncertain, it's all funny money.

If you terminate shortly before vesting:

1. You face the prospect of an expensive and distracting wrongful termination suit.

2. You're sending a blindingly obvious signal to all other employees, and potential employees, that you can, will, and have terminated employees immediately before vesting. That may well prove ruinous if you find yourself unable to hire and/or retain talent.

Let the vest happen. Whether you separate from the employee before or after is your call, though if you've made that determination, do so.

PIPs are fugly as hell for all involved but exist for a reason. You should probably look into setting that up as a process.

Fix your recruitment, training, and monitoring processes.

If you can't fire an employee because the vesting of their shares is "part of their compensation", what's the point of vesting at all? You should just give it to them on day 1, right? How is an executive supposed to operate if something that was promised for the fulfillment of service through a certain day becomes an entitlement any time before that agreed date? One month is too "obvious"? How about 2 months? 6 months? Where is the line when it's ok to fire someone before their vesting day but not after?

I mean the answer is that you just feel it out. 1 month is soon enough to wait, 2 months is gray area, 3 months is probably fine. And if it's a huge vest, then you give more leeway.

You're not appealing to some objective rule here. You're thinking about what would look like shitty behavior to the rest of your employees.

Firing people gracefully is a really, really important part your relationship to your employees. It's about whether people feel like they're being respected as professionals or abused like they work in a sweatshop.

I take the point of view of the employees who have been wishing that their underperforming colleague was fired already, and would rather the company not spend money (which could be theirs) on someone who's dragging down the team.

What about that scenario? Not every underperforming employee is the case that you imagine.

Come on, they know that money won't be theirs. I have never heard of a corporation saying "we'll fire this person and distribute their next vest to the rest of the team"! No, it goes into some generic pool. First priority for RSUs is usually new hires.

I can definitely see wanting someone gone. Been there. But everyone probably hopes they get a soft landing and find a job that suits them better (unless the person's a huge asshole, then maybe not)

This is a great example of a line-drawing fallacy. The claim isn't wrong just because there's no universal precise line.

If I understand, your argument is that the GP's argument isn't invalid because they didn't pick a specific time as to when to fire someone.

I argue that the line-drawing fallacy misapplied here.

The parent's point is that there is no vagueness as to when you can revoke someone's pre-vested shares per the contractual terms in direct contrast to the GP's claim:

> Denying part of compensation after the fact is a bad look.

By asking the GP for a time, they're raising the fact that the contractual terms allow for the the firing pre-vesting at ANYTIME and the GP is making an out of contract judgment.

They started off talking about the line defined in the contract as though it applies in the relational context. The GP contends that the equivalence is inaccurate: many will view termination a day before vesting a sort of theft, i.e., the contract line is fundamentally separate from the appropriate-in-people’s-judgment line.

The response then operates from that premise, exploring the possibility of a distinct line to draw. In other words, while it is clear that there is no vagueness contractually, the response is focused on the distinct question of a line of appropriateness in the relational context.

In evaluating that possibility, it commits the line-drawing fallacy, rejecting the distinction on the fallacious grounds that there isn’t one clear answer as to where that relational line is.

> i.e., the contract line is fundamentally separate from the appropriate-in-people’s-judgment line.

You nailed it, and ultimately, I'm glad you shared this fallacy/concept.

Re-thinking my reaction, I don't think the line-drawing fallacy is constructive here and maybe in general.

Here's what happened,

1. The original comment said "Denying part of compensation after the fact is bad (sic) look."

2. Then the follow-up asked for a "standard" for what duration of time needs to pass for the decision to be regarded "bad" despite being contractually allowed.

3. Then you said "The claim [in #1] isn't wrong just because there's no universal precise line."

IMO, #2's a constructive question to ask because the answers add information about someone's position and furthers debate. The judicial system uses this all the time with "reasonable-ness" standards by specifying a fuzzy line or a "reasonable person would know it when they see it". And if #1 were to say "I don't know how many days make it good/bad," then it's not compelling reasoning and more opinion-based -- which is fine, but not very compelling because it's so vague.

It seems like a lower order fallacy to use in a debate.

I don't think a question like #2 has to be destructive, but it seems clear to me that it was here. The comment tossed out an extreme position—"You should just give it to them on day 1, right?"—and suggested that an executive couldn't even function if vesting was socially expected any time before the contract date. That's hyperbolic, and the "where is the line" question shouldn't be taken in good faith at that point.

Constructive engagement usually involves proposing answers, not just asking questions, or at least demonstrating an agreement on some underlying premises. The comment could have said "I can understand the expectation that vesting is right around the corner carries some weight. But surely there's a point where it's too far. It seems clear to me that six months in with six months to go shouldn't be a concern. If someone hasn't been there for a year, do you think two months would be socially problematic?"

Maybe it isn't compelling, due to vagueness, but what counts is the social reality—and that's often fuzzy.

I like your alternative phrasing for #2.

Thank you again for the interesting discussion.

Also known as Sorites Paradox:

https://en.m.wikipedia.org/wiki/Sorites_paradox

Thanks for linking.

I interpreted the exchange as asking for precision when someone makes a vague statement in the context of a contract that defines things in clear terms.

In this situation, the number of grains of sand (N) to make a heap is defined! It's as if the GGP is debating whether N-1 grains can still be considered a heap regardless of the contractual definition. I think that's what the GP is getting at.

"If you can't fire an employee because the vesting of their shares..."

That isn't what I wrote.

As others have noted (and I should have considered), pro-rata vesting is another option to consider.

Why those terms aren't standard is ... along with a number of other elements of vesting ... is something I don't fully understand.

It matters how it is perceived. If everyone involved sees a company firing a bad employee, then good. But if I were in that situation, I would see a company that decided to be greedy and did not care about the sacrifices you made for them.

I treat equity as zero cash value, but that makes it worse because the company is now clawing back something worthless!

That said, I find the whole concept of vesting cliffs to be a bit of nonsense. Vesting I can understand, but why set these cliffs when they are not explicitly tied to regularly-scheduled reviews, performance, or some other checkpoint?

Vesting of options is supposed to be an incentive for employees to not quit, not an incentive for employers to fire people before it happens.

Trust is an iterated game, and while I'd not argue that you can't fire someone close to their shares vesting, I'd like to be fairly clear on shouldn't. If it's close enough that the political implications are obvious to the owner, it's close enough that the political implications are obvious to the other employees too. And so it becomes a political question.

In a non-iterated game, or one that only involved the employer and the employee, if someone has reached the point of being let go then there's no particular reason not to let them go, vesting or no vesting.

But in an iterated game, and when other employees can see and make inferences about what's happening, it absolutely makes sense to be seen to be generous. You are setting expectations on future behaviour that will make a difference to how the next rounds of the game are played.

I agree entirely -- so long as the intent is entirely performance-based and not as an attempt to short-change the employee, the employer can be justified in parting ways.

However, this entire conundrum points to a flaw in the vesting structure. The one-year cliff might be better composed of a series of smaller monthly vesting events that begin slowly at 9 months, grow to a peak at 12 months and settle down to monthly vesting at month 15.

Technically correct but getting rid of someone at 11 months is their mistake not the employee. They should have evaluated at 3 and 6 months. Letting go at those points and not vesting seems fair enough. The company needs to sharpen their processes. I am guessing this is a startup founded by people who have never worked for someone else as this is commonplace process to have set up 3 and 6 month reviews, PDPs, and probably a tighter hiring process is needed too.

I'm willing to give leeway to a new company. Many founders, even those from companies that have these processes, might not fully understand the value of those processes until they're in the spot of needing them (like in this case).

The problem is optics. Obviously from OPs perspective the vesting isn't part of the firing calculation. However from the perspective of another employee if they see someone get fired right before vesting then it looks like a bait and switch "we'll let you work up to vesting and then fire you to save money in the long run".

There's no obvious answer to when is it fine to fire someone before vesting. The day before is obviously not OK. 1 day after they started working obviously isn't an issue.

The job of an executive is to Deal With It.

> what's the point of vesting at all?

I think usually it's intended to incentivize the employee to not quit, rather than to not be fired.

This is my thinking. Which leads me to think if he’s not performing he should be fired. Vesting or not vesting. The employee is hired to do a job and if he’s not doing it then let him go.

On your note about sending signals to employees, as a candidate, if I was applying to a 10-person company with a formal PIP process, I would run for the hills. The signal that sends is that you're micromanaging and have a very CYA-culture. You're way too small to have a formal PIP process and under a dozen employees.

You're right that vesting is part of compensation, and completely wrong that this would be getting compensation denied after the fact. He's not vested yet. If he's fired today, he's not due anything.

Even among most wrongful termination suits this would be laughable.

At 10 ee's PIP may be too formal, but considering the long history of fractious founder / early-hire disputes, considering and beginning to formalise the process is a good idea. And you'll want that in place by the time you hit 40+ or so.

One school of organisational behaviour says that bureaucracy exists to protect both the organisation and participants (e.g., workers, customers, business partners, vendors, ...) by creating structure and process, rather than arbitrary action and judgements. See Charles Perrow's Complex Organizations: A Critical Essay (1986), somewhere in the early chapters.

https://www.worldcat.org/title/complex-organizations-a-criti...

https://archive.org/search.php?query=Complex+organizations+:...

Believe it or not this is on my reading list, though a handful of entries down.

I don't see how that applies if the employee was deliberately malperforming. A bonus should only be paid if the employee performed well and sometimes perhaps if you feel sympathetic towards the employee, but it seems neither is the case. The legal side should be no concern if other employees are on your side.

This person put in labor, maybe not great labor, but they earned their compensation. Ensuring the quality of the work meets the standards of the employer is ultimately on the employer.

And they might've taken a salary sacrifice in exchange for that equity; in my mind that makes it unethical to withhold any "earned" equity/options.

(I also think the typical cliff of a year is too high, I know the point is to keep cap tables from getting out of hand, but 6 months seems more reasonable given current average tenures).

When my employer laid people off due to COVID-19 they had everyone's stock vest. Linearly vest (as in, if they worked there 6 months they got 6 months of stock, not the 1 year cliff). This is the way to go. The one year cliff is to keep people from leaving on their own accord. Firing someone close to the vest date is a big red flag to other employees. Viewed from outside, it looks like an employer is trying to get out of paying an employee. It's not such a big deal to fire someone a couple months into a year long vesting cliff, but one month is way too close.

A layoff is not comparable to firing a specific individual because they are incompetent.

I've been fired a month before vesting. My ego was super bruised at the time (this was 10ish years ago), but I'm fine now.

Knowing what I know now, and having been a manager who's had to fire people, I wouldn't have hired me in the first place. What they needed was a senior engineer, what they got was a n00b with a heart of gold who couldn't handle medium to large projects. Wrong expectations on both ends. My manager was also brand new to management at the time so he flubbed this part too, I don't fault him for it because I made basically the same mistake when I first became a manager at a fast growing startup too.

That being said, you can't change the past, here's a few tips:

1. Put the business first. It sounds cold, but that's the reality. In my example I was a super early employee with a crazy large equity chunk. Looking back, it made zero sense to give me that much equity considering my skill level and what the market was for compensation at the time. I had a larger equity chunk there 10 years ago than when I joined to manage the entire engineering team at another company.

2. You can soften the blow with a nice severance package instead of equity if it makes you feel better. Three months severance ain't a bad consolation prize in the startup lottery game.

3. It may be a bad look to the rest of the team if they seemed like they were contributing, but by the sounds of it they were generally a low performer anyways. In my experience, letting go of low performers doesn't cause morale to go down.

In the future, nip performance issues in the bud as quickly as possible. Especially at early stage startups. Putting someone on a 4-6 week PIP as early as possible makes things _a lot_ easier on both sides.

Put together a separation package that works for everyone.

Something like:

* Last day of work is today, all building and system access is revoked.

* Remain employed, on the payroll, full benefits, etc until after vesting (30, 60, etc days).

* Subject to signing an agreement around non-disparagement of the company, not poaching employees, etc, whatever else.

These kinds of things are typical for layoff situations. Trying terminate prior to vesting seems unnecessarily punitive, but you can still get them out of the building immediately.

Why is there a need to remain employed for vesting? Can't OP offer the right to vest in the separation package and terminate immediately?

No. Why does this one employee get to vest early and the others don't? It's a legal minefield and sets up the wrong precedent.

As opposed to paying them more money and then vesting the stock? Paying them more is not a worse precedent?

And I don't see any legal ramifications here, but not legal advice

I wasn't referring to letting the stock vest. I was referring to the concept of leaving them on the payroll until their stock vests. There's no reason not to vest the stock early and send them on their way.

Unless the original poster wanted to give them severance.

I know - I would personally just put them on gardening leave until their stocks vest. Sure that costs money but not a lot - it's probably worth it for the lack of drama.

It's < 10 people, so getting the message out isn't an issue. So I wouldn't worry about drama wrt people thinking he got screwed out of his stock. Can even hold a meeting about it.

Legal fees for early vesting might be a significant cost.

How?

can the employee be terminated but part of that termination package is the assurance of his vesting at the right time soon?

in this case he's now a headache to keep around

Typical for a large company maybe but a ten-person startup?

I've done this at a 10 person startup. If you have 10 employees, you probably have a decent law firm. Any decent law firm will have boilerplate separation agreements that can be easily modified to fit your special needs with minimal work.

I was primarily thinking of the 60 days full pay and benefits for someone who had been there barely a year. That's like a week of the entire company's payroll.

I think the stock concerns are making a mountain out of a molehill. They may not even want it. The other legal stuff probably wouldn't be worth the legal costs/headaches of enforcing anyway.

If they are that bad and you let it run this long (sounds like ~6 months of declining performance), it is either not as bad as you think it is or you really dropped the ball. Either way you should give them the equity and consider it a lesson learned.

Unfortunately, engineering is more .1x engineers than 10x engineers.

Leadership demands you make hard decisions early, with sometimes only 60% certainty, but firing needs to be done as fast as possible for the sake of the team and product. It can be really hard, I've only had to do a few times and each time it was never easy.

While not really helpful in the current situation, this is only an issue because the issue wasn't addressed earlier, and now they're stuck in this weird place.

So yes, let them vest, but also inform them that they are also fired immediately after.

Your principles need to be better. You had your time to assess the person and put them on performance management. Some people arent cut out for certain jobs, but the person did their time and showed up and worked and earned their vest. Going above and beyond wasnt part of the agreement. Taking time off and not informing the team is weird - do they not need to request it off? And plain wrong work in the past wasnt picked up on until now... both of these things sound like management issues. Even if they are relatively senior.

Its totally reasonable to want someone who you think is better going forward, but to be as callous as to play politics on something you have used as a motivator is manipulative, contemptible, and a further sign of weak leadership.

Get them out, but let them vest.

Don't delay the decision - You've had performance conversations with them already, so this won't come as a surprise.

Tell them they're on leave immediately, and then pay them whatever they're owed in terms of leave, set their effective termination date for just after their vesting date.

Talk to the team, explain that it didn't work out, but that you're not the kind of founding team who will screw someone out of their equity weeks or months before their cliff.

The team will respect you doubly : For getting the under-performer out of their team, and for treating them fairly. This may sting a bit, it's your company and you're killing yourself to try and make it worth something.

Consider that the cost of learning how to be a better boss and not having made the hard decision earlier.

If you go the other way, you risk killing your velocity and losing the people you need.

In general the CEO has the ability to award equity however they want. It's fairly common for exercise windows to be extended, awards to be increased as a part of a severance package, cashless exercise to be allowed, etc. You may need to get sign off from the board, but that's usually easily justifiable.

As stated above, after that, the communication to the rest of the team is key.

I can't help but think this is the only sensible approach.

Persistant performance related issues are management's responsibility. It's unfair to withhold their vesting mere weeks from their vest date when management should've addressed the issue earlier.

Hey there.

So after thinking about this for a while, it occurs to me that you might actually have an employee who has a problem with the other employees.

Normally, giving/getting feedback (in my opinion) means that they care enough to actually perform to some extent.

But if they are taking off without informing the other employees... that tells me they don't respect those other employees for some reason. It could be that this employee is just a jerk; but it can also be that the other employees are the jerks. I know that may seem a stretch, but I've run into it before myself, where the other employees were doing all sorts of things wrong, and were risking getting customers sick/hurt. So of course I did the right thing, and did my job, which is make sure that sort of thing isn't happening.

The result? They all complain to the boss, claim my work is below standards, and get me fired.

I wonder if this is the case for your problem employee as well, because you say it 'felt like squeezing water from a stone'.

I can totally be like that in the eyes of some at times, especially when I am verifiably correct about something. And guess what the group thinking mobs tend to hate the most? Yup, people like me who don't budge for nimrods.

So I wonder if things go worse because of the others recognizing they weren't getting their way and so they are now making things worse for that employee. I know that if it were me, I would certainly start to give a lot less fucks about a lot of things, especially if the boss is taking the wrong side of things.

So ask yourself this.

Are you being fooled by fools?

Founder, similar stage, though haven't encountered what you have. Read through your other replies.

I would grant them the equity. It's on you for not firing them earlier - don't make them pay for that mistake.

I agree. OP has done themself no favors by kicking the can down the road. It was cruel to let them carry on this long without consequences. There is no need to heap on another cruelty. The fact that OP even has to wonder about this is depressing. You’re the boss. The buck stops with you. And that includes holding yourself accountable.

Give them pro-rata equity. if the cliff was on 1 year and they were fired 11 months into it, give them 11/12th of the promised equity and fire them today.

+1 to this. It seems that the underperformance was known well before this milestone. The only reason OP wishes to terminate the employee now is purely because the vesting date is approaching. Termination sans vesting sends a bad message to the rest of the employees. This is a bed OP may need to sleep in to save face.

Founder of a Series A company. Just give them the equity which should be in the form of options at this stage, which they will need to choose to exercise. If shares still give it to them.

If you don't people will gossip and hurt employee moral.

As for effect on cap table, theres no issues with a former employee having some common shares. If you raise money it will likely be in the form of preferred shares.

Find a better way to indentify under performers earlier so it doesn't drag out to this point

Don't be that guy. Let them vest and be on their way.

Being generous and parting on good terms is desirable, even when they suck. Even moreso on a small team.

> Being generous and parting on good terms is desirable

The desirable part might be what happens to the morale of the rest of the team.

A possibly vindictive boss is going to be on the mind for everyone who is still there and delivering value - you also risk dividing your team's opinions on this topic ("so unfair" vs "good riddance").

As with a lot of startups with a handful of employees, often what an employee thinks they are getting is some percentage of "possibly nothing" & the person might also have come to the same conclusion before underperforming.

So you might be getting some brownie points with the team, the person getting thinks they're getting nothing of value(but not that you're yanking it out of their hands) and the cap table is not going to be affected anymore than hiring someone & them booking it out on the first vest, which happens.

Agreed with this. Everyone knows when he vests. You will lose the trust of others if you are seen to be doing this only now so that you can avoid giving him some other component of what he has earned.

And despite his performance, he did earn it.

I don't understand this point of view. Stock/options are given when an employee works satisfactorily through the date of vesting. That's part of the terms of the deal. Why do you get to decide that a certain period of time before that date, counts as "unfair" if you quit or get fired?

People get to decide because you can't stop them from doing so. There's plenty of situations in life where being right and having a positive relationship come into tension. Invoking the "terms of the deal" usually has a cost, relationally—to the point that choosing positive relationship may be less costly overall.

You’re full of bad takes today. Morale at a 10 person company decides it. If it took you 49 weeks to realize this was a bad hire, that’s on you too.

The person you're responding to doesn't seem to be the founder who wrote the ask HN. Also, the phrase "you're full of bad takes today" seems to be against the site guidelines.

"You're not wrong Walter, you're just an asshole"

At present he hasn’t been fired and if his date of vesting wasn’t approaching, OPs question may not even have arisen in his mind.

Since terminating him is a question related directly to his vesting, everyone is going to know he was let go right before vesting to eek out the best possible value from him right before he gets something he’s worked a year to receive.

“Yeah but our contract says” is literally the worst thing you can do with a small company if you want morale to be high.

This.

Learn from the experience and how you can identify, investigate, address and correct future pivots like theirs. Don't let them become the wrong kind of example for how you do business.

My gut feeling here is that the founder has an outsized perception of the value of the potentially-vested shares.

95% of startup shares are pointless funny money. The remaining 5% that turn into something only really make wealth for the founders and the VCs. Having been through acquisition a couple times and seen how it shakes out for individual contributors -- most employees could make more money in a year or two of regular FAANG compensation.

I know those shares look super important to the founders, and founders need to believe in their business to stay motivated. But the share agreements for startups these days rarely provide more than a small fraction of a percent to an employee, and even fairly generous exits lead to "helps with downpayment for house" level money, not "retire in the south of France" or "go start my own startup now" level money. https://www.tldroptions.io/ is informative here.

Those of us who are working in startups as employees don't do so on the hope of getting rich -- we do so because the work is sometimes interesting. In competitive job markets, founders need to keep this in mind. For non-junior employees -- or anybody who has been around the block -- the equity is rarely the thing keeping them there. The work environment and project is.

All this to say, focusing on the vesting seems silly. Those shares are likely useless and not worth getting stressed about. Unless this person was offered a substantial equity stake, it's the wrong thing to focus on.

Fix your performance management process and move on. Playing games with the equity now is only going to make you look petty.

That is what it strikes me as. But even large companies can play this game. One I worked at had a fairly sweet pension plan. The catch was you had to work there 30 years. It was pointed out to me when I had been there about 2 years that at about 29.5 they would let someone go then re-hire as contractor. It was usually 2-3 people in the building I worked in, per year, and was for them considered a small facility of 'only' 200 people. In the time I was there only one guy made it to 30 and he was an upper manager. My takeaway on that was take care of yourself and your money. Do not depend on 'bonus' items like that.

> One of those (one of the first to join) has been an issue for quite a while. Lots of time off, low effort at work, minimal hours. Felt like squeezing water out of a stone to get a result from them.

The real issue here is that this wasn't properly addressed by the company when it was a going concern. Now there's a "reason" to do it, the vesting event, you are attempting to fit a round peg in a square hole with this type of rationalization. And thus, you then find yourself questioning it and putting it up for public consideration.

It would be expected that a person's behavior will "double down" when they get closer to vesting. They can "be themselves" the closer the event comes. That said, they also "stuck and stayed" at the company through all this.

The best thing is to not discuss this further and do the right thing even though it's difficult. You've already made up your mind to let them go. What can also help is to let go of the blame you've applied to them over the years and give them what they have earned by staying: their stock in the company.

I am not a lawyer, nor a US person.

Since that employee being around is an ongoing net loss for the company, you could consider quietly sending them off to garden leave to end on the day after vesting, conditional on signing a severance agreement that's favorable to you (do not disparage, do not solicit etc.)

On the other hand, in some jurisdictions firing an employee a short time before a benefit is due may actually be legally hazardous.

Under the normal employee grant conditions - specifically waiving off power of attorney for governance - there shouldn't be that much that person can do to harm you. (They still might have access to shareholder reports FWIW). If they care about vesting, probably they have at least some interest in the company's success.

A final angle is the optics towards other employees - even if they don't like the person in question, you probably want to appear reasonable - which includes making an effort to part amicably.

So the takeaway here is - consult a lawyer and try to work a quiet solution so that everybody can go back to building that startup you care about so much.

Founder of a late-stage start-up here. Firing people is never fun, and pretty much always I (and most of my founder friends) drag it out. With some people, PIP would work. For most people it doesn't. You don't need to put them on a formal PIP as long as you've been direct with feedback, and your legal environment allows at-will termination. As an early-stage company, especially in this economy, you don't have the time in engage in this luxury.

What I'd do - if this person has been underperforming under bad faith, and you have this well documented, I'd move to terminate right away - vesting or no vesting. If that means they don't get to vest, too bad. Don't be scared of lawsuits - yes it will be unproductive if a lawsuit pops up, but if you've been following the law, and you've been following your contract, and you have been direct about the under-performance, the law will be on your side.

When someone is allowed to operate in a team in bad faith, it also severely demotivates the people who perform well. And when this person is allowed to derive a benefit which they don't deserve, it is unfair to those who are putting in their time. And this employee knows that there is a 1-year cliff with vesting; the whole point of that cliff is to weed out such employees.

If they have been underperforming for personal reasons, or because they're not best fit for the job, or if they have benefited you at some early stage, perhaps with fundraising, initial prototypes etc, and then lost momentum, then some amount of empathy is justified, and you can apply that at your discretion. In this case, I'd immediately send this person on garden leave, and terminate past your vesting date, since that's so close.

As to whether there are any downsides on having them in the cap table - it depends on how much equity they hold, assuming that's very small, then no.

Firing bad employees (and customers) is the opposite of planting trees. The best time to do it was months or years ago, the second best time is now.

Rewarding an incompetent shirker is financially foolish and sets a tone for everybody else in the company. If the employee is as bad as you say he is, everybody that works with him would know that and fully understand why he was sacked.

Employee equity is a rounding error compared to what founders and investors make. You’re talking about 2% of the company, max? That’s usually vested over four years, so the one year cliff means they’d get 0.5%.

They put a year of their life into making you rich. I would part ways amicably and be generous.

If you IPO, none of this will matter either way. So if you fire them early, it’s a needless risk.

My mental image reading this is that you demand overtime, are reluctant to allow holidays and are trying to fire this person before you have to deliver on promised compensation.

Of course I could be completely wrong.

Out of curiosity what counts as lots of time off and minimal hours?

I read this and am glad to live somewhere with legislation covering working hours, rights around leave and around being fired.

This is pretty dirty, you should have let them go a long time ago. Now you will destroy a bunch of your credibility if you do them dirty, your team will act like it's okay, but its not and you will lose more than you gain. I'm saying this from the perspective of an employee who has worked at a few small startups. Learn from your mistake.

You are not clear with what you actually think the OP should be doing. Although you are using very loaded language ... "do them dirty"

There are only two choices here; it's pretty clear what I'm suggesting. There is no need to sugarcoat it.

Maybe ask the employee if they are having personal life issues or have issues with the vision? I know I’m under a lot of stress lately and been performing slower than usual. Maybe you should consider if they are burnt out after being the first employee? Maybe they put in a ton of effort at the front end and now they need you to be a leader and help them become less burnt out.

You’re treating it like they’re a machine who is starting to break down and needs to be replaced. This is a shameful post for a founder.

I'm surprised to see how many people are saying that this is a bad look. You want to fire this person so fire them.

> Should I let them vest then let them go, or just let them go? Feedback from former founders esp is helpful. Any downsides to having them on the cap table?

IMO the time to fire an employee is as soon as you have decided that you need to fire them. That's all there is to it barring an extreme circumstance, but in this case it's clear cut - you gave them plenty of time, warning, etc. It has gotten worse.

As for your cap table, I doubt there are serious implications to having them on it, assuming they're just typical common stock options and not very many. That said, the first time I fired someone I got on a call with my lawyers to make sure everything was ironed out - I suggest you do the same.

Firing people really really sucks. It's maybe the worst part of the job? Not sure. But ultimately that's what you sign up for when you start a company. It's not fair to anyone else on the team to keep someone around who you know needs to go ASAP.

I see a lot of posts saying that your other employees will feel negatively. That's not my experience at all. If this is a justified firing they probably already think it should have happened and they will totally understand why you had to do it. Explain to them that there was ample notice, you set a timeline for improvement, you saw things get worse, and so you took action.

edit: I will add that:

a) It's your company, you ultimately make the calls on how these situations are handled

b) You're going to have the most context. No one else has the same view of how the company is structured, how people will react, etc. Use your best judgment.

If I saw a review on glassdoor for a company stating that they were fired a month before vesting and received nothing, I would never work for that company. Not only that, I would actively advise my professional network to never work for that company.

The time to fire them was months or years ago.

Weird, that feels like an extreme reaction to a single comment.

It's a seller's market and companies aren't generally known to treat employees fairly anyway. He means better safe than sorry.

Is it only you who has the problem with them or the entire team?

If it's the entire team then get rid of them asap, after checking corresponding labour laws. Imagine you work hard and someone's smooching off your hard work, then they get paid the same to boot! That shit negatively affects everyone.

I agree to the general sentiment of this thread but...

> Taking off without informing team

You tolerate such a behavior if you let him vest and show weakness. Maybe the guy did worse things, talked behind your back and what not. Maybe there are more people who would appreciate his lay off and then, wonder why he still got the vesting. Letting him vest might make you the nice guy with an easy company to work with but could also frame you as the dumb, weak CEO who doesn't dare or can't make tough decisions. It's a thin line.

Not an easy decision and the majority goes for the easy way but there must be a better solution. Despite of a lot of good advice in this thread, I wonder how many in this thread are founders/employers vs employees.

So OP should fire the employee 1 month sooner because "maybe he did worse things" and OP can't afford to "look weak"? This sounds more like a prison gang than a small startup.

It's unclear to me: Why are you wondering _now_?

Vesting is compensation unlocked after a period of time. It is _meant_ to keep people _engaged_. You shouldn't feel bad for having to terminate someone two weeks before vesting, or 1 month before vesting, or 6 months before. No more than you should feel bad for having to stop paying someone that you fired.

Do you have _facts_, undebatable ones, demonstrating that the person is below expectations? Do other team members share the same point of view? Do you have feedback from others, pointing out that this person wasn't pulling its part? Did you share that with the person? Did you share these elements, did the person acknowledged that there was missed expectations? Did you agree on concrete goals to progress and meet expectations? Did you guide that person on this, for like 2~3 months?

If you answered YES to all these questions, but the person is still failing, then let that person go. You've made your job. Whether they are vesting tomorrow or in 6 months or in a year, is _a detail_. They have been failing to meet the bar, you've told them, you explained them how to reach it, you guided them for some time, and they are still failing.

If you didn't, then start right away.

Put vesting in parenthesis. That is not the topic at hand. The topic is meeting expectations or not.

This is naive. How do you think people feel about being fired one day before their 20th anniversary where they would qualify for pension? Sure, the date is the date, but it’s naive to think that this wouldn’t have blowback.

I'm not saying it wouldn't trigger legal action or resentment. My point is that the question is on the performance or lack thereof and how it was shared and worked on with the contributor.

I'm saying that someone who hasn't been doing their job for 6 months, has been told so repeatedly, has been shown and guided through an improvement plan, but still fail to meet the expectations, should not be kept at their position. Whatever the date for whatever bonus, yes.

It doesn't matter if it happens one day, one week, or one month or 6 months prior to that date. What matters is whether everyone was aware of what was happening and the implications of it.

If that is not the case, then yes sure, start now to build that file. In this instance, the date will pass, and in a couple of months from now the contributor will be out. The next instance, act faster.

I feel like the fact that this person is posting this now indicates that all of the I's weren't dotted. As you note, ideally, it would be very clear -- you need to improve by this date. Here are the checkpoints, and if you don't then you will be terminated on about this date -- and here are the financial implications of the termination. I'm not sure, but it doesn't seem like these sorts of steps were taken.

You made this situation worse by not firing them sooner. This is 100% on you. You let this drag out far too long until it comes time to vest.

Now you're going to make this even worse by not letting them vest? You're making mistake after mistake. You're going to look like an asshole in front of the other employees and they won't forget that because you could turn around and do it to them.

‘Despite feedback’. Was that feedback clearly given in a sit down? With more than 4eyes present? Confirmed afterwards in writing to the employee, in a clearly worded ‘here is what we discussed’ email, stating behavior and output has to be stepped up? If ever it came to a discussion be it personally or even legally, do you have a track record to prove to yourself you did enough to warn him? If yes, then let him go. If it’s ambiguous, I would reconsider, from a legal and personal pov. Depending on the amount of vesting after this cliff, it might be worth it to let him go w some of the shares two months from now, and take your loss (moment of learning) for not resolving this in a more timely manner, and be more on top of it with other employees.

It's tempting to think in terms of right and wrong, or whether or not -- to simplify decisions for the sake of moving forward.

The question is not whether to fire, but how to manage this person, whether present or former employee/founder.

As a founder, you're creating something with at least as many dimensions and perspectives as you have stakeholders -- not a graphic but a sculpture. Worse, as the founder/creator you actually can't see things from stakeholders' perspectives, because you don't have their concerns or knowledge gaps or insights. Even worse, you're building a live thing: you start something and it keeps going, becomes precedent or expectation or concern. So it's a multi-dimensional seed.

To avoid getting lost in situations like this, get in the habit of putting on everyone's hat for a minute, and then think about the dynamics, and then ask what's the distinguishing feature of this situation. (Ideally you develop a team doing the same thinking, and then they can do this without you as the business grows.)

Other commenters have mentioned some of the perspectives, particularly about people's sense of fairness. But I think the distinguishing factor here is the safety of closeness with deciders.

If you as the decider fire this person for not putting out, and then it comes out they were struggling with something they couldn't share (e.g., an addicted spouse or sibling?), aside from piling havoc on horror, you look like you don't understand those working closely with you and don't appreciate their (earlier) sacrifice.

You want people to tell you the truth -- about their situation, the business, and you as a person. If you don't know, that's your problem. You don't have to agree with them, or even understand how it all fits together, but you should know.

So, all thing considered, in this case I would recommend doing something that will ensure observers will be more inclined to come to you with the truth, not less.

Sooner, softer, smoother...

I want to provide a bit of a counterpoint from personal experience:

A harsh firing process can actually even improve trust into management/leadership.

Poor performance especially in smaller companies is often very noticeable to coworkers and firing people for not performing at all can signal that management is willing to follow through with hard decisions for the good of the company (and that IS important to employees!)

If there is consensus in your team that your disappointing employee is useless, than firing him on the spot might be the best thing you can do to increase trust in leadership (but this is a hard decision and a lot more context would be needed to judge).

Not sure about legal ramifications but can you offer them the opportunity to “depart now but remain on the books until vesting”?

I don’t know the compensation details and I’m not trying to be mean, but if you’re an early stage startup, odds are the options are worth negative dollars (zero minus strike price). It may be insulting to say, “we graciously kept you on so you’d have a chance to buy into the startup that’s firing you.”

What’s chiefly on my mind is that I think you shouldn’t unilaterally decide what’s best for them. Maybe they don’t want your stock and would have preferred you just be honest and prompt.

View anything as a price to the company. This is a lesson you pay to not identify the problem and fire them early. Putting generosity aside, as an early startup, you cannot afford legal battles and ex-early-employee badmouthing you afterwards. And for an employee this early, they get what, at most 1% of the equity with a vesting schedule of 4 years? So at most 0.25%, which is nothing in the long run regarding the company's success. So, have a chat with them, negotiate at least 6 months equity, ask them to sign an agreement, and let them go asap.

maybe there's other stuff going on? Family life is burning down around them? They probably used to be good, and now they're not, so might as well ask directly. They probably have thoughts on it.

I would feel out the rest of the team, see about their opinion of the guy.

My other consideration would be on whether or not I've actually let this employee know that there was a problem.

Did they know they were on the edge of being fired? Did they know their performance wasn't up to expectations?

And I mean, were they explicitly told these things? Are these things documented?

Because if the team doesn't like him and you have multiple documented instances where you told him his performance wasn't adequate and his job was in jeopardy then do you could fire him 5 seconds after you read this message. In that case was given every chance and threw them away.

But if you've just been mostly silently stewing about this and giving passive aggressive hints that he needs to step up, with your only note being "I need this now". Or if the team thinks he's pulling his weight and that what's being asked of him is too much, then you should let him vest. Because in that case, you're the one who made the mistakes.

Basically, determine who made the mistake to let it get to this point. And that should tell you whether or not to let him vest.

I'm willing to bet it's more latter than former considering you're here asking for advice rather than printing out all of your documentation to show him why you're firing him.

> or just let them go?

You're firing him, you're not letting him go.

> They vest in a few weeks

Who? Who vests? "They"? Talk straight dude.

> Feedback from former founders esp is helpful

I'm a current founder. You just fire the guy. What are we talking about, it's your company! You don't have to give him any shares. Even if he had vested!

Do you know how any of this works? You're talking so limp right now. It's all flexible. It is all subject to change. Every deal, everything you put in writing.

To quote another user:

> I would grant them the equity. It's on you for not firing them earlier - don't make them pay for that mistake.

This is the limpest shit I've ever heard. What the fuck are these people even talking about? The cliff exists for this very reason. The purpose is to let you spend your sweet time to fire someone, which you did. Okay, and now you don't have to give the shares.

You're in charge.

Another commenter:

> Rewarding an incompetent shirker is financially foolish and sets a tone for everybody else in the company. If the employee is as bad as you say he is, everybody that works with him would know that and fully understand why he was sacked.

This is the only outcome that makes sense. Just tell everyone that you fired this guy and did not give him the shares. End of story. If he sucks as much as you say, people will be relieved to hear you didn't give this fuck shares for nothing.

>This is the limpest shit I've ever heard.

Are you willing to back your opinion by exposing your name and company affiliation rather than creating a new username?

The vest schedule means "if you're still at the company on day X, you'll get Y amount of equity".

You have a specific vest date for a reason.

If you wait to get rid of that employee just because they have equity vesting in a few weeks, it means that the vest is not on "day X", but on "day X - a few weeks". But that's not what the vesting schedule says.

The only logical decision is that whether or not they are vesting soon does not matter, what matters is you want to fire them now, so do it.

I understand that there is a supposed moral aspect to it as well, and that's probably why you asked online. Once again the decision is easy, do you want to fire them today because they are not performing, or do you want to fire them today because they have their vest in a few weeks?

For me the fact that you are even exploring the possibility to keep them onboard a few more weeks means it's the first situation, so I see no wrong there.

Lastly, some comments are predicting doom for your startup due to the bad reputation this would cause, including journalists knocking at your door and customers setting up a guillotine outside of your door, but this is all BS and isn't going to happen. Even your other employees will probably not know about this vesting schedule "problem".

The only ethically right way to handle this is to pay the amount that would have vested prorated to the time spent vesting. Perhaps combine it with a non-disparagement and non-disclosure agreement as well as a promise not give negative references.

Equity based compensation is a bargain between you and an employee that they forgo immediate salary and supplement your cashflow in agreement to be repaid for that at a later date. Anything less than that means you're displaying that you don't respect agreed bargain on behalf of all your employees. You also burn a bridge forever of someone that was there at the beginning. You lose an investor, but gain a permanent detractor. I'd strongly consider never joining your company if it was known you'd done this to an employee, so you need to fix that in your favor (by either vesting or paying the employee).

You may find this is acceptable to the employee as a way to save face and leave a job that they're either not enjoying, is past the point where they care about, or even where there are concerns that you are unaware of that are causing this behavior (health, relationship, life etc).

Not a founder here, so I'm just giving a general leadership perspective.

I think you should completely disregard the vesting in your decision-making. I'm guessing you've not developed a performance management process in your business yet. You've highlighted that you gave feedback, however I'm not sure if you've set out a process by which they stay or go.

This isn't the end of the world, you can do this process now:

1. Give feedback on the behaviour (you've already done this)

2. Escalate the feedback to a written warning, highlight what you want to see change and when by

3. Once that date passes, if the change hasn't occurred, let them go

This process doesn't need to take very long: it should depend on expected timeline to make these kinds of changes. If these are behavioural issues, then 2-4 weeks should be sufficient.

Assuming the person doesn't change, you'll let them go. This will be a shock to your other employees, so call a meeting with everyone afterwards. Make it clear (without going deep into the details) that this was a performance-related sacking. Highlight the fact you gave feedback, with clear and actionable steps to improve, but the situation didn't work out.

If this seems onerous consider it this way: you're not doing this for the team member you're letting go. You're doing it for the rest of the team. You want to reassure them that you're not just looking to screw the team out of vested shares and that, if you haven't discussed performance issues with them, there's nothing for them to worry about.

I was let go from a small startup exactly one day before vesting, on specious grounds. A lawyer I consulted stated that I had strong grounds to sue on legal grounds of bad faith, with probable triple damages. I pretty quickly decided to let it go because the company founder was a dishonest creep and the company was going nowhere. Ask yourself whether pursuing any such claim is actually worth the hassle and time and money.

That happened to me, but much worse. They said I performed well, but in their words I “wasn’t the long term employee they envisioned for the company”. That was the best lesson I received about work ethics and helped a lot to shape the rest of my career. I’m thankful I saw this kind of disgusting management early. I would be trapped in that sick environment and low salary until today if that hasn’t happened.

> Lots of time off, low effort at work, minimal hours. Felt like squeezing water out of a stone to get a result from them.

From my experience this was always due to low pay and to a lesser extent bad management. When workers couldn't find anything better they focused on side gigs to top up their wages or giving a shot at their own projects hoping to launch their own business, so they were not fully focused on anything.

Yes, I respect that the OP has made his/her determination but there are two (or more) sides to every story.

The way I've structured options agreements is that if someone is let go without cause, they get their prorated shares that will vest next. So half way through the year on a one year vest? Give them half the shares. If we fired with cause (which usually requires somewhat egregious behavior and isn't just an employee not working out), then they did not get anything prorated. If they quit, generally we'd also prorate unless they leave us in a lurch. It was setup this way contractually for us, but you could certainly choose to do it this way willingly without the contractual obligation.

Not enough detail.

How long of a period was the vesting cliff?

When did their work start having issues?

When did you first talk to the about it?

When did it get to the point they weren’t doing their job?

If they were still doing their job (even to a minimum standard) by the 2/3rds point, I’d let it slide.

Keep in mind as a the boss you should have been on this from day 1. If you do fire them it shouldn’t be a surprise. If it will be, then let them vest.

[deleted]

Ok, so it sounds like you were on top of the performance issue along the way, which is good.

Someone else mentioned a partial vest, which I love.

Let them go, tell them normally they'd walk away with nothing, but you're making an exception, so they will vest half.

It's a pretty good compromise.

I understand that it's uncomfortable on a personal level (looking at it from both sides), and you might wanna consider the optics for company politics.

On a purely mechanics level I am somewhat confused: If the setup is such, that firing the employee can lead to cutting them out of the vesting at this stage, then that's because it has explicitly been built into the vesting mechanism. If that is not an option that you are actually willing to exercise, or if the employee is not okay with this being used as mechanism against them, why was this contract set up and signed by both parties?

If there's no good answer to that, revising the system in a way that everyone involved feels actually okay with seems like a good next step. Since I am not all that deep into vesting mechanisms, I am happy to learn why this is might be a dilemma situation that has no generally acceptable solution.

You should vest them monthly instead of only after the full term completion.

If the full term is 2 years, pay him 23/24 and let him go.

If you have been giving honest feedback about the performance issue and he is aware of what is going on, you can risk a termination whitout compensation but you are probably getting sued. If he is not aware about the management insatisfaction you are most likely getting sued because he will see receive it as an unjust termination.

The best case scenario here is to push some form of compensation agreement.

Also, as a manager, you should build trust, even you people that you don't particularly like, so termination without compensation can have negative lasting effects on teammates.

> One of those (one of the first to join) has been an issue for quite a while

Focusing on the vesting issue is secondary to the fact that this employee should have been fired a while ago. Risking giving up a little equity is unlikely to be existentially risky but keeping distracted unmotivated and incompetent employees around definitely is.

If I worked at your company and saw that you were firing people right before vest, rightly or wrongly, I’d assume worst case that’s a possibility you’re maliciously doing it and would probably jump ship.

Additionally, if asked by friends in the industry why I left, I’d be honest about the experience.

Not a founder here, but yes having the guy on the cap table costs you. Every month, there is that percentage of your work and your team’s work that goes into their pocket, just for the tiny bit of work they did in the first months. It’s always going to be a thorn in your thigh.

Plus you’re going to have to explain to investors who that person is, and why they’re on the cap table and not in the company.

Vesting is a form of trial period. It’s the rules of the game. You warned them. They didn’t react properly. That’s it.

Moreover, firing them allows you to keep those stocks so that you can reward someone else. Someone who’s actuelly been doing the work.

You should definitely fire them right now. You need to control the narrative though. Make sure everyone on the teams understand the move. People shouldn’t be surprised.

Why not just fire them, but accelerate their vesting to today? That gets rid of the actual problem employee, signals to everyone that you care about the workplace, but also signals that you will treat your employees fairly even in the case of termination?

Definitely just fire him and be open about why with the rest of your team. If you are really worried about the rest of your team, just discuss it with them first and ask them for advice on what you would do, most of the time if he's really slacking they will wonder why the guy is still in the company.

The other option is to just fire him and then explain that you've been given feedback to him for a while and that you've had enough and that letting him vest would just be plain unfair to people who do put in the work.

Depending on the size of his grant, your current and future investors will think you are weak for letting him vest. That's also a conversation you don't want to have.

Make sure that you terminate early employees on good terms. Have a termination agreement in place so if investors or employees reach out, you would have neutral or positive feedback. Make sure your termination agreement follows the law and is not ones sided, (or it would not have any effect as such agreements are not enforceable). Make sure that your HR and HR only can provide feedback regarding that employee. Oh, you don’t have HR? You probably done a lot of things that are illegal and opened yourself to lawsuits. Have you been paying him market salary? If you’ve been paying sub-market salary don’t even think going after the stock.

it's not all or nothing. you can let them go now and vest them 6 months. i would keep in mind, this person may not have been productive, but they have taught you an extremely valuable lesson. you should vest them at least the 6 months.

[deleted]

Let me give you a real data point of what happened at a leading social network company. One of the early hires was fired after a few months on the job, and the company agreed to not only vest him, but FULLY ACCELERATED, 4 years. Of course lawyers drew up non-disparagement agreements and such. This actually happened multiple times over the course to IPO, but it was a smart move in hindsight to ensure there was no leaks and legal battles that could cause huge problems later.

it sounds like your company is still small. i wouldn't decide by committee, but do be transparent with everyone after you make the decision.

To me this comes down to legal. If the person has been documented as a problem, corrective actions have been documented, and whatever you have as an HR dept says it's ok to fire the guy, fire him. If you feel guilty, then offer him a portion of his potential vesting, and explain that he was shit, but you don't want to leave him empty handed.

Is the timing great? No. That's why it must be well documented the behavior your penalizing. He will almost certainly come back to sue you for wrongful termination if there is no documentation (and you have any value to your shares).

Good luck, cut the dead weight, and move on.

Presuming they’ve been there a year, you cannot expect current and future employees to believe that you only figured out that they’re useless a few weeks before vesting. Like, that might be true, but no-one will believe it.

If this is the first time you've fired someone, consult an HR firm to make sure your legal bases are covered. Legal fees + insurance policy rate hikes are existential threats to your runway.

You're probably over-valuing the (non-liquid) options, since that's part of being a Founder.

If your equity is worth real money someday, you'll have the opportunity to buy back the shares (or introduce your ex-employee to an investor interested in purchasing). This is a win/win for early employees who tend to value liquidity. Part on amicable terms so this isn't an awkward conversation in two years.

Can you afford to buy back the equity you would have accelerated? We had this happen and vested them, but the person didn’t really appreciate the equity at all, despite it ending up more valuable than the cash.

If it’s really an issue, you can get it both way. Fire them now and pay a prorata of what would have vested as severance but you are opening a can of worms regarding who get what when.

You can also talk to them, tell them you have noticed they are disconnected and have the feeling that they are waiting for vesting to leave the company. Say you find their current performance unacceptable but don’t want to deprive them of their vesting and see if you can work something out like an unpaid leave until the due date.

Concentrate on the company's future.

A big and expensive wrongful termination lawsuit is not what you need right now.

Sending a message that you can fire a guy weeks before cliff is not what you need right now.

In your position, I would offer the guy two options:

A. Lifting of his cliff for the time he actually worked (if he worked 10 months, then 10/12 of his yearly schedule) — in stock options that the guy needs to exercise by bringing money; or

B. Three months of severance pay — in real money (or some other perk if three months are a legal obligation in your jurisdiction).

Yes, it's an absolute dick move. If it's that bad, accelerate his cliff and let him leave early.

Had a situation where I was let go 2 months before my cliff in an advising/part-time situation, and while I won't say anything negative about the company and most of my colleagues, I was honest in respect to the exec teams behavior. Zero of the 4 applicants who I relayed that to accepted their offers. Was my small equity stake worth (potentially, may have had other reasons) 4 hires?

Question for you all, let's say you have an under-performer in a startup. At what point do you say it's fine to fire them without them vesting anything? 6 months?

for real under-performers, it's usually clear within 3-4 months, esp in small teams / small startups. i have _never_ seen a case where i feel a person lacks fundamentals or is a bad culture fit for a team after 3 months, then turn it around 6 - 9 months.

any number of months waiting after 3-4 IME is months too late. but it feels cruel and it's tough to convince yourself you're right in a specific case. especially when you get to know the person.

I've seen it once, but it was clear the person knew what to do - just needed a bit more time.

Depends entirely on the situation.

1. Are they a danger to others? If no, move to #2. If yes, fire them and don't look back. If anyone gives you grief over it, fire them too just to set the record straight who the boss is, and isn't. This may hurt some reputation you may have, but over time the truth will come to light and things will work themselves out. Usually. Bonus: Future employees will know you don't fuck around.

2. Do ALL the other employees have an issue with this employee? If yes, have a group meeting to determine what the issue is without that employee present. Record everything, and let everyone know that they are being recorded and to be 110% honest about everything. If no, then move on to #3.

3. Is their work amicable or able to be improved at least? If yes, keep them, because coworkers can be backstabbing traitors who deserve worse sometimes. If this is suspected to be the case, move on then refer to other employees track records. If worse than others, fire them. If not the worst; work on improving them. Make it a group thing too so that no one feels singled out, because where there is one bad employee, there are others. Perhaps lesser in some way, but possibly worse as well. If their work is not amicable or capable of being improved upon, move on to #4.

4. Do they have any redeeming quality that helps the startup in a way others cannot manage to do? If yes, keep them regardless of #2 and #3, and find a way to make the scenario work for everyone. If no, continue to #5.

5. Alright, we've reached the final point. At this point it can be determined that the employee has no redeemability, and keeping them on has zero value for the company. Now we come to the question about length of time as implied by your question. The answer is, it doesn't matter. If the employee truly is a problem, cannot be redeemed or improved upon, and is even possibly a danger to others; just get rid of them. If however they can be redeemed somehow, or things can be made to work in the case of some coworkers not getting along and backstabbing each other; then keep them on and work through it.

Your employee could be a complete Wally from Dilbert, but still have some redeeming quality to keep them on the payroll and any benefits included. But if even the other Wally's of the company dislike this person, then it's probably best to just get rid of them and let those other Wally's know they are next if they don't smarten up.

Why do I pose it like this?

Because at the end of the day, you don't want to look like a pushover to the other employees that may be just as useful or useless as this employee. But you don't want to seem like a tyrannical asshole either. So a proper order of things has to be explored. It needs to be determined whether or not there is any potential way to make things work. If things cannot be made to work out somehow, then cut your losses and keep records if possible.

And as far as that vesting goes. Regardless of which ever decision is made to fire them or keep them; pay them out anyways. But make it abundantly clear why they are being fired, or kept.

My experience in the workforce has taught me that other employees will go to ridiculous lengths to get rid of someone they don't like, even if all those other employees are actually the problem. Thing is, groups tend to like to agree with each other, even when wrong. So it needs to be determined who is actually the problem, and who is just a problem to those other problems.

I was the problem for other problems. At one place, I was let go gracefully in a similar manner to how I just explained. And because of it, despite how much I dislike the bosses who fell for those employees bullshit, I don't run them under the bus and sue the shit out of them, because they are just ignorant fools who fell for malicious bullshit.

But there is another job I may be running under some monster busses here soon as soon as I can afford to get a lawyer who is willing to take my case. I've had to deal with some really shitty coworkers who should never be allowed to hold a job in that field ever again. But because of how people can be very convincing to fools; I was seen as the problem.

I hope this is a good enough answer for you, because I learned a long time ago that sometimes high maintenance employees are well worth their maintenance... sometimes.

Just wanted to say - damn, this is a great reply. Lots of knowledge & a decent bit of time to write out, all for free/out of goodwill.

Least some things are still nice on the internet :)

Thanks.

I only have so much experience in management positions; but I have 16 years of work experience and 33 years of life experience. Those last two means I have decades of experience dealing with shitty people. I try to put it to use as best I can, even in this world that placates, coddles and basically all around serves them.

I found it hilarious that most of the people advice something along the lines of "you ought to let him vest for X/Y/Z reasons".

Is HN quiet-quitting and afraid of similar thing happening to them ;)

You don't owe him anything more than what has been agreed upon signing the employement contract, especially considering what looks like gross underperforming (if not blunt misbehaviour).

His vesting in 2 weeks? Too bad, this literally shouldn't matter to your decision.

I agree with you with the "Engineer who doesn't know how people work" part of my brain. But the "Has been around people for more than 25 minutes" part of my brain disagrees.

It's not about what the company is legally allowed to do based on employment contracts, it's about the signal that gets sent to other employees, and the signal that gets sent to prospects and candidates. Rumors are a thing, even (especially?) at very small companies, and when someone is applying for a job here three years from now and hears a new guy got fired right before his vesting cliff, that's going to cause problems.

If he's truly a bad employee the safest route is fire him today to prevent additional poor work product from being introduced, but give him the initial vest. Then, send a message to the rest of the company explaining that he was let go, but you gave him his full vest because it's so close to the time and you didn't want the appearance of that being the decision. Easy, clean, no legal challenge surface area, and as long as the employees believe you, no damage to reputation or morale.

A single employee's initial vest should not be enough to materially impact the finances of a startup even at seed stage.

You had better be careful. You mix "them" with him" in your description. You have to make sure that each and everyone of the individuals that you are thinking about taking action, is based on HIS or HER INDIVIDUAL PERFORMANCE ETC. Not a lot of precedents for this kind of action on a group without looking like you are trying to keep them from just vesting. It will go better if you have their transgressions OTR.

I presume you mean vesting options? If so, then this means they need to still pay (albeit a discounted price) to get shares. And your employee sop, should have a limited time for them to exercise those options. If you’re early stage then do you truely think they will spend cash to buy shares with no liquidity (and possibly never of liquid value)?

Maybe this is a non-issue.

As all of these posts state, it's likely the wrong move. Of course, you could always get the employee to 'voluntarily' accept being let go for an alternative lumpsum or some other incentive. It's not the most moral of moves but if you can convince them to agree and sign something that changes the original contract...thats kind of on them.

Vest them proportionally, and tell them that you are doing it early to fully maximize the potential value of those options that vested.

I'm surprised I don't see any questions about viewpoint, perspective, or diversity of opinion.

Is there some wisdom being applied in their lack of enthusiasm for the task at hand?

Maybe there's some purchase or acquisition that's turning their part of the task Sisypheaan?

Perhaps they have some illness, or family issue?

These are all obviously important questions to answer before you retaliate.

You don't want a person like this to own shares of your company. Offer him a small severance package, and forgo the stocks.

It's very important how you communicate your decision to the rest of the company. You don't want slackers or troublemakers or parasites to infest your company; but at the same time, you want to respect the dignity of everyone.

You already had a talk about the issues you experienced and it was getting even worse. I can’t see any reason why you should wait.

Pro rata it to the day they leave.

Job done.

Employee is happy, employer is happy.

You'll get a brutal reputation externally, possibly some journalists pointing at your startup, destroying your ability to hire. You should have done it earlier or not do it at all. Employee might have their side of the story that could be very unflattering to you (were there any unfulfilled promises in the past?).

Let them vest, fire, and buy them out. Also you need to have an evaluation with the ones who hired and onboarded them.

Keep in mind that most options have an expiration date on when they can be purchased after the employee no longer works at the company. Furthermore most option agreements have a ROFR clause. I would say let them have the options. There is good chance they might not even execute them in the required window.

Are you in a position to offer the cash value of the impending vest? (Not back to an old 409a, but at a current or projected reasonable valuation.)

If so, that keeps your cap table clean, which has value, but still pays the employee for their time.

You know the mistake you made in waiting too long to decide to fire, so I won’t harp on that.

Vest them, then let them go. It isn't worth the potential noise it will generate in the fallout.

As an employer, it is never a bad thing to look a little generous (I said a little) when you terminate someone. This eliminates (or at least lessens) potential liabilities, as with severance pay.