Indeed. Other people no longer contributing to the business include the VC's and angel investors by the same logic. Either the former employees were paid full

Indeed. Other people no longer contributing to the business include the VC's and angel investors by the same logic. Either the former employees were paid full market rate salaries during their employment, in which case the company colossally fucked up by giving shares to them for literally no reason, or those former employees made a capital contribution just like any other investor.