Does C actually control 30% of the legal entity (c-corp or LLC I assume), or was the agreement an up front verbal commitment of 30%? Is there a vesting schedul

Does C actually control 30% of the legal entity (c-corp or LLC I assume), or was the agreement an up front verbal commitment of 30%? Is there a vesting schedule in place? The most reasonable thing, I think, it to treat the situation as a well-formed c-corp would. 30% of shares allocated but vesting over a four year period. There's a one year cliff for 25% of allocated shares then 1/36th of remaining shares per month for the next 36 months. Depending on when you consider the venture to have started, six months ago when A and B went full time or when it was a side project, C may have between 0 (because they haven't hit the one year cliff) and 1 year and N months worth of shares (between 7.5% and 15% ownership). Based on what you've written, I assume that: You don't want to completely wipe this person off the cap table by asserting that they aren't legally entitled to anything because of not meeting their one year cliff. However, You also don't feel that they should get 7.5-15% ownership. If both of those are true, it's a negotiation. Having two people whose entire livelihood is dedicated to something but a third who is not but is earning equity at the same rate sounds like the sort of thing that will only ratchet up in pressure over time. "Founder c thinks this is unfair." That's the most interesting thing that you wrote. All of the options that you laid out seem reasonable given the situation that's described.