50/50 doesn't even remotely make sense here. You've taken on a huge amount of the risk in starting and pushing your company to profitability. Calculating the e

50/50 doesn't even remotely make sense here. You've taken on a huge amount of the risk in starting and pushing your company to profitability. Calculating the equity distribution should be easy: 4 * (His current salary - what you would be paying him) = His risk (I use 4 here because that's the usual vesting period) Your profit * [5-10] = Your valuation (You'll have to work out the coefficient on your own, as it depends heavily on your market and growth potential) His risk / your valuation = His equity This should give you a really rough number. This is the absolute upper limit of what you should be giving him in equity (otherwise there is little to no risk). Keep in mind that if you are growing 20%+ year over year then your valuation doesn't conform to the formula above and should be adjusted much higher (or just think about what you would be comfortable selling the company for today). Equity is all about risk/reward. Because you are profitable, much of the risk is already out of the equation. Consider also how much greater the responsibility in having 30%+ equity to the company - do you think this person will be loyal to that?