Aargh-- first of all, why don't you have vesting in place? what were you thinking being irresponsible? Solution given the circumstances-- if you have any doubt

Aargh-- first of all, why don't you have vesting in place? what were you thinking being irresponsible? Solution given the circumstances-- if you have any doubts, he has to go. It would be best to have a frank conversation, explain your reasoning, and wrap things up cleanly with paperwork from your lawyers. Convince him that its better to part in a good way and find something that excites him. Give him a fair separation agreement, e.g. pro-rated stock for the 3 months etc. Get everything in writing, help him find a good next gig, and you'll salvage the relationship AND your company. I would recommend giving some stock even if you had vesting and he hadn't hit his cliff for a few reasons: (a) startups are a small world, no point in making enemies (b) a little stock aligns long-term incentives. If he goes, and the company is successful because of that, he actually makes $$. When you're getting acquired he'll be there to help, because he will see a financial outcome. Giving no stock breeds hate and resentment. (c) Startups are hard, grueling experiences, not everyone makes it. Its OK.