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What happens if the board fires me while I’m still vesting?

I’m the CEO and founder of a Startup and I’m vesting all my shares. I own majority shares but only have 1 vote on the board. Our terms are 1 year cliff total of 4 years. Its been only 2 months since we signed the vesting agreement.

  • Technically speaking if you get fired by the board during your cliff you’ll get nothing. If you get fired post-cliff you’ll get what you’ve vested.

    Practically speaking unless you’ve done something egregious you’re unlikely to be outright fired. You may be asked to take on a different role, but kicking out a founder/CEO has all sorts of organizational implications that can be really disruptive to the health of the company.

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    • I think he was asking if the investors could cheat him of his majority shares simply because they have control of the board. In this case the investors have no reason to give him a different role as he would still retain his shares.

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      • If he is vesting and is two months into a one year cliff he actually doesn’t own the majority of shares. He owns nothing.

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        • So the question is if founders give investors 20% equity and agree to vest their 80% ownership. Are they setting themselves out to be screwed over since as you said they really don’t have 80% once they agreed to the vesting agreement.

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  • I get the concern, but investors rarely fire entrepreneurs before the first year (at least). They are investing IN YOU. They want you to be a success. If they remove you it will be later- only if you are successful. Believe it or not, investors known they will likely incur losses. They most likely just wont care that much about your company.

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  • Sounds to me like someone doesn’t have an employment agreement. If you have any reason to believe you might be fired with or without cause, I’d definitely want one.

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  • It can happen i guess, but unusual so soon after signing a vesting agreement unless something drastic were to occur between the founder concerned and the investors.

    All the same founders should try to protect themselves as much as possible via an employment contract, part of which should specifically deal with this worst case scenario, if nothing else it may pause trigger happy investors from firing at will.

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