One of our leadership team members is a minority shareholder who clearly does not GWC their seat anymore, but I feel paralyzed to address their performance because of their equity stake. How do we separate ownership from seat performance on the leadership team?

Question

Tyler Smith · Accepted Answer

It is a common and painful challenge for founders when a leadership team member holds an equity stake but no longer has the capacity to perform their job. This situation often leads to operational paralysis because owners confuse shareholder rights with employment accountability. To run a healthy business, you must treat these as two completely separate issues.

Begin by evaluating their performance strictly through the lens of your Accountability Chart and the GWC™ tool. Ask yourself objectively if they get, want, and have the capacity to do the job. If the answer is no, you must address the performance gap just as you would with any other employee, regardless of their stock ownership.

Schedule a direct, professional conversation to discuss the gap between their current performance and the requirements of their seat. Make it clear that while their status as a shareholder is secure, their employment in a leadership seat depends entirely on performance and alignment with your core values.

If they cannot meet the standards of the seat, you must transition them out of that role. You can explore restructuring their involvement, such as moving them to a non-operational advisory role, or initiating a buyout of their minority shares. Keeping an underperforming leader in a critical seat simply because they own equity will destroy your operational traction and ruin your exit value.