I started my company from scratch and found a technical co-founder to build my product. So I managed to hustle in order to find this guy, who was working in a company. He started working for me part time and was doing a decent job working part time (during night).
I also had two other employees so I managed to get the work done. The product was built in 4 months but we didn't find the product market fit. We were in an accelerator during those 4 months with some cash from the accelerator.
After those 4 months, we decided on building a new product along the same lines which was an extension of the old product. We managed to get customers but no revenues until the product was shipped as it was a technology licensing deal.
My start up is now a year old and out of the 8 months involved in the new product, the technical co-founder did not contribute anything except for the first two months just because of the excitement of closing a new customer.
He has no clue about the product and isn't involved in any development. He has not been full time till now. I've been able to find guys to run the show. He has a minority stake (single digit) in the company.
I want to fire him and get back the equity and compensate with a salary for the 5-6 months he worked for the product. How can I handle this situation? Is it still possible for me to get back the shares?
Do you have a written constitution / shareholders agreement / contract? Are they in breach of a contract? It sounds like your error is probably going to cost you. If he is a legal shareholder in the business the only way you can "fire" him is for him to sell you back his shares. From the information you have given there is little to nothing you can do apart from have a civilized conversation with them and hope you can come to a solution. Otherwise see a lawyer and have fun in court, but I doubt very much you will have success. (Again based on the info you gave)