[harindirand]

Agree with above points. It sounds like it should have been dealt with a long time ago. Being this close to vesting is the cost of inaction. The equity issue feels like a sunk cost at this point.

Would initiate a conversation around performance to set expectations that performance needs to improve or their position is at risk.

Be the hero of the story: treat the employee fairly and raise performance expectations. Hopefully, the equity is a small price to pay.