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There would be nicer ways to shield the company from that. They could talk to Allen, make sure that, in the possible event of his death, they would take care of his family in case the company succeeded.

In all my commercial ventures, my partners were also my friends. I would never, ever even entertain doing something like this to a perfectly healthy partner, much less one with a serious health problem.

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Targeted dilution of individual shareholders seems extremely shady. Almost seems like it should be illegal.

As noted by someone else, they should have simply retained first option to buy any portio of Allen's shares in the case where his shares would change hands. Actually that should probably apply to all major insiders.

Intentionally trying to dilute his shares, if this did indeed happen, is tantamount to stealing in my eyes.

I agree that you shouldn't screw a friend over obviously. But, there does need to be some way to make sure equity of an early stage company is in the hands of the people who are most incentivized for its success. Ideally Gates would offer a contract where he could buy shares from Allen to make sure he and his family was taken care of. But- I do understand the logic of trying to ensure key stakeholders in the company are leading it.

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