Nobody reads the leaver clauses on signing day. Everybody reads them on leaving day.
Good leaver / bad leaver provisions answer one question: what happens to a departing founder's equity, depending on how they leave? A good leaver typically keeps what has vested. A bad leaver may forfeit equity, sometimes even vested equity, or be forced to sell it back at a discount.
Same departure date, same shareholding, radically different outcomes. The entire difference lives in two definitions.
Two departures, two stories
Founder A leaves because a parent falls seriously ill and she has to move back home. She worked flat out for two years, and everything she vested, she earned.
Founder B leaves after quietly negotiating a job at a competitor, taking the roadmap with him on the way out.
Any fair-minded person treats these two departures differently. Leaver clauses exist so that the agreement treats them differently too, instead of leaving the outcome to whoever has more leverage, more money, or more appetite for a fight at the worst possible moment.
You do not negotiate leaver clauses for the person you are today. You negotiate them for the person one of you might become.
What the labels usually cover
There is no universal definition. That is precisely the point, and the risk. But the market has conventions.
Good leaver, typically: death or permanent disability; dismissal without cause; sometimes resignation for "good reason" (for example, the company materially breaching its own commitments). Consequence: the good leaver keeps vested equity, and unvested equity returns to the pool through the normal vesting mechanics.
Bad leaver, typically: fraud or serious misconduct; material breach of the founder agreement (confidentiality, IP assignment, non-solicitation); dismissal for cause. Consequence: forfeiture of unvested equity and, depending on the drafting, a forced buyback of vested equity, sometimes at fair market value, sometimes at nominal value, which is the difference between a real payout and a symbolic one.
The gray zone is ordinary voluntary resignation. Some agreements treat any resignation as bad leaver. Think hard before signing that.
The drafting trap: equity as handcuffs
An overly broad bad leaver definition ("anyone who resigns for any reason forfeits everything, vested included") turns equity from an incentive into a hostage situation. It feels protective on day one. It ages terribly.
It ages terribly for three reasons. It punishes honesty: a founder who is burned out and honest about it gets treated like the founder who committed fraud. It invites litigation: courts in several jurisdictions look skeptically at forfeiture of vested equity for a mere resignation. And it repels investors, who read a hostile leaver regime as a sign of a low-trust founding team.
The modern, balanced approach: let vesting do the work for ordinary departures (you keep what you vested, you lose what you did not), and reserve bad leaver treatment for genuine misconduct. Vesting handles time. Leaver clauses handle behavior. Confusing the two is where the pain comes from.
Before incorporation
In a pre-incorporation founder agreement, leaver provisions apply to intended equity: they define which departures preserve the founder promise and which void or reduce it, and they pre-agree the buyback logic that will later be mirrored, on real shares, in the post-incorporation shareholders' agreement. Deciding this early is cheap. Deciding it during a departure is not.