The way it's usually done (in Silicon Valley) at least, is that all co-founders are shareholders of a C corporation. They buy their shares at a very low price, and the corporation has buy-back rights to those shares in case the co-founder leaves before 4 years.
Note: it's slightly different from regular employees who have stock options. The main differences are: employees don't own stock upfront, plus there usually is a 1-year cliff for vesting, so if the employee leaves before a year, they have nothing.
Note: it's slightly different from regular employees who have stock options. The main differences are: employees don't own stock upfront, plus there usually is a 1-year cliff for vesting, so if the employee leaves before a year, they have nothing.