As leaders we must make sure we are not taking unfair advantage of the trust and faith people put in us.

Yesterday I heard a troubling story about a high-potential Atlanta startup. The CEO had created a situation where equity agreements for key executives had been left to a handshake deal for far too long. This situation should have been easy to resolve but had started causing significant problems.

My first reaction was something like, “Boy, I’m glad that would never happen at an ATDC company. They all know better.”

After thinking about it a bit more, I remembered all of the struggles I had with equity and operating agreement terms when I started my first company. I only avoided countless major mistakes because I got experienced advice along the way. In truth, it’s easy for even the best-intentioned leaders to let bad decisions creep along while they focus on what feels like more urgent needs.

When I started my first company, I had two co-founders. We eventually brought on three more folks with high-equity positions. Every time we brought on someone new, we all battled for hours over where the equity would come from. Bringing on new team members should be seen as an additive proposition, but it can be darn near impossible to get around the emotional gut wrench of seeing your own paper percentage share decline. Of the six major shareholders, only two stayed with the company until the exit. If we had not had a strong operating agreement, a thoughtful divesting schedule for departed founders, and completely buttoned-up paperwork, we might have just folded. Some cap table sins, you can’t recover from.

At my most recent startup, I had three other co-founders. Again, we did not all make it to the exit, but we all knew the ground rules from the start because they were spelled out in black and white and signed in blue ink.

I can think of no greater responsibility as a leader than to make sure we are not taking unfair advantage of the trust and faith people put in us. It is a CEO’s responsibility to never put the company or employee in an ambiguous situation when it comes to compensation and fair play.

Every second you leave equity undefined, you are fostering a breeding ground for divergent self-entitlement and conflicts of interest. You are unwittingly treading somewhere between very bad management, in the best case, and, at worst, morally bankrupt leadership.

Equity loose ends communicate that you either don’t trust your own abilities and valuation, don’t trust the future contributions of your partners or employees, or straight up want to wait to get discounted labor and a better strong-arm deal for yourself down the road. I’m not saying that is what you are trying to do. I’m saying that is what delayed equity deals signal to others. Instead, be a clear, inspiring leader who creates trust by letting everyone know where they stand at all times.