From what i read here you need to talk to a lawye. Either you have a case somehow, or - you just try to betray people owning a part of your company. Sorry, but there is no such thing as "dead equity". Investors are not "no longer with the company". if an investor pays you money for shares, the shares are his, and seriously, I would be pissed like hell if one of my invetments would come back and demand that I start doing some more stuff like working for them. That said, my investment are more traditional stocks, not startups. But the principle is the same - if whoever owns the equity fulfilled his part of the deal, the equity is not dead. It is active. Equity is not an ongoing payment, it is ownership of a part of the company when paid (either through sweat or money).
I thought about drafting up a document that would rewarded equity over time to those actively
working on the project.
The go to jail card?
Here is the point: it is not yours as CEO of the business to decide whether or not the business turns out shares for work. The quorum of owners (i.e. general assembly) can authorize a program for you to do so, but they (i.e. the owners) have to do so, not you. And yes, all alrge companies have such programs - approoved by the owners. If an employee of mine (and a CEO if an employe) decides to turn over part of my stuff to someone else.... ;) This is called theft, you know ;)