If they are that bad and you let it run this long (sounds like ~6 months of declining performance), it is either not as bad as you think it is or you really dropped the ball. Either way you should give them the equity and consider it a lesson learned.
Unfortunately, engineering is more .1x engineers than 10x engineers.
Leadership demands you make hard decisions early, with sometimes only 60% certainty, but firing needs to be done as fast as possible for the sake of the team and product. It can be really hard, I've only had to do a few times and each time it was never easy.
While not really helpful in the current situation, this is only an issue because the issue wasn't addressed earlier, and now they're stuck in this weird place.
So yes, let them vest, but also inform them that they are also fired immediately after.
Unfortunately, engineering is more .1x engineers than 10x engineers.
Leadership demands you make hard decisions early, with sometimes only 60% certainty, but firing needs to be done as fast as possible for the sake of the team and product. It can be really hard, I've only had to do a few times and each time it was never easy.