This is key to me. Your boss is looking to you to show you are management material and solve his "problem", ie firing Zack. It sounds to me that you know the guy isn't cut out for the job, but you like him and are weighing that into the picture.This is business, nothing personal, and it sounds like the guy will be well taken care of, have an option to go back to his family in Chicago, and wouldn't suffer too much.The only option I would even consider would be to work out a deal with Zack, where he can leave on good terms with the company (saving face and industry reputation), while still getting a decent severance. That would allow him to return to a better location for him to succeed, while getting rid of your problem.Retaining him, after a demotion and PIP would likely kill any friendship anyway. I can't imagine a PIP looks good on his track record either.Just my $0.02