It all depends on your personal flavor of paladin.
If your PC is a firebrand/agressive type, have that PC confront him in some way. Calling him "the Coward" or "Craven" is a good start, as is exhorting him to take more effort in combat while in combat. Other steps might include vocally refusing to share things with him that he has not earned- not just treasure, but also the benefit of your companionship. By that I mean you don't share your water with him, you don't share your rations with him, you don't protect him. DON'T just let foes get past you, but by the same measure, you don't take extraordinary measures to keep foes away from him.
On the other hand, if your paladin is more pastoral, he should engage the character verbally to change his ways. Take him under your wing, try to get him to be a part of the group.
If your PC is a firebrand/agressive type, have that PC confront him in some way. Calling him "the Coward" or "Craven" is a good start, as is exhorting him to take more effort in combat while in combat. Other steps might include vocally refusing to share things with him that he has not earned- not just treasure, but also the benefit of your companionship. By that I mean you don't share your water with him, you don't share your rations with him, you don't protect him. DON'T just let foes get past you, but by the same measure, you don't take extraordinary measures to keep foes away from him.
On the other hand, if your paladin is more pastoral, he should engage the character verbally to change his ways. Take him under your wing, try to get him to be a part of the group.