A Guide to Board Compensation for Early-Stage, Private, Consumer Companies

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Warning: There is very little publicly available information on private company board compensation. The insights provided here are based on our observations and experience working on numerous board roles over the years. While not definitive, these guidelines have proven to be generally accurate and helpful for both companies and candidates.

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TL;DR

Compensation for a high-growth, early-stage, private, consumer business should be all or a mix of the following:

• $0-20k cash per year
• 0.25% equity that vests over 4-5 years, with a reasonable belief that equity would be worth $50-100k in proceeds at exit
• Ability for the board member to invest in order to increase her ownership
• 15-20 hours of board-related service per quarter with all related expenses paid

The Basics

When considering board compensation, we recommend that both companies and candidates think holistically about the entire package, not just focusing on equity. A comprehensive compensation package can include various components that provide value to board members and align their interests with the company's success. Here are some key elements to consider:

• Cash compensation: For early-stage companies, cash compensation is atypical. This presents an opportunity for companies to differentiate themselves by being thoughtful about cash compensation, if they can afford it. For example, typical board members spend 15-20 hours per quarter. If you want to incentivize your board member to spend a bit more time than that to, say, get involved in a special project or strategic initiative, we recommend considering compensating that board member with cash, in addition to equity. Typical cash compensation in this scenario is $10-20k annually, paid quarterly. For companies that cannot compensate in equity (for example: a business that has no intention or interest in selling, like a legacy, family-run business), typical cash is $50k per year but varies widely depending on the size (revenue, profitability) of the company.
• Ownership: A good rule of thumb is to aim for a board member's equity to be worth $50–100k per year of service at the time of exit. For early-stage companies, this often translates to about 0.25% ownership. However, it's more important to look beyond percentages and have a meaningful conversation about the company's vision and the mechanics of the security. There's a lot to consider: options vs. incentive units vs. RSUs, dilution, early exercise, ability to liquidate, QSBS, vesting schedule, and more. Rather than delving into technical details here, we've included several additional resources for further information below.
• Investment opportunities: Allowing board members to invest in the company can create a win-win situation, increasing their commitment and potential upside. Are you attracting a particularly high-profile or successful board member and 0.25% equity (give or take) isn't enough? Consider inviting them to invest in the business. This approach allows them to increase their exposure to the company's success without requiring you to give up too much equity "for free".
• Product or service benefits: Providing board members with free products or the ability to gift company offerings can align incentives. This allows board members to become influencers within their communities, promoting the company's products or services to their networks.
• Term length: We believe term length should align with the vesting schedule of the equity granted, which is typically 4 or 5 years.
• Time & Travel Expectations: A typical board member should spend approximately 15–20 hours per quarter on their board role. This time includes attending the quarterly board meeting, preparing for meetings, participating in one-on-one sessions with the CEO and/or leadership team, and contributing to special projects. While most board meetings occur in person—often with accompanying events like a dinner the night before—it's not uncommon for companies to alternate between in-person and virtual meetings. This flexibility may be more or less attractive to the board member you're recruiting, depending on their preferences and circumstances.
• Expense coverage: The company should cover costs such as flights, hotels, and per diem for board-related activities.