How to Compensate Your Advisory Board and Board Members
A founder’s guide to equity, expectations, and incentives that work — from Seed to Series C and beyond
You’ve found the right people — advisors with deep industry insight, operators with scaling experience, and independent directors who’ve been where you’re going.
Now the question is: How should you compensate them?
Startups often underthink this, especially in the early stages. But how you structure incentives — especially equity — plays a big role in whether your advisory board or formal board will be engaged, effective, and long-term aligned.
Here’s how to think about compensation for both advisory board members and independent directors — and how it evolves with stage and scope.
Equity vs. Cash: The Basics
• Advisory Board Members are typically compensated with equity only (no cash), especially in early stages.
• Board Directors may receive equity and/or cash, with cash becoming more common in later stages (post-Series B/C or Pre-IPO).
• Equity is often structured using vesting schedules, typically over 2 years for advisors and 3–4 years for board members.
• Compensation levels depend on stage, scope of involvement, and strategic value — not titles alone.
Compensation Benchmarks by Stage
Advisory board (Equity Range)
Pre-Seed / Seed
0.10% – 0.50%
Series A
0.05% – 0.25%
Series B
0.02% – 0.10%
Series C / Pre-IPO
0.01% – 0.05%
Public Company
N/A
Independent Board Member (Equity & Cash)
Pre-Seed / Seed
0.25% – 1.00% equity Typically no cash compensation
Series A
0.25% – 0.75% equity Some start adding modest cash ($5K–$15K/year or per meeting stipend)
Series B
0.25% – 0.50% equity Cash more common ($15K–$25K/year), possibly per-meeting stipends
Series C / Pre-IPO
0.15% – 0.35% equity $25K–$50K/year cash + equity, often tied to committee work or lead roles
Public Company
Standard director comp packages: $50K–$100K+ cash + equity (stock or options), per public benchmarks
Note: Advisory equity is typically granted via advisor agreements and often includes a 2-year vesting schedule. Board equity may be granted as options (ISO/NSO), RSUs, or direct stock, depending on stage.
How to Match Compensation with Contribution
Rather than assigning equity based purely on title, consider the type of contribution they’re making:
Light-touch advisor
0.10% or less
Intro calls, occasional emails
Tactical domain expert (e.g. GTM)
0.15% – 0.30%
Bi-monthly calls, specific support, hands-on sparring
Strategic, multi-functional advisor
0.30% – 0.50%
Recurring advisory cadence, introductions, active strategic input
Independent board member (early)
0.25% – 1.00%
Strategic governance, board meeting cadence, investor alignment
Independent board member (growth)
0.25% – 0.50% + cash
Governance, committee work, CEO support, exit prep
Best Practices for Structuring Incentives
• Use a vesting schedule: Avoid upfront grants. Standard for advisors is 2 years (e.g. 25% after 6 months, monthly thereafter).
• Define scope and expectations upfront: Use a written agreement that outlines cadence, responsibilities, and confidentiality.
• Review and refresh: Equity can be revisited or extended if the relationship deepens. Or rolled off if inactive.
• Keep the cap table in mind: Allocate a clear portion of your option pool for advisors and board members (1–2% total is typical).
• Don’t over-index on “big names”: Relevance, responsiveness, and real support > credentials.
Why It Matters
The right compensation structure makes it clear: you value their time, insight, and impact. It also aligns incentives for the long term — which matters more than ever when you’re asking people to contribute at speed and with purpose.
Great advisors and board members don’t work for the upside alone — but fair and thoughtful compensation ensures you’re setting the tone for a professional, committed relationship.
At OPERATORS, we help startups design structured, high-leverage boards and advisory boards — and we guide you on compensation that matches contribution and stage.
Because alignment isn’t just cultural — it’s economic too.
