What is the average compensation for startup board members? How much startup board members make varies depending on company size and other factors.
A board of directors plays an important role in driving the success of any organization. Due to the time and work responsibilities that come with serving on a board, most members receive some type of compensation for attending startup board meetings.
Startup board compensation varies from organization to organization, and some boards may not provide compensation at all (typically rare). Read on to learn more about the importance of putting together a startup board, typical board duties, as well as the type and amount of compensation startup board members receive.
What is a Startup Board?
Every successful company was once a startup with an uncertain future. A startup board of directors works closely with the founder of the startup to set goals that align with their vision for the company and make decisions to help the startup succeed.
A startup board plays a major role in choosing a company’s early senior management team, which can significantly impact whether the startup succeeds or fails. The board is also responsible for long-term strategic planning and ensuring each decision helps the organization move forward. Other important responsibilities include obtaining startup business loans and helping the new startup understand the startup term sheet, which outlines valuation, equity, options, liquidation preferences, payout provisions, and board seat terms.
Startup Board Member Compensation
Because a startup board of directors plays an essential role in getting a young company off the ground, it’s common to offer various forms of compensation to the leadership committee.
Start With Shares
While many startup board members get paid for their efforts, it’s common for the compensation to start with shares in the company instead of an immediate payment. This is especially common for very new organizations with limited funding and startup capital. With this option, startup board members receive a small percentage of ownership in the company that is largely ceremonial at the time, but will result in compensation as the company grows and achieves success.
Cash Compensation
Once a startup begins to bring in revenue and earn a profit, it’s common to provide each member of the startup board with regular compensation. It’s not intended to replace their regular salary, but instead serve as additional compensation, often $1,000 to $3,000 per meeting, for the extra time and effort they spend advising the startup board.
Retainer Fee
Up to $10,000 may be given as a “retainer fee” that encourages original board members to keep their positions from year to year, which helps to maintain stability and consistency as the young company grows. Directors may continue to receive equity shares once they begin to receive cash compensation, but this equity will often reduce over time.
Factors That Can Impact Startup Board Member Compensation
Not every startup provides compensation to its board members, especially early on. There’s also no requirement for every member of the board to receive the same amount of compensation. Some factors that impact whether members receive compensation include:
- The startup’s current revenue, expenses, and overall profit
- The specific role, responsibilities, and level of experience of each startup board member
- The board’s current level of involvement in the company, which often decreases as the startup becomes more established
Improving Startup Board Member Effectiveness
In a digital-forward world, organizations increasingly turn to startup board management technology to streamline processes and simplify board governance.
For instance, OnBoard software comes with a wide range of built-in features to help startup boards work smarter. OnBoard improves board governance with tools for agenda creation, file distribution, remote communication, and more. A key feature of OnBoard’s meeting management software is the ability to create customizable agendas, which ensures all necessary items receive coverage and meetings stay on track. OnBoard also enables easy file distribution so meeting attendees can browse all relevant materials before the meeting.
Getting Started With OnBoard
Using cloud-based software like OnBoard adds an important step in building good habits to propel your new company toward long-term success. OnBoard comes equipped with the following board management features, among others:
- Industry-leading security, compliance, and data protection that’s certified and accredited
- Agenda Builder and Minutes Builder for simplified meeting administration
- Secure Messenger and Zoom Integration to enhance communication
- Board Assessments to empower boards to measure their performance against the organization’s goals
Ready to learn more about board governance software? Check out our 2023 Board Management Software Buyers’ Guide.
Want to fuel your startup for success? Get started with a free trial of OnBoard.
About The Author
- Adam Wire is a Content Marketing Manager at OnBoard who joined the company in 2021. A Ball State University graduate, Adam worked in various content marketing roles at Angi, USA Football, and Adult & Child Health following a 12-year career in newspapers. His favorite part of the job is problem-solving and helping teammates achieve their goals. He lives in Indianapolis with his wife and two dogs. He’s an avid sports fan and foodie who also enjoys lawn and yard work and running.
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