One of the questions we get asked on a weekly basis is 1. Does Thelander have comp data for non-investor / independent board members? and 2. How much do they make?
Since we ran an exclusive analysis for Halle Tecco’s latest post on “What Independent Board Members Do (And How They’re Compensated”, we wanted to share the data with you. Let’s dig in.
There are a couple of ways to compensate independent board members, and the actual mix of cash and/or equity depends on how much capital the company has raised.
Under $15 million in total financing:
At this stage, cash retainers are small and rare; one-time equity is the most common compensation lever utilized.
- 74% of startups use equity-only compensation. Most provide a one-time equity grant, while a smaller share use annual equity grants.
- 19% of startups combine cash and equity.
- 6% of startups use cash-only compensation.
$15 – $49.9 Million in total financing:
In the Series A-B stages, most companies still use equity-only compensation. However, the median equity grant shrinks compared to the under $15 million category. And for those who offer cash-only compensation, the retainer is much larger.
- 72% of startups use equity-only compensation.
- 20% combine cash and equity.
- 8% use cash-only compensation.
$50 – $89.9 Million in total financing:
By this stage, cash compensation has become much more common, although nearly half of startups still rely on equity-only compensation for independent directors.
- 49% of startups use equity-only compensation.
- 36% combine cash and equity.
- 16% use cash-only compensation.
$90 Million+ in total financing:
At later stages, cash becomes the norm, with companies increasingly using a mix of cash and equity rather than equity alone.
- 38% of startups combine cash and equity.
- 33% use equity-only compensation.
- 29% use cash-only compensation.
What’s the bottom line? As Halle says, “Choosing the right independent director is one of the highest-leverage decisions a founder can make. The right person can become a trusted advisor, help manage board culture, and provide guidance that changes the company’s trajectory.” Which is why it’s critical to get their, and YOUR compensation right.
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