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How to Compensate Your Outside Board Members

Often, when working with outside board members, an entrepreneur can increase his or her profitability and ensure errors are fixed. While they provide a valuable service, it’s not always easy to compensate outside board members due to regulations and rules put forth by local, state and federal government offices. While true, with these three tips, one can compensate their outside board members with ease.

Stock options:

When running a profitable and established corporation, it’s easy to compensate outside board members by handing out valuable stock options. People appreciate this form of compensation as they can minimize taxes and maximize their gains. When doling out this compensation, it’s wise to seek approval and run the numbers first. Otherwise, if an entrepreneur doles out stock options to everyone, the stock price will suffer when it is diluted. Whether an outsider provides credit card processing or merchant account services, it’s wise to offer compensation in the form of stock options.

Free product or services:

A smaller business can offer free products or service to its outside help. Since companies without massive profits can’t afford to hand out cash or stock options, it is an excellent way to provide compensation without hurting the profits of a company. To offer free products or services, one needs to offer something people will enjoy and use for their own personal life or business. For example, a merchant account provider can offer credit card processing services to its board members who need this vital service. Either way, when offering products or services, the company will save money and prevent financial issues down the road.


While controversial, it’s often beneficial to give board members cash. Since the best and brightest will not always work for free, it is critical to offer other compensation to outside help. While one can skip this step and only elect to hand out free products or stock options, they will suffer. Instead, when looking to find talented and dedicated assistance from professionals, one can excel when they offer compensation in the form of cash. While the owner will not want to do this at first, he or she will enjoy multiple benefits by using qualified outside help.

When working with outside board members, one needs to offer solid compensation. When providing an incentive, the business will improve and the owner will enjoy higher profits.


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