How to Pay Advisory Board Members in Australia
How to Pay Advisory Board Members in Australia
Most founders spend weeks finding the right advisory board members. They spend about ten minutes thinking about how to pay them. That imbalance creates problems.
Get remuneration wrong and you either undervalue the relationship, create tax headaches or dilute your cap table unnecessarily. Get it right and you attract serious operators who show up prepared, engaged and invested in your outcomes.
This is a practical guide to advisory board remuneration structures in Australia. It covers equity, cash, hybrid models and what I've seen actually work well at different business stages.
Why Remuneration Matters More Than Founders Think
Advisory boards often fail not because the advisors are wrong but because the structure is wrong. When advisors are unpaid they tend to deprioritise your business. Free more often than not equates to zero value!
When they are paid cash with no upside, unless structured correctly (such as the Advisory Board Centre), they can behave like consultants, not partners. When they hold equity with no clear expectations they disengage over time without anyone addressing it.
Remuneration signals what you value and what you expect.
A well-structured advisory arrangement is also one of the most cost-effective ways to access senior expertise. The right advisor with a small equity stake can save a growth-stage business far more than their economic cost.
The Three Core Advisory Board Remuneration Models
1. Equity Only
Equity arrangements are common at early-stage companies where cash is constrained. Equity is an important consideration for how to pay advisory board members in Australia.
Typical equity grants for advisory board members in Australia range from 0.1% to 1.0% of the company, depending on the stage of the business and the expected contribution of the advisor. General benchmarks:
Business Stage | Equity Range |
|---|---|
Pre-revenue / early stage | 0.5% to 1.0% |
Revenue generating, pre-Series A | 0.25% to 0.5% |
Post-Series A or scaling | 0.1% to 0.25% |
Equity should vest over time, typically over two to three years with a six-month cliff. This protects the company if the relationship does not work out and aligns incentives over a meaningful period.
Options are generally more tax-efficient than direct shares for the advisor in Australian structures. The Employee Share Scheme (ESS) rules under Division 83A of the Income Tax Assessment Act 1997 apply to advisory arrangements, so taking tax advice before issuing equity is important, if not essential.
When equity works: When the business has genuine upside and the advisor has the conviction to take a long-term position.
When equity fails: When the advisor is primarily motivated by cash, or when the equity stake is too small to feel meaningful given the time commitment expected.
2. Cash Fees
Cash fees suit more established businesses and advisors who are operating at a senior professional level where equity in early-stage companies does not form part of their personal investment strategy. Common cash fee structures in Australia include:
Structure | Typical Range |
|---|---|
Annual retainer | $5,000 to $20,000 per year |
Per meeting fee | $500 to $4,500 per session |
Project-based engagement | Varies by scope |
Cash fees should reflect the time commitment expected. If you are asking an advisor to attend four meetings per year and respond to occasional ad hoc requests, an annual retainer in the $5,000 to $10,000 range is reasonable for a credible operator.
Higher fees are appropriate when you are accessing genuinely scarce expertise, when the advisor has a strong public profile that adds credibility to the business, or when the engagement requires significant preparation time.
GST applies when the advisor is operating through their own entity. Advisors billing personally rather than through a company may not be registered for GST, so the invoicing structure should be confirmed early.
When cash works: When the business has the cashflow to support it and when the advisor's primary value is network access or domain expertise rather than long-term alignment.
When cash fails: When it creates a transactional dynamic where the advisor shows up to meetings and contributes nothing beyond what was explicitly requested.
3. Hybrid Models
Hybrid structures combine a modest cash component with a smaller equity grant. They are increasingly common as Australian founders become more sophisticated about advisory board design.
A typical hybrid arrangement at growth stage might look like:
Component | Detail |
|---|---|
Annual retainer | $6,000 to $12,000 |
Equity grant | 0.1% to 0.25% vesting over two years |
Meeting frequency | Quarterly board meetings plus ad hoc |
The logic is sound. Cash covers the advisor's time cost and signals that the relationship is taken seriously. Equity creates alignment with long-term outcomes. The vesting criteria is often the the sticking point.
Hybrid arrangements tend to produce stronger advisory relationships because they remove the tension inherent in pure equity arrangements, where advisors may wonder whether their time will ever convert to real value.
What Does an Advisory Board Chair Get Paid?
Where an advisory board chair is appointed, additional remuneration is appropriate. The chair carries responsibility for meeting facilitation, agenda design, relationship management with the founder and cohesion across the advisory group. That requires more time and more accountability than a standard member role.
Advisory board chair remuneration typically sits 30% to 50% above the standard member rate. For a business paying advisory members a $10,000 annual retainer, the chair might receive $14,000 to $15,000 for the same period.
Where equity is involved, a chair might receive a grant at the top of the standard range or a small additional allocation reflecting the additional commitment.
Non-Financial Remuneration
Not everything that motivates strong advisors is financial. Many experienced operators join advisory boards because the work is interesting, because they respect the founder or because the category aligns with a genuine passion or expertise area.
Non-financial value you can offer advisors includes:
Access to your network and introductions they would not otherwise receive
Early visibility into market trends in your sector
Involvement in strategic problems they find genuinely stimulating
Recognition and profile through your communications and public presence
A defined scope of work that respects their time
The advisors who are purely motivated by the fee are rarely the ones who add the most value. Design your remuneration to attract operators who want the opportunity, not just the compensation.
Advisory Board Agreements
Regardless of the remuneration model, all advisory arrangements should be documented. A basic advisory board agreement should cover:
Term of the engagement and renewal terms
Scope of responsibilities and time commitment
Remuneration structure including vesting schedule for equity
Intellectual property ownership
Confidentiality obligations
Conflict of interest disclosure
Termination provisions
Agreements do not need to be complex. A two to three page document prepared by a commercial lawyer is usually sufficient. The discipline of putting the arrangement in writing tends to produce better conversations about expectations before the engagement begins.
Common Mistakes to Avoid
Setting equity too high too early. Founders sometimes over-allocate equity to advisors at the formation stage in an effort to attract credibility. This creates problems at later funding rounds when dilution calculations become real.
No vesting schedule. Equity without vesting leaves the company exposed if the advisor disengages after the first quarter. Always vest over time.
Treating advisory fees as employment. Advisory board members are not employees. Structuring the arrangement incorrectly can create unintended employment obligations. Advisors should invoice the company, not receive payroll.
Ignoring ESOP capacity. Equity grants to advisors come from your option pool. Make sure your ESOP has sufficient capacity before making commitments.
Under-documenting the relationship. Handshake deals with advisors are common in early-stage companies. They create ambiguity about what was agreed and make it harder to exit the relationship if it does not work.
Getting It Right
Advisory board remuneration is not complicated, but it does require deliberate thinking.
Start with what the advisor actually values. Some operators want equity. Some want a credible retainer that signals the engagement is professional. Most want to feel that their contribution is recognised and that their time is not being wasted.
Design the structure around the outcome you want, not just the cost you can afford.
The best advisory relationships I have seen are built on clarity from the start: clear expectations, a fair economic arrangement and a founder who is genuinely prepared to take advice.
Need Help Structuring Your Advisory Board?
If you are establishing an advisory board or reviewing the structure of an existing one, I work with founders and leadership teams across Australia to design and chair high-performing advisory boards.
