Outside Board Member Agreement

As businesses grow and evolve, one common step they take is to bring in outside board members to help guide their strategy. These individuals typically have a wealth of experience and knowledge to offer, but it`s important for companies to establish clear expectations and communication channels to ensure that everyone is aligned. One key component of this process is the outside board member agreement.

An outside board member agreement is a formal document that outlines the terms and responsibilities of an individual joining a company`s board of directors from outside the organization. This document serves as a guide for all parties involved and lays out key considerations such as compensation, time commitment, and expectations for performance.

One of the most critical elements of an outside board member agreement is the compensation section. Board members often receive a combination of cash and equity compensation, and it`s important to clearly outline how these payments will be made and under what circumstances. Equity compensation, for example, may be tied to specific goals or milestones that the board member is expected to help the company achieve.

Another key consideration for outside board member agreements is the time commitment required. Board members are typically expected to attend a certain number of meetings each year and may be asked to contribute in other ways, such as providing guidance or making introductions to other professionals in their network. The agreement should make it clear what is expected of the board member in terms of time commitment and how they will be compensated for that time.

Finally, it`s important to establish expectations for performance. This may include specific objectives that the board member is expected to help the company achieve, such as increasing revenue or expanding into new markets. The agreement should include metrics or other criteria for evaluating the board member`s performance and how compensation may be adjusted based on results.

Overall, an outside board member agreement is an essential tool for companies looking to bring in new perspectives and expertise to help guide their strategy. By establishing clear expectations and guidelines, the company and board member can work together more effectively to achieve their goals.