Getting asked onto a board on its way to an IPO, with a seven figure equity grant attached, sounds like an easy yes. A listener in exactly that spot, invited to join as an independent director at a company he used to consult for, assumed the smart first move was calling a lawyer about D&O insurance and indemnification. That instinct isn’t wrong. It’s just not the first question.
The Insurance Question Isn’t the First Question
Most people jump straight to coverage: am I protected? That’s the wrong starting point. You want to know what you’re being protected from before you worry about how well you’re protected. Yes, you’ll want D&O insurance, and you’ll want to see the actual policy language, not just a verbal assurance that coverage exists. Yes, you’ll want indemnification with legal fees advanced up front, not reimbursed after the fact, and coverage that follows you even after you leave the board. All of that is standard, contractual, and your attorney will walk you through it. But none of it tells you whether this is a board you actually want to be on.
Read the Room Before You Read the Policy
Before anything else, find out what’s really going on inside the company. What’s the financial condition, beyond the fact that it’s about to go public? Are there impending lawsuits, SEC action letters, or whistleblower complaints sitting quietly in the background? Pull or request the minutes from recent board meetings and read them closely. Those minutes will tell you whether the board actually pushes back on management or functions as a rubber stamp, and whether the issues currently on the table are things that will still be your problem the day you join.
Know What You’re Actually Walking Into
Given the prior consulting relationship, dig into what “independent director” really means here. Independence gets defined differently depending on who’s doing the claiming, and how recent or entangled that consulting work was matters more than people assume. If that relationship wrapped up last month, that’s a very different conversation than if it ended twenty years ago. Don’t assume the label automatically applies to you just because someone put it on the offer.
Ask how you get off the board if you want out, or if the company wants you out. Ask what the time commitment looks like realistically, not what the recruiting conversation implied. Boards that are told “a few hours a week, plus a nice trip for meetings” have a way of turning into a hundred hours a month once a company is actually navigating a public offering: emergency meetings, last-minute calls, and being pulled in constantly on short notice. Know that going in, not after you’ve already said yes and the calendar starts filling up.
The Equity Grant Deserves the Same Scrutiny
“Probably seven figures over four years” isn’t a detail, it’s a placeholder. Before accepting anything, get the actual grant terms in writing: the vesting schedule, strike price, blackout windows, and the rules around trading as a company insider once you’re privy to material nonpublic information. Ask how compensation is affected if you leave the board early, voluntarily or otherwise, and whether any of the vesting accelerates or is forfeited under those circumstances. This can happen alongside the governance questions rather than strictly after them, but every figure needs to be nailed down and documented before you commit, not estimated from a hallway conversation.
Say Yes to the Right Board, Not Just the Right Number
The coverage questions matter, but they’re protecting you against a specific kind of risk: someone hiding something you didn’t catch, or a company in real legal or financial trouble that becomes your responsibility the moment you join. That’s a different question than whether you want this seat at all. Before you sign anything, have real conversations with current board members, not just an email exchange, and get a clear picture of what you’re stepping into. A seven-figure equity grant is a good problem to have. Just make sure it’s attached to a board worth joining.
This post is adapted from a recent episode of the Scholar Wealth Podcast. For more perspective on evaluating a board seat opportunity, listen to the full podcast episode here.