Hi there,
My name is Luke, I work for start up and I should be able to give a little more insight from the employee perspective as I am in a similar situation right now!

I think what you will find in this particular situation is there is no one right answer. Only you will understand the relationship you have with this individual and how you believe they will want this to be approached.

I think the best way to prepare for this it to try and get an idea of their expectations. If you have a rough idea how they see themselves valued, that should help better bridge the gap in your offering.

I know from my perspective as an employee I would want to come into that meeting with no bs and have a well though out offer ready for me.

For you, I think it is important to base this off not only on what that person has done / their role now but also identify what you expect from them moving forward and give him the opportunity to communicate the same things back!

If you have any more questions for me from a "employee perspective", feel free to book a followup call.