Well, equity is always a good incentive, but it you don't want to setup options, you could work out a bonus program. That can be structured in a wide variety of ways, but some basic ideas are:
- based on individual performance / milestones,
- based on the company performance / milestones,
- accrued over time,
You could prepare a menu of possible compensation scenarios (from mostly salary to mostly bonus) with the bonus options of course being calculated so that if targets are met that it would amount to significantly more than straight compensation would. So that way you can gauge the level of interest and have a dialog about what scenarios he finds most attractive.
The challenge is getting these to be fair for all parties.