Results for non-executive director
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Investment Dictionary:

Outside Director

Any member of a company's board of directors who is not an employee or stakeholder in the company.

Investopedia Says:
Outside directors are advantageous because they have very little conflict of interest.

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CEOs, CFOs, presidents and vice presidents: learn how to tell the difference. The Basics Of Corporate Structure


 
 

Member of a company's Board of Directors who is not an employee of the company. Such directors are considered important because they are presumed to bring unbiased opinions to major corporate decisions and also can contribute diverse experience to the decision-making process. A retailing company may have outside directors with experience in finance and manufacturing, for instance. To avoid conflict of interest, outside directors never serve on the boards of two directly competing corporations. Directors receive fees from the company in return for their service, usually a set amount for each board meeting they attend. See also Board of Directors.

 
Wikipedia: non-executive director

A non-executive director (NED, also NXD) or outside director is a member of the board of directors of a company who does not form part of the executive management team. He or she is not an employee of the company or affiliated with it in any other way. They are differentiated from inside directors, who are members of the board also serving as executive managers of the company (most often as corporate officers).

Non-executive directors have responsibilities in the following areas, according to the 2003 report by Derek Higgs commissioned by the British Government:[1][2]

  • Strategy: Non-executive directors should constructively challenge and contribute to the development of strategy.
  • Performance: Non-executive directors should scrutinise the performance of management in meeting agreed goals and objectives and monitoring, and where necessary removing, senior management and in succession planning.

NED's should also provide independent views on:

  • Resources:
  • Appointments:
  • Standards of conduct:

On the whole, non-executive directors are the custodians of the governance process. They are not involved in the day-to-day running of business but monitor the executive activity and contribute to the development of strategy.

References

  1. ^ Higgs, Derek (2003-01-20). Review of the role and effectiveness of non-executive directors. Retrieved on 20 October 2007.
  2. ^ DTI The Higgs Review summary page. Retrieved on 20 October 2007.

Further reading

  • Merson, Rupert (2003). Non-Executive Directors. Profile Books Ltd. ISBN 1-86197-499-X. 

See also

External links


 
 

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Investment Dictionary. Copyright ©2000, Investopedia.com - Owned and Operated by Investopedia Inc. All rights reserved.  Read more
Financial & Investment Dictionary. Dictionary of Finance and Investment Terms. Copyright © 2006 by Barron's Educational Series, Inc. All rights reserved.  Read more
Wikipedia. This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Non-executive director" Read more

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