Non-executive director
Barron's Finance & Investment Dictionary:
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Non-executive director
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.
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.
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Wikipedia on Answers.com:
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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 who also serve or previously served as executive managers of the company (most often as corporate officers).
Non-executive directors are often confused with Independent director who are people who do not own shares in the company, non-executive directors could hold shares in the company.
Non-executive directors have responsibilities in the following areas, according to the Higgs Report, commissioned by the British Government and published in 2003:[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.
- Risk: Non-executive directors should satisfy themselves that financial information is accurate and that financial controls and systems of risk management are robust and defensible.
- People: Non-executive directors are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing, and where necessary removing, senior management and in succession planning.
NEDs should also provide independent views on:
- Resources
- Appointments
- Standards of conduct
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.
In 2011 the Financial Times launched the first formal qualification specifically for Non-Execs. The Non-Executive Directors Certificate is a level 7 masters postgraduate qualification accredited by Edexcel.
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References
- ^ Higgs, Derek (2003-01-20). "Review of the role and effectiveness of non-executive directors" (PDF). http://www.dti.gov.uk/files/file23012.pdf. Retrieved 20 October 2007.
- ^ DTI "The Higgs Review summary page". http://www.dti.gov.uk/bbf/corp-governance/higgs-tyson/page23342.html DTI. Retrieved 20 October 2007.
Further reading
- Merson, Rupert (2003). Non-Executive Directors. Profile Books Ltd. ISBN 1-86197-499-X.
See also
External links
- Financial Times - Non Executive directors' club
- European Directors and Board Members Association
- CIPD non-executive directors' resource
- ITNEA, an Association for non executive directors and chairmen
- ITNEA
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Barron's Finance & Investment Dictionary
Dictionary of Finance and Investment Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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