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What is a non executive director?

A non-executive director is a member of the board of directors 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).

In the “Review of the Role and Effectiveness of Non-Executive Directors”, published in 2003, Sir Derek Higgins reported that by ensuring sufficient emphasis on both the conformance and performance aspects of their role, Non-Executives can make a contribution. In particular, non-executive directors have responsibilities in the following areas:

Strategy: Non-executive directors should constructively challenge and contribute to strategy development.

Performance: Non-executive directors should scrutinise management performance in meeting goals and objectives. They should also monitor, and where necessary remove, senior management.

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.

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