Non-executive directors

Non-executive directors

Non-executive director have no executive (managerial) responsibilities.

NED have an important and inescapable relationship with shareholders. They provide a balancing influence, and play a key role in reducing conflicts of interest between management (including executive directors) and shareholders. They should provide reassurance to shareholders, particularly institutional shareholders, that management is acting in the interests of the organization.


Role of non-executive directors

(a) Strategy
NED should contribute to, and challenge the direction of, strategy. They should use their own business experience to reinforce their contribution.


(b) Scrutiny
NED should scrutinize the performance of executive management in meeting goals and objectives and monitor the reporting of performance. They should represent the shareholders interests to ensure agency issues don’t arise to reduce shareholder value.


(c) Risk
NED should satisfy themselves that financial information is accurate and that financial controls and systems of risk management are robust. 


(d) People
NED are responsible for determining appropriate levels of remuneration for executives, and are key figures in the appointment and removal of senior managers and in succession planning.