Non-Executive Director
Candlefocus EditorTypically, non-executive directors have professional qualifications and a wealth of experience in their respective fields. This expertise is beneficial to the board by providing strategic advice and monitoring their effectiveness. NEDs also ensure that the board fulfills its fiduciary responsibilities and obligations, promoting transparency and accountability.
Non-executive directors owe their primary duty to the company stakeholders which includes creditors, customers, and suppliers. Companies may benefit from the NED's expertise in crisis management and provide guidance on company strategy and performance. Additionally, they may assist with exploring potential partnerships, investments or acquisitions.
The most common form of compensation for non-executive directors is fees, equity and cash payments. As a general rule, fees are paid on a regular basis, proportional to their hours worked, while equity and cash payments are provided on an incentive basis. A company may also opt to provide non-executive directors with additional benefits, such as access to private health insurance, life insurance, and travel expenses.
In summary, non-executive directors are an essential part of corporate governance as they provide an independent viewpoint on board decisions and protect the interests of the stakeholders. They possess a wealth of experience and qualifications in their field of expertise and are compensated for their service. Non-executive directors bring a balance to the operational and strategic direction of the company and help to ensure the long-term success of the organization.