Non-executive directors

Non executive Directors are external professionals. They are not involved in the day to day functioning of the company and they can be directors on the boards of various other entities or groups.

They are member of  company’s

board of directors who is not part of the executive team. A non-executive director typically does not engage in the day-to-day management of the organization but is involved in policymaking and planning exercises.

They are on the board for a reason – either to protect the interest of whoever nominated them, or because the board needs their inputs/exercise/network in a specific area or some times, simply because there is a legal requirement to have them on the board.   

In addition, non-executive directors' responsibilities include the monitoring of the executive directors and acting in the interest of the company stakeholders.

Understanding Non-Executive Directors

Non-executive directors (also known as external directors, independent directors, and outside directors) are put in place to challenge the direction and performance of a company as well as its existing team.

Since non-executive directors do not hold C-level or managerial positions, they are thought to understand the interests of the company with greater objectivity than the executive directors, who may have an agency problem or conflict of interest between management and stockholders or other stakeholders.

Additionally, non-executive directors are often installed on a firm's board for public relations reasons. For instance, a particular non-executive director's community standing, a record of philanthropy, and prior experience could provide positive exposure and symbolic value for the firm.

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