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Non-executive director

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Title: Non-executive director  
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Subject: 2013–14 Rangers F.C. season, Welsh Government, Board of directors, Tile Mountain, Diederik van Dijk
Collection: Business and Financial Operations Occupations, Corporate Governance
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Non-executive director

A non-executive director (abbreviated to non-exec, NED or NXD) or outside director is a member of the 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 sometimes considered the same as an independent director,[1][2] while other sources distinguish them from independent directors saying non-executive directors are allowed to hold shares in the company while independent directors are not.

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.


  • Objectives 1
  • Appraisal objectives 2
  • See also 3
  • References 4
  • Further reading 5
  • External links 6


Non-executive directors have responsibilities in the following areas, according to the Review of the role and effectiveness of non-executive directors published by the British government in 2003:[3][4]

  • 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

Appraisal objectives

Some organisations appraise non-executive directors on general overall performance criteria such as in the

  • ITNEA, an Association for non executive directors and chairmen
  • NEDonBoard

External links

  • Merson, Rupert (2003). Non-Executive Directors.  
  • Gerry, Brown (2015). The Independent Director: The Non-Executive Director's Guide to Effective Board Presence

Further reading

  1. ^ Independent (outside) Director
  2. ^
  3. ^ Higgs, Derek (2003-01-20). "Review of the role and effectiveness of non-executive directors" (PDF). Retrieved 20 October 2007. 
  4. ^ DTI "The Higgs Review summary page" . Retrieved 20 October 2007. 
  5. ^
  6. ^
  7. ^
  8. ^
  9. ^


See also


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