What is the Role of a Non-Executive Director and who needs one?
What is the Role of a Non-Executive Director and who needs one?
A Non-Executive Director (NED) is a member of a company’s board of directors who does not form part of the executive management team. NEDs are appointed to provide independent oversight, governance, and strategic input. They bring external perspectives, support accountability and help ensure the long-term success of the organisation.
Non-Executive Directors are involved in policymaking and planning exercises but are not engaged in the day-to-day operations of the business. Their presence on the board helps maintain a balanced and objective approach to decision-making.
What is a Non-Executive Director's Core Responsibilities
Non-Executive Director's typically undertake the following duties:
- Strategic Guidance: Contribute to the development of company strategy and review its implementation.
- Governance Oversight: Ensure the company complies with statutory and regulatory requirements.
- Risk Management: Monitor and assess risks and controls within the business.
- Performance Review: Scrutinize the performance of executive management in achieving agreed goals and objectives.
- Board Contribution: Provide independent judgment and challenge on issues of strategy, performance and resources.
- Committee Participation: Serve on key board committees such as Audit, Risk or Remuneration where applicable.
What are the benefits of the Role
While NEDs are not involved in day-to-day operations, their participation offers several benefits to both the individual and the organisation:
- Independence: They bring an objective viewpoint that supports balanced board decisions.
- Expertise: Many NEDs are chosen for their specific sector knowledge or professional experience.
- Accountability: They help ensure that the company acts in the interests of shareholders and stakeholders.
- Governance Standards: Their presence strengthens transparency, ethics and corporate governance practices.
- Knowledge Sharing: NEDs often serve on multiple boards and can share relevant practices and insights from other sectors or organisations.
Remuneration
Non-Executive Directors are typically compensated for their time and expertise. Remuneration varies depending on the size and complexity of the organisation, as well as the responsibilities undertaken (such as committee roles or chair positions).
Compensation may include:
- A fixed annual fee
- Additional fees for committee chairing or participation
- Reimbursement of reasonable expenses incurred in the role
NED roles are not salaried positions, and they do not usually include benefits such as pensions or bonuses. Remuneration is subject to periodic review and is disclosed in the organisation's annual reporting where applicable.
How can Kennedys Accounting help?
Here at Kennedys Accounting we are experienced in assisting a number of companies when they require NED services.
For some clients this can be a short term post while they implement something new to the business or maybe the business is going through some sort of change.
Other clients however use our services monthly and have done so for years as they see the benefit of the ‘outside person looking in’.
Please get in touch to discuss your requirements or to just have a general chat about using a NED – we will be pleased to chat it through and see if we can help.