Welcome to NEDXChange – The Non-Executive Director Exchange
A non-executive director (abbreviated to non-exec, NED or NXD) independent, or outside director is a member of the board of directors of a company who does not form part of the executive management team. They are not employees of the company or affiliated with it in any other way and are differentiated from executive or inside directors, who are members of the board and are also employees of the company.
Not all non-executive directors are considered to be independent – NEDs holding a significant shareholding and those who have recently been executive directors of the company are not considered to be independent. The UK Corporate Governance Code recommends that Chief Executives should not take on a Chairman position in the same company.
Non-executive directors have responsibilities in the following areas, according to the Higgs Report published by in 2003 and subsequently enshrined in the 2006 Companies Act.
- 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.
Non-Executive Directors should also provide independent views on:
- Standards of conduct
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.
In 2011 the Financial Times launched the first formal qualification specifically for Non-Executive Directors. The Non-Executive Directors Certificate is a level 7 masters postgraduate qualification accredited by Edexcel.
Excellencia provide a 1-day course for aspiring Non-Executive Directors – How to become a Non-Executive Director