A member of a company's board of directors who is not part of the executive team. A non-executive director (NED) typically does not engage in the day-to-day management of the organization, but is involved in policy making and planning exercises. In addition, non-executive directors' responsibilities include the monitoring of the executive directors, and to act in the interest of any stakeholders. Also called external director, independent director and outside director.
ROLE OF NON EXECUTIVE DIRECTORS * Provide objective and independent advice to the Board to enable it to make better decisions in the interest of all shareholders * Bring a genuine independent perspective to enhance decision making …show more content…
In early some research shows that compensation packages of non executive directors is directly related to compensation of CEO like increase in pay of non executive directors is a payback for increased CEO compensation.
Some research also shown that compensation package of non executive directors is directly related to industry, company’s size, growth and complexities. As non executive’s directors pay are likely to depend on firm characteristics because “one size fit all “unlikely to apply.
Some people say that when non executive directors hold substantial equity they ‘better’ align their interests with shareholders or they are best motivated to act on behalf of shareholders.
Some research work done in the past shows that pay of non executives