2 Strong Facts Non Executive Role is Opening Up

The non-executive director (NED or NXD) continues to evolve, grow and expand. This trend for finding the best non-execs for your board seems to be growing steam. Here are 2 facts showing the NED role is opening up.

Legal Definitions Evolving

The Institute of Directors (IOD) has discussed the legal application of 2006 Companies Act to this position. The Stock Exchange’s Combined Code advices that non-execs “should comprise not less than half the board.” Gradually, the business world is encouraging companies to adopt better rules to create more diverse boards of directors.

Non-Executive Director Fees

Macroeconomics teaches that rising demand should lead to higher fees. As the business world demands more non-exec directors, salaries should increase. The 2013 Non-Executive Director Fees Report by Price Watershouse Coopers (PWC) compares fees for FTSE 100, FTSE 250 and SMCs. The most impressive increase was seen in the 140% increase in the fee for remuneration committee members from 2008 to 2013 at “£5,000 to £12,000 in the FTSE 100” – this position seemed to be more the most challenging.

The non-executive director position continues to advance due to its flexibility and independence. Certain board functions are better accomplished when a director has an outside perspective. What are the primary developments that will impact NED in the next five years?

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