Role of non-executive directors

Introduction

The directors, as members of the Board, are required to:

• Provide leadership of the company within a framework of prudent and effective controls which enable risk to be assessed and managed;
• Set the company’s strategic aims, ensure that the necessary financial and human resources are in place for the company to meet its objectives, and review management performance; and
• Set the company’s values and standards and ensure that its obligations to its shareholders and others are understood and met.

Non-executive directors

In addition to these requirements which apply to all directors, the role of the non-executive director has the following specific key elements:

• Strategy
  Non-executive directors should constructively challenge and help develop proposals on strategy.
• Performance
  Non-executive directors should scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance.
• Risk
  Non-executive directors should satisfy themselves on the integrity of the financial information produced and that financial controls and systems of risk management are robust and defensible.
• People
  Non-executive directors are responsible for determining the appropriate level of remuneration for the executive directors, and have a prime role in appointing, and where necessary removing, executive directors and in succession planning.
• Confidence
  Non-executive directors should constantly seek to establish and maintain confidence in the conduct of the company.
• Independence
  Non-executive directors should be independent in judgement.  They should have an enquiring mind and should build a recognition by executives of their contribution in order to promote openness and trust.
• Knowledge
  Non-executive directors need to be well-informed about the company and the external environment in which it operates, with a strong command of issues relevant to the business.  A non-executive director should insist on a comprehensive, formal and tailored induction.  An effective induction should not be restricted to the boardroom and consideration should be given to visiting sites and meeting senior and middle management.  Once in post, an effective non-executive director should seek continually to develop and refresh his/her knowledge and skills to ensure that his/her contribution to the board remains informed and relevant.
• Information
  Non-executive directors should ensure that information is provided sufficiently in advance of meetings to enable thorough consideration of the issues facing the Board.  Information should be sufficient, accurate, clear and timely.
• Investors
  Non-executive directors should understand the views of major investors both directly and through the chairman and the senior independent director.
• Conduct of the Board
  Non-executive directors are responsible for:
  
  - Supporting the executives in their leadership of the business while monitoring their conduct.
  - Questioning intelligently, debating constructively, challenging rigorously and deciding dispassionately.
  - Listening sensitively to the views of others, inside and outside the Board.  They should gain the trust and respect of other Board members.

Corporate governance and ethics

Non-executive directors should promote the highest standards of corporate governance and should seek compliance with the provisions of the Code wherever possible.  They should uphold the highest ethical standards of integrity and probity.