Expectations of boards are increasing. It’s no longer sufficient to protect financial wealth and maximise profit growth, changing consumer preferences, employee attitudes and emerging regulation has increased the scrutiny that both boards and businesses face.
Non-executive directors (NEDs) are not immune to this increased attention. While NEDs operate independently (their work can be described as eyes on but hands off), they are still a full member of the company’s board, which holds collective responsibility for the success of the company. This means NEDs have the same duties, responsibilities and potential liabilities as the registered executive directors of a company.
In times of crisis NEDs are increasingly being expected to take on what seems like executive levels of responsibility, often under intense media scrutiny. As such, the role of NED has come in for some tough criticism as shareholders have been increasingly vocal in their outrage at perceived boardroom failures.