Legal English – Peter’s Pills – Lesson 50 – Executive and Non-Executive Directors

Legal English for Notaries - By Federnotizie

Executive and Non-Executive Directors

Transcript:

Hello!

In Common Law countries, a company’s board of directors is typically made up of both executive and non-executive directors. While both types of directors have important roles to play in the company’s governance, there are some key differences between the two.

Executive Directors:

  • Are full-time employees of the company and are involved in the day-to-day operations of the business;
  • Have specific responsibilities for managing the company and are accountable to (e rispondono a) the board of directors;
  • Are paid a salary and may also receive performance-based incentives (incentivi basati sui risultati) such as bonuses or stock options for the work they do in the company;
  • May hold a significant number of shares in the company and have a vested interest (interesse acquisito) in its success;
  • Have a more intimate knowledge of the company’s operations and are therefore more involved in strategic decision-making.

Non-Executive Directors:

  • Are part-time and are not involved in the day-to-day operations of the business;
  • Do not hold an executive position within the company;
  • May be appointed (nominati) for their specific expertise or to provide independent oversight (supervisione indipendente) of the company’s operations;
  • Are not paid a salary, but are instead compensated with a fee for their services;
  • Are generally not shareholders in the company and therefore have less of a vested interest in its success;
  • Provide an external perspective to the board of directors and bring a wider range (più ampia gamma) of experience and expertise.

Thank you, and see you next time for more Peter’s Pills to improve your legal English.


Read more about the roles and responsibilities of Non-Executive directors in a Common Law country here: “Roles and Responsibilities of Non-Executive Directors of Boards of Companies“.


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