Position description for an executive director

Wednesday, 01 January 2020

The ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (ASX Principles) provides the following definition for an executive director: “In the case of an internally managed listed entity, a director of the entity who is also an executive of the listed entity or a child entity and, in the case of an externally managed listed entity, a director of the responsible entity who is also an executive of the responsible entity or a related body corporate."

Once the board has identified a need to appoint a new executive director, the next step in the recruitment process involves developing a position description for the role.

Executive directors have a dual role: that of company employee, usually a senior executive, and that of board member. Although they have the same duties and responsibilities as other directors, executive directors can add value to the board through their increased knowledge of the company’s business and operations – including strategy, direction and competitive pressures – and having greater access to company information than non-executive directors. Since non-executive directors are more distant from the daily operation of an organisation, inclusion of executive directors on the board can bring valuable insights about the organisation to the table during board discussions.

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