Executive directors wear two hats: that of a company employee, usually a senior executive, and that of a board member. On top of their full time executive position, they are appointed to the board. At law they have the same duties and responsibilities as other directors. In the United States, executive directors are sometimes known as inside directors and are more common there relative to Australia.

Given the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, and other discussion on the roles and challenges of boards, there have been some calls for a two-tiered board governance model similar to that found in Germany and some other countries. These models have a supervisory board and a management board. The executive board manages the day-to-day operations of the company and proposes strategy changes. The supervisory board made up of shareholder representatives and, in some cases, elected employee representatives, sets the dividend, votes on strategy changes, appoints and dismisses executives and sets their remuneration.

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