If you are starting a new business, one of the first things that you need to do is to establish a board of directors. One of the most important roles on the board of directors is the non-executive chairman.
In this article, we will discuss what a non-executive chairman is, their responsibilities, and what a non-executive chairman agreement involves.
What is a Non-Executive Chairman?
A non-executive chairman is a member of the board of directors who is not an employee of the company and has no operational role in the day-to-day running of the business. Instead, the non-executive chairman provides guidance and oversight to the executive team, ensuring that the business is run efficiently and that the board of directors is functioning properly.
Responsibilities of a Non-Executive Chairman
The non-executive chairman has several responsibilities. One of the most important is to ensure that the board of directors is functioning effectively. They do this by leading board meetings, setting the agenda, and ensuring that all members of the board contribute to the discussion.
The non-executive chairman is also responsible for providing guidance and support to the executive team. They ensure that the business strategy is sound and that the company is meeting its objectives. The non-executive chairman also acts as a mentor to the CEO and other members of the executive team, providing advice and insight when needed.
Finally, the non-executive chairman is responsible for communicating with stakeholders, including investors, customers, and employees. They ensure that the company`s values and goals are communicated clearly and that all stakeholders are aware of the company`s progress.
Non-Executive Chairman Agreement
A non-executive chairman agreement is a legal document that outlines the terms of the non-executive chairman`s appointment. The agreement typically includes the following:
1. Term of Appointment: The agreement specifies the period for which the non-executive chairman will serve on the board of directors.
2. Duties and Responsibilities: The agreement outlines the non-executive chairman`s responsibilities and duties, including their role in leading board meetings and providing guidance to the executive team.
3. Compensation: The agreement specifies the non-executive chairman`s compensation, which is typically a combination of a retainer fee and a meeting fee.
4. Confidentiality: The agreement requires the non-executive chairman to maintain the confidentiality of any information they receive during their tenure.
5. Termination: The agreement outlines the circumstances under which the non-executive chairman`s appointment can be terminated, including for cause or upon the expiration of the term of appointment.
In conclusion, a non-executive chairman plays a critical role in ensuring that a business is run efficiently and that the board of directors is functioning effectively. A non-executive chairman agreement is a legally binding document that outlines the terms of their appointment, including their responsibilities and duties, compensation, and termination conditions. If you are starting a business, it is important to have a non-executive chairman in place and to have a clear agreement that outlines their role in the company.