Differences. Advisor. Board Advisor. Non-Executive Director.
The terms "advisor" and "board advisor" refer to individuals who provide guidance and expertise, but they do so in different contexts and with varying degrees of formality and involvement in a company's governance. Here are the key differences and key select responsibilities as a general guide.
ADVISOR
General Guidance
Advisors offer advice and expertise in a specific area, such as strategy, marketing, technology, finance, or operations.
Scope
They typically work with the management team or specific departments rather than with the board of directors.
Focus
Their focus is often on operational, tactical, or strategic issues within their area of expertise.
Appointment
Advisors are usually appointed by the company's management or executive team. The process is often informal and based on the company's needs and the advisor's expertise.
Authority
They do not have formal authority or decision-making power. Their role is purely advisory, and they influence through their recommendations and expertise.
Remuneration
Advisors might be compensated through consulting fees, retainers, or other arrangements based on their contributions and the nature of their engagement.
Time Commitment
This can vary widely. Advisors may work on a project basis, part-time, or as needed, depending on the company's requirements.
BOARD ADVISOR
Strategic Guidance
Board Advisors provide strategic advice and expertise specifically to the board of directors. They help the board make informed decisions and develop long-term strategies.
Governance Role
While they do not have formal governance responsibilities, their advice often pertains to high-level, strategic issues that the board oversees.
Appointment
Board Advisors are typically appointed by the board of directors. The process can be more formal than that for general advisors, often documented in board minutes or agreements.
Authority
They do not have voting rights or formal decision-making power on the board. Their influence is through the provision of expert advice and recommendations.
Remuneration
Compensation for board advisors might include retainers, honorariums, or other fees, and is generally structured to reflect their advisory role to the board.
Time Commitment
It is usually defined by the needs of the board. Board Advisors may attend board meetings, participate in strategic planning sessions, and provide ongoing counsel.
NON-EXECUTIVE DIRECTOR
Governance
NEDs have a formal role in the governance of the company, providing independent oversight and contributing to the board's strategic direction.
Duties
They are involved in decision-making processes, ensuring the board operates effectively and ethically. They challenge and contribute to the development of company strategy, monitor executive management, and ensure the company remains accountable to its shareholders and other stakeholders.
Legal Obligations
NEDs have the same legal duties and responsibilities as executive directors, including fiduciary duties to act in the best interests of the company, duty of care, and compliance with statutory requirements.
Appointment
They are formally appointed by shareholders at the annual general meeting (AGM) and their appointment is typically documented in the company’s annual report.
Voting Rights
NEDs have voting rights on board decisions and resolutions, influencing the company's strategic direction and key decisions.
Remuneration
They are usually paid a fee for their services, which may include additional compensation for serving on or chairing board committees.
Time Commitment
NEDs are expected to commit a significant amount of time to board meetings, committee meetings, and preparation for these engagements.
In essence
Non-Executive Directors are formal members of the board with governance responsibilities, legal obligations, and voting rights, whereas Board Advisors serve in an informal, advisory capacity without governance duties or decision-making authority. A general Advisor provides expertise on operational or tactical issues within the organisation.
Thought leadership by VOCASO.
Comments