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Director vs Executive Director

Updated on April 9, 2024
Article byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

Difference Between Director vs Executive Director

Director refers to a person in a company who is part of the Board of Directors and responsible for making important decisions. It can be either a full-time or part-time Director. Whereas an Executive Director refers to the person in a company, who is considered the Board of Director’s head and appointed as a full-time employee of the company, earning a salary from the company over and above director remuneration like an employee.

Who is a Director?

For a relatively small to large organization, whether the business is a public or private company, the Director stands for a leader of a particular function within the organization. Directors are broadly divided into two types, one known as the Executive Directors and the other known as the Non-Executive Directors Non-Executive DirectorsThe non-executive director (NED) is an external member of the company’s board of directors appointed through a letter of appointment and they represents the shareholders interest.read more. Generally, directors are part of the company’s board, which discusses all the important strategies within the company for various functions like marketing, finance, human resource, and information technology.

Directors are responsible for making all the important decisions for the company. Therefore, the director must have the right experience and knowledge to make decisions for the company. The Non-Executive Directors are the ones who are not part of the organization and do not take part in the company’s day-to-day activities. However, they are part of the Board of Directors because they bring in knowledge and expertise in special areas and are from other organizations. Therefore, non-Executive Directors generally provide an unbiased solution to a critical problem as they are not part of the organization.

Director vs Executive Director

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Who is an Executive Director?

Executive Directors are generally the head of the Board of Directors for an organization. They are the organization’s internal employees responsible for its day-to-day activities. They head the Board of Directors and lay the role of a manager and a leader. Many executive directors may vary depending on the organization’s functions and nature.

Various types like Marketing, Finance, and Managing Directors, are responsible for running the business, from day-to-day activities to expanding and making critical decisions. Other than that, they are also responsible for taking care of all the legal aspects within the firm, to taxations applicable to taking note of the changes due to accounting adjustments in the organization. Finally, Executive Directors need to lead the board by finalizing a decision and reaching a consensus among the other directors.

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Director vs Executive Director Infographics

Here, we provide you with the top 4 differences between Director and Executive Director.

Director-vs-Executive-Director-info

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Director vs Executive Director – Key Differences

The key differences between Director and Executive Director are as follows: –

  • Directors can be broadly divided into two. One is the Executive Directors, and the other is the non-Executive Directors. It can be further divided into Shadow Directors, Alternate Directors, and De Facto Directors. Executive Directors are of various types depending on the number of functions present within an organization like Marketing Directors, Finance Directors, Director for information technology, and Managing Directors.
  • The Non-Executive Directors do not participate in the organization’s day-to-day activities. They are not part of the organization and are generally hired from another organization part-time to provide their expertise in a niche area. Executive Directors are part of the organization and participate in the day-to-day activity.
  • Directors are part of the board that takes all the important decisions for the company; the Executive Directors are generally the head of the board and function as both manager and leader.

Director vs Executive Director Head-to-Head Differences

Let us now look at the head-to-head differences between Director and Executive Director:

Basis – Director vs Executive DirectorDirectorExecutive Director
DefinitionFor a public or a private company, Director stands for a leader of a particular function within the organization. Director is a broader term within the organization and can create many categories. They are generally head of the Board of Directors for an organization. They are the organization’s internal employees responsible for its day-to-day activities.They are generally head of the Board of Directors for an organization. They are the organization’s internal employees and are responsible for its day-to-day activities.
TypesIt can be broadly divided into two. One is the Executive Directors, and the other is the non-Executive Directors. Depending on the size and nature of the company, Directors can be further divided into Shadow Directors, Alternate Directors, and De Facto Directors.There are various types depending on the number of functions present within an organization, such as Marketing Directors, Finance Directors, Directors for information technology, and Managing Directors.
FunctionThey are not part of the organization and are not involved in the day-to-day activities. However, they are the direct employees of the organization and are involved in all daily activities.They are the direct employees of the organization and are involved in all daily activities within the organization.
NatureThey are responsible for making all the important decisions for the company. Therefore, the Director must have the right experience and knowledge to make decisions for the company. In addition, they are responsible for managing and leading the Board of Directors in the organization.They are responsible for managing and leading the Board of Directors in the organization.

Conclusion

The Directors are the leaders of an organization who lead various functions. They are part of the board, which makes all the important decisions for the company. Directors are mainly of two types – Executive Directors who are part of the organization and generally head the Board of Directors. The other type is Non-Executive Directors, who are outsiders and work part-time to provide specific knowledge and expertise.

This article is a guide to the Director vs Executive Director. Here, we discuss the differences between Director and Executive Director with infographics and a comparison table. You may also have a look at the following articles: –

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