Executive Directors are involved in the day to day running of the business. They have intimate detail of the groups operations, it’s success relative to its competitors, and the likely future prospects of the group.

Non Executive Directors are invited to sit on the board, participate in regular board meetings and have access to details of the business, but as their name implies, are not actively involved in running the groups operations. I believe that they are often in a better position to know whether the shares are under or over valued, as they are more able to evaluate the market perception of the industry and the company as they have the time and distance to be able to look from above, from 20,000 feet.

For an analysis of directors transactions, which shows a marked difference between the performance of executive directors and non executive directors share transactions, see ‘Non execs make better investors- by far‘ April 2nd 2009.