An executive director sits on the company's board and also works in the business in an operational capacity, typically a role like CEO or CFO, combining governance oversight with day-to-day management responsibility.
What it means
Because they're both a director and an employee of the company, executive directors are usually remunerated through payroll like other employees, in addition to any directors' fees, and their income tax treatment follows the normal employee rules rather than the non-executive director directive.
Where it fits in
The distinction from a non-executive director matters for payroll and tax: a non-executive director's fees are typically subject to a specific tax directive treatment, while an executive director's remuneration is processed as ordinary employee remuneration through the standard PAYE tables.
Key rules
- Combines board membership with day-to-day operational management.
- Usually remunerated through normal payroll, not the NED directive.
- Distinct from a non-executive director, who has no management role.
- Subject to standard PAYE treatment on their remuneration.
