outside director

Also found in: Dictionary, Medical, Wikipedia.

Outside director

A director of a company who is not an employee of that company and brings in outside experience to help make board decisions.

Outside Director

A member of a publicly-traded company's board of directors that is not otherwise employed by or engaged with the company. That is, he/she does not represent shareholders or major executives in the company. Outside directors are thought to be advantageous because they offer objectivity and have little or no chance of conflict of interest. However, there is the possibility that an outside director might be unengaged with the issues involved in the company's governance. The Sarbanes-Oxley Act of 2002 mandates that a certain percentage of boards of directors be outside directors. It is illegal for outside directors to sit on multiple boards in the same industry as this may result in conflicts of interest.

outside director

A member of a firm's board of directors who is not employed in another capacity by that firm. An example is the president of one firm who serves as a director of another firm. Some people believe that at least some outside directors are needed to give a board balance and to protect stockholders' interests. Compare inside director.
References in periodicals archive ?
Nevertheless, throughout this period of increased enthusiasm for outside directors on corporate boards, AIG successfully recruited capable people who added the value of their business judgment and experience and put the interests of AIG and shareholder prosperity first.
You will be bound by any judgment rendered in the Action with respect to the Outside Director Defendants with respect to claims asserted in the action identified above, and with respect to other claims that you had, have, or may have against the Outside Director Defendants based on matters related to Allou, unless you request to be excluded from the Settlement Class, in writing, in accordance with the instructions set forth in the Mailed Notice, received no later than October 4, 2006.
He argues also that the environment puts an additional burden on outside directors and perspective outside directors to do their homework, do their due diligence on the boards that they join, before they make that commitment.
Indeed, because of the rising risk of civil and criminal liability, many experts believe that outside directors will become a yew rare breed.
The coefficient signs on the ownership variables indicate that inside director ownership actually reduces bank performance and affiliated outside director ownership and independent outside director ownership increase bank performance.
Candidates for global outside director board seats typically have worked in several countries and have held executive positions of increasing responsibility.
Outsider board membership, according to the shareholder-voting hypothesis, will increase with outside blockholder, institutional investor, and outside director share ownership.
Under the de minirnis exception, an individual employed by another entity may serve as an outside director for a publicly held corporation as long as the publicly held corporation's payments for goods or services to the outside director's entity does not exceed the lesser of $60,000 or five percent of the entity's gross income.
In a recent analysis, Outside Director Liability [58 Stanford Law Review 1055 (2006)], authors Michael Klausner with Bernard Black and Brian Cheffins surveyed all settlements and judgments that they could identify involving litigation against directors.
One outside director, usually the chairman of the corporate governance committee, if there is one, needs to consolidate the responses and lead the ensuing discussion.
162(m) outside director requirement without the administrative burdens and costs of maintaining separate committees or a separate subcommittee.
While the theoretical underpinnings relating to corporate governance structure are applicable to banks as well as nonfinancial firms, several factors may limit generalizing studies of outside director effectiveness from nonfinancial firms to banks.