outside director

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Related to outside directors: Inside director

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 ?
Routinely ever since, in response to national scandals involving corporate misconduct, Congress passed new legislation and the New York Stock Exchange--where AIG listed its shares in 1984--adopted rules that increasingly required corporations to add outside directors to the board.
Selection Criteria for Outside Directors and Outside Corporate Auditors
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.
Similarly, having some inside directors who know the business can help inform the outside directors by reducing the filtering of knowledge through the CEO.
Indeed, because of the rising risk of civil and criminal liability, many experts believe that outside directors will become a yew rare breed.
Almost two years ago, an ARMA Board member contacted me to see if I was interested in being considered for one of ARMA's first outside Director positions.
He said the nine-member board, which includes five outside directors, approved Stephen Riggio unanimously.
Our paper investigates the association between board-independence variables related to independent outside directors, pay-related incentives, and financial performance.
In addition to options granted to outside directors, two other groups of options will be affected by this interpretation:
The entity's compensation committee consisted of at least two outside directors, plus several other individuals who did not qualify.
162-27(e)(3) and (e)(4) (setting forth the definition of outside director and the shareholder approval rules) until as late as the first shareholders' meeting in 1997, as long as the directors are disinterested directors under SEC rules and the plan was approved by shareholders under SEC rules, and these grandfathered plans and agreements have not been materially modified.
A recent publication from Heidrick and Struggles, consultants in executive searches, lists what the firm considers distinguishing attributes in selecting global outside directors.