outside director

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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 ?
Also, the business groups named 44 professors as outside directors in 2018, compared with 57 from last year -- the largest portion.
In the adoption of the LTI in place of the old LTI, Directors who are members of the Audit and Supervisory Committee to be appointed in fiscal 2016 and Outside Directors shall be added, and the new BIP Trust shall be established for Directors who are not members of the Audit and Supervisory Committee (excluding Directors residing overseas who are not Outside Directors.
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.
In many studies of corporate boards researchers have categorized the role of outside directors in large firms into three types: control, service, and resource dependence (see e.
After controlling for outside director involvement, the results suggest that certain indicators of board effectiveness are related to performance as well.
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.
To comply with the qualified performance-based compensation requirements and to ease the administrative burdens and costs of maintaining separate committees, all the directors who did not meet the outside director definition abstained or recused themselves from these determinations.
The length of time an outside director serves on the board may also affect the director's effective ability to scrutinize top management's actions.
1) After the end of this transition relief, a director will qualify as an outside director only if a number of detailed requirements are satisfied.