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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Michiko Chiba Outside Director, Audit & Supervisory Committee Member
The spirit of today's corporate governance reform in Japan is to enhance transparency of management and also achieve a wider perspective on business and management by taking account of the views of outside directors. "The Kao Way" seems to share this spirit.
We apply four filters to these 1,517 outside director appointments to obtain our final sample.
Next, the top three outside director candidates (in recommended asking order) are presented at a stockholder meeting for discussion and official vote.
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.g., Johnson, Daily, & Ellstrand, 1996; Peng, 2004).
The relationship between the heterogeneity of outside director tenure and financial performance is less clear.
* The performance goals are determined by a compensation committee of the corporation's board of directors, which is composed solely of two or more outside directors (Sec.
The TSE has also picked journalist Nobuko Takahashi, 52, as its first woman outside director since becoming a stock company.
It may be helpful for the board to designate an outside director as the principal contact with the auditor.