outside director

(redirected from outside directors)
Also found in: Dictionary.
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 ?
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.
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.
As already described, outside directors play a resource-dependence role by bringing external resources that are critical to the firm's success.
The NCUA had filed in opposition to that draft ruling, offering extensive argument that the outside directors in fact had culpability in the losses incurred by WesCorp.
The results of the study indicate that both the number and proportion of outside directors are positively and significantly related to financial performance, measured as both return on assets and return on shareholders' equity.
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.
have joined the CAB USA board as outside directors.