Independent Outside Director

AAA

DEFINITION of 'Independent Outside Director'

A member of a company's board of directors who was brought in from outside the company. Because an independent outside director has not worked with the company for a period of time (typically for at least the previous year), he or she is not an existing manager and is generally not tied to the company's existing way of doing business.

INVESTOPEDIA EXPLAINS 'Independent Outside Director'

The general consensus among stockholders is that independent directors improve the performance of a company through their objective view of the company's health and operations. They do not have to pander to other management personnel in order to retain their jobs. Stockholders and politicians pushed for more independent outside directors in the wake of the Enron collapse in the early part of the 2000s.

RELATED TERMS
  1. Andersen Effect

    A reference to auditors performing more careful due diligence ...
  2. Inside Director

    A board member who is an employee, officer or stakeholder in ...
  3. Board Of Directors - B Of D

    A group of individuals that are elected as, or elected to act ...
  4. Outside Director

    Any member of a company's board of directors who is not an employee ...
  5. Sarbanes-Oxley Act Of 2002 - SOX

    An act passed by U.S. Congress in 2002 to protect investors from ...
  6. Enron

    A U.S. energy-trading and utilities company that housed one of ...
Related Articles
  1. Evaluating The Board Of Directors
    Insurance

    Evaluating The Board Of Directors

  2. The Basics Of Corporate Structure
    Investing Basics

    The Basics Of Corporate Structure

  3. Evaluating A Company's Management
    Active Trading Fundamentals

    Evaluating A Company's Management

  4. What Are Corporate Actions?
    Bonds & Fixed Income

    What Are Corporate Actions?

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center