Inside Director


DEFINITION of 'Inside Director'

A board member who is an employee, officer or stakeholder in the company. Inside directors - and outside directors, for that matter - have a fiduciary duty to the company of which board they sit on, and are expected to always act in the best interests of the company. Because of their specialized knowledge about the inner workings of the company, a strong board of inside directors is a key element in its success.

BREAKING DOWN 'Inside Director'

Inside directors typically include a company's top executives, such as the chief operating officer, the chief financial officer and the chief operating officer, as well as representatives of major shareholders and lenders, and representatives of other stakeholders, such as labor unions.

An institutional investor who is considering making a sizable investment in a company will often insist on appointing one or more of the investor's representatives to the company's board of directors as a condition of such investment.

  1. Board Of Directors - B Of D

    A group of individuals that are elected as, or elected to act ...
  2. Non-Executive Director

    A member of a company's board of directors who is not part of ...
  3. Insider Buying

    The purchase of shares of stock in a corporation by someone who ...
  4. Board Of Directors

    An appointed or elected body or committee that has overall responsibility ...
  5. Conflict Of Interest

    A situation where a professional, or a corporation, has a vested ...
  6. Outside Director

    Any member of a company's board of directors who is not an employee ...
Related Articles
  1. Personal Finance

    How To Become A Corporate Board Member

    We look at how corporate boards are constructed, and how investors can get involved.
  2. Insurance

    Evaluating The Board Of Directors

    Corporate structure can tell you a lot about a company's potential. Learn more here.
  3. Investing Basics

    The Basics Of Corporate Structure

    CEOs, CFOs, presidents and vice presidents: learn how to tell the difference.
  4. Investing

    Nasty Shareholder Activist Battles And Why They Happened

    Shareholder activists can have a big impact on a company's operations. These battles turned ugly as management lost control.
  5. Options & Futures

    Can Insiders Help You Make Better Trades?

    Find out why the trading activity of owners and executives can be a valuable trade-confirmation tool.
  6. Economics

    What Do Central Counterparty Clearing Houses Do?

    A central counterparty clearing house facilitates trading in European derivatives and equities markets.
  7. Investing Basics

    What Is Schedule 13G Used For?

    Schedule 13G is an SEC form an investor must file upon taking ownership of 5% or more of a company’s outstanding shares.
  8. Taxes

    6 Reasons to Donate Your Car to Charity

    It's no longer a free ride, but there are still tax benefits to doing so.
  9. Economics

    What Does Vesting Mean?

    Vesting is the process of accruing non-forfeitable rights.
  10. Economics

    What's a Conglomerate?

    A conglomerate is a corporation that’s comprised of several different independent businesses.
  1. Do ETFs have a board of directors?

    Yes. An exchange-traded fund (ETF) is a type of security that tracks a basket of assets or an index (such as an index fund), ... Read Full Answer >>
  2. How do modern companies assess business risk?

    Before a business can assess or mitigate business risk, it must first identify probable or likely risks to its bottom line. ... Read Full Answer >>
  3. Why has emphasis on corporate governance grown in the 21st century?

    Corporate governance refers to operational practices, management protocols, and other governing rules or principles by which ... Read Full Answer >>
  4. What impact did the Sarbanes-Oxley Act have on corporate governance in the United ...

    After a prolonged period of corporate scandals involving large public companies from 2000 to 2002, the Sarbanes-Oxley Act ... Read Full Answer >>
  5. Why should investors research the C-suite executives of a company?

    C-suite executives are essential for creating and enacting overall firm strategy and are therefore an important aspect of ... Read Full Answer >>
  6. What is the difference between a direct and an indirect distribution channel?

    A direct distribution channel is organized and managed by the firm itself. An indirect distribution channel relies on intermediaries ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  2. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  3. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  4. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
  5. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  6. Capitalized Cost

    An expense that is added to the cost basis of a fixed asset on a company's balance sheet. Capitalized Costs are incurred ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!