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.




RELATED TERMS
  1. Board Of Directors - B Of D

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

    Any member of a company's board of directors who is not an employee ...
  3. Directorate

    An organization headed by a director. In finance, directorate ...
  4. Duty Of Loyalty

    A director's responsibility to act at all times in the best interests ...
  5. Executive Director

    The senior operating officer or manager of an organization or ...
  6. Dummy Director

    A person on a company's board of directors who votes and acts ...
Related Articles
  1. Investing

    The Basics Of Corporate Structure

    CEOs, CFOs, presidents and vice presidents: learn how to tell the difference.
  2. Markets

    What Does the Board of Directors Do?

    Every public company must have a board of directors. These boards establish administrative policies including the hiring and firing of executives, the distribution of dividends, and executive ...
  3. Investing

    What are the fiduciary responsibilities of board members?

    Find out what fiduciary duties a board of directors owes to the company and its shareholders, including the duties of care, good faith and loyalty.
  4. Personal Finance

    Evaluating The Board Of Directors

    Corporate structure can tell you a lot about a company's potential. Learn more here.
  5. Managing Wealth

    Retired Execs: How Much Do Corporate Boards Pay?

    If you have the right skill set, getting a seat on a company board can be a lucrative and stimulating way to spend some of your new free time.
  6. Investing

    When Insiders Buy, Should Investors Join Them?

    Insider tracking can inform your investment strategy, but it requires research and a level head. Find out what to look for.
  7. Managing Wealth

    What Investors Can Learn From Insider Trading

    Some insider trading is actually legal - and can be extremely telling for investors.
  8. Entrepreneurship & Small Business

    The Marketing Director's Pitch

    Are your shoulder's wide enough to carry a company's reputation?
  9. Investing

    Sales Director Career Provides Daily Challenge

    Find out what you need to do to close the deal on this investment management position.
  10. Investing

    Can Insiders Help You Make Better Trades?

    Find out why the trading activity of owners and executives can be a valuable trade-confirmation tool.
RELATED FAQS
  1. Who is responsible for protecting and managing shareholders' interests?

    The average shareholder, who is typically not involved in the day-to-day operations of the company, relies on several parties ... Read Answer >>
  2. What is the difference between a president and a chief executive officer? Can there ...

    In general, the chief executive officer (CEO) is thought of as the highest ranking officer in a company while the president ... Read Answer >>
  3. How do a corporation's shareholders influence its Board of Directors?

    Find out how shareholders can influence the activity of the members of the board of directors and even change official corporate ... Read Answer >>
  4. What exactly is insider trading?

    An "insider" is any person who possesses at least one of the following: 1) access to valuable non-public information about ... Read Answer >>
  5. What is the difference between a shareholder and a stakeholder?

    Shareholders are stakeholders in a corporation, but stakeholders are not always shareholders. A shareholder owns part of ... Read Answer >>
  6. How often should I measure my company's key performance metrics (KPIs)?

    Learn the definition of illegal insider trading while reviewing the people who can be involved and the regulations and consequences ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center