Inside Director

AAA

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.

INVESTOPEDIA EXPLAINS '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. Non-Executive Director

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

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

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

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

    Any member of a company's board of directors who is not an employee ...
  6. Board Of Directors - B Of D

    A group of individuals that are elected as, or elected to act ...
RELATED FAQS
  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 >>
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. Stock Analysis

    Why Should You Invest In Stratasys Today?

    When Stratasys pre-announced its fourth-quarter earnings, management highlighted that its MakerBot acquisition was underperforming expectations.
  7. Investing News

    Folio Investing Brings Experience To Robo-Advisors

    Prior to the recent upsurge of robo advisors, Folio Investing established itself as an alternative investment service through its online service.
  8. Economics

    America's Most Notorious Corporate Criminals

    Learn about the crimes and punishments of some of the most infamous convicted white-collar crooks.
  9. Investing

    Corporate Governance

    Corporate governance refers to the formally established guidelines that determine how a company is run. The company’s board of directors approves and periodically reviews the guidelines, which ...
  10. Investing Basics

    Enterprise Resource Planning System: A How To

    An ERP system won’t transform poor management into good management, but the real-time business analytics can help make good management even better.

You May Also Like

Hot Definitions
  1. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  2. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  3. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  4. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  5. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  6. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
Trading Center