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Inside Director

Moneyzine Editor
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Moneyzine Editor
1 mins
January 22nd, 2024
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Inside Director

Definition

The term inside director refers to a board of director member that is also an employee or officer of the company. A company's chief executive officer that is also a member of its board of directors would be considered an inside director.

Explanation

A board of directors is a recognized group of select individuals who jointly oversee the activities of an organization, which can be either a for-profit business, nonprofit organization, or a government agency. Publicly traded companies are required to have a board of directors.

Employees of a company that are also a member of its board of directors are inside directors. For example, if the chief executive officer of a company is also a member of its BOD, that individual would be considered an inside director. Since inside directors have direct knowledge of the company's operations, their participation and input is essential to the successful decision-making process of the board.

The BOD's powers, duties and responsibilities are determined by government regulations and the organization's own constitution and bylaws. The primary responsibility of the BOD is to make non-operating decisions on behalf of the organization or its shareholders. The number of inside directors is typically limited because of perceived, or actual, conflicts of interest.

Related Terms

The term outside director refers to a board of director member that has no other meaningful connection to the company. Outside directors are the converse of inside directors, which are board members that are also employees of the company.
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Executive Director (Non-Executive Director)
The term executive director refers to a board of director member that is also an executive of the company. A company's chief executive officer that is also a member of its board of directors would be considered an executive director.
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Board of Directors (BOD)
The term board of directors refers to a group of individuals that collectively oversee the activities of an organization. The powers and duties of an organization's board of directors will be found in its constitution and / or bylaws.
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January 8th, 2024

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