A company’s management is assisted and overseen by an outside director. A person who accepts this position on the board of directors has a fiduciary duty to protect the interests of shareholders. Unlike other people who sit on the board as inside directors, his designation as an outside director indicates that he has never worked for the company or been a major shareholder. This director is expected to bring a fresh perspective to the board’s decision-making process as an outsider.
The board of directors is a group of people tasked with ensuring that a corporation operates in the best interests of its shareholders, rather than for the personal enrichment of its executives. Rather than being owned by the company’s executives or managers, a corporation is owned by the people who own stock in it. Stockholders can be located anywhere in the world and do not always have the ability or right to intervene in the day-to-day operations of the company to ensure that their investment is protected.
The law allows the board of directors to act as a proxy for all of the company’s shareholders. Inside or outside the corporation, directors can be appointed to the board of directors. Inside directors are usually founders or individuals who own large blocks of the company’s stock and also work as a top executive for the company. Outside directors are appointed to the board to counterbalance the influence of inside directors by providing objective viewpoints. The board of directors is required by the corporation’s bylaws and current needs to meet a certain number of times per year.
All members of the board of directors, including outside directors, are required by law to perform certain duties in order to protect the public’s interests. These responsibilities include financial oversight to ensure the corporation is not mismanaged, management of the chief executive positions’ staffing and conduct, and strategic management of company-wide matters. In addition to fulfilling a director’s fiduciary duty as required by law, an outside director is typically expected to contribute to the corporation in a variety of ways.
When an outside director is appointed to a board, he is expected to contribute his expertise, credentials, clout, and resources to the corporation’s benefit. These contributions can take many forms, ranging from influencing an important regulatory filing on behalf of the company to generating positive press through media contacts. He may be asked to take on additional responsibilities, such as chairman of the board of directors or spokesperson for the company. In general, an outside director can be asked to serve on project-based committees or perform any task that benefits the corporation as a whole, in addition to the regular duties mandated by law.