Independent (Outside) Director

Member of a company's board of directors who has not been an officer or employee for one year preceding any action on an offer.

Member of the Board of Directors of an entity who is an outsider, meaning he or she is not an employee of that entity. An example is a broker sitting on the Board of a client company. Such directors are important because they bring unbiased opinions regarding the company's decisions and diverse experience to the company's decision-making process. In order not to have a conflict of interest, independent directors should not participate on the boards of directly competing businesses. Directors are typically compensated based on a standard fee for each board meeting.