Which board member is typically not an employee or officer and serves on the board?

• A. Inside Director
• B. Independent Director
• C. Outside Director
• D. Nonexecutive Director

Answer: (C)

An outside director is the person on the board who is not an employee or officer of the company. This separation from management brings an objective, independent perspective to governance, helping to scrutinize decisions and supervise management without conflicts of interest. Inside directors are part of the company’s management, so they aren’t outside directors. A nonexecutive director generally means someone not involved in daily operations, but the explicit designation that describes not being an employee or officer and serving on the board is outside director. An independent director is similar in not having management ties, but independence focuses on relationships that might affect impartiality; the term that most directly matches “not an employee or officer and serves on the board” is outside director.