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Oversight and management: The corporate C-suite and board of directors
Oct 19, 2024 7:51 AM

  

Oversight and management: The corporate C-suite and board of directors1

  What’s the difference between a company’s chief executive officer (CEO) and its president? And what about the board of directors and its leader, the chairman (or chairperson, or simply “chair”)? Who’s in charge? Fantastic question.

  Corporate titles like these are common—exceedingly common—but not frequently defined. Here’s a rundown of all the chiefs and chairs, their functions, and the typical corporate chain of command (and control).

  How are corporations structured?Corporations are organized using a clear hierarchy and checks and balances on decision-making authority. You may be most familiar with the C-suite—C being short for “chief”—but corporations also have boards of directors. The C-suite assumes operational responsibility and control, while a company’s board of directors oversees and guides the C-suite.

  Some corporations have presidents, too. Excluded from the C-suite, presidents typically take direction from C-suite executives and hold primary responsibility for operations and strategy execution.

  Should the same person hold the roles of chair of the board, CEO, and president? There are certainly trade-offs. Combining CEO and chair of the board can streamline decision-making and tighten the timeline between decision and execution of any given initiative. But such consolidation can also raise governance concerns in matters including executive compensation and financing operations such as share buybacks, dividends, and issuing corporate debt.

  Smaller corporations—particularly where the founder is still active in both executive and governance matters—tend to lean toward a combined role. But as the company matures, the founder may look for a successor to be CEO, and/or they may retire to a role of chairperson emeritus. Large corporations almost always separate these roles among executives to maintain the appropriate checks and balances, but there are exceptions.

  Corporate structure matters because the right structure balances strategic leadership (vested with the board of directors) with operational leadership (vested with the C-suite). The corporate system of checks and balances, when designed and implemented properly, prioritizes and protects the interests of a corporation’s shareholders.

  Understanding the C-suiteEvery corporation has a chief executive officer (CEO), and likely a chief financial officer (CFO) and chief operating officer (COO). Other types of chief executives can (and frequently do) contribute to the leadership and management of companies.

  Chief executive officer. As the title implies, the chief executive officer holds the highest executive position in a corporation. CEOs are responsible for shaping and executing the company’s vision, mission, and strategic objectives. CEOs often hold a seat on the board of directors. They work closely with other C-level executives to lead and operate the company. The CEO is often the public face of an enterprise.

  Chief financial officer. The chief financial officer is responsible for overseeing the financial health and strategy of a company. CFOs manage financial planning, budgeting, and forecasting, with a fiduciary responsibility for accurate financial reporting, regulatory compliance, and sound financial management.

  CFOs may serve as key liaisons with external stakeholders including investors, banks, and financial institutions. Chief financial officers often communicate company financial performance to the board of directors and to analysts and investors during quarterly earnings conference calls.

  Chief operating officer. The chief operating officer is the executive responsible for day-to-day operations of the company. The COO, often working closely with the CEO, implements a company’s strategic plan and improves operational processes. COOs ensure that corporate resources are used effectively throughout the company, including in its supply chains, production, sales, marketing, and customer service.

  COOs also play a significant role in growth initiatives by developing operational plans to support various corporate expansion goals. Chief operating officers manage growth to ensure that it doesn’t occur at the expense of product or service quality.

  Chief marketing officer. The chief marketing officer (CMO) is another early hire for many corporations. CMOs are responsible for shaping and executing the company’s marketing strategy to support key corporate objectives. Chief marketing officers oversee branding, positioning, and messaging across various channels to ensure that consistent and compelling narratives reach the enterprise’s target audience.

  Chief strategy officer. An organization may hire a chief strategy officer (CSO) to be primarily responsible for guiding the company’s long-term strategic planning. The CSO, often working closely with the CEO, is tasked with ensuring that the organization remains competitive and positioned for maximum growth. Typically CSOs lead strategic projects and initiatives that significantly drive innovation, expansion, and transformation within a company.

  Chief technology officer. Some businesses employ a chief technology officer, or CTO. The CTO is responsible for setting and guiding the technology strategy of an organization, both to support key business goals and identify technological growth opportunities. CTOs manage the development, implementation, and scaling of technical solutions, including software, hardware, and data infrastructure.

  Chief information officer. The chief information officer (CIO) is the executive responsible for overseeing an organization’s information technology (IT) strategy and operations. CIOs focus on aligning IT initiatives with business objectives, ensuring that the company’s technology infrastructure enhances productivity, security, and operational efficiency. CIOs are typically responsible for developing, implementing, and scaling the company’s physical and digital IT systems.

  In smaller companies, one person may serve as both CTO and CIO. In larger organizations, the two will frequently collaborate on tech initiatives (e.g., the design and implementation of artificial intelligence into data systems and product solutions).

  Deconstructing the board of directorsThe board of directors for a corporation is tasked with setting strategic direction, deciding executive compensation, and generally practicing good governance to work collaboratively with the executive team. Every board typically has a chair (many companies still use the gender-specific term chairman of the board) and independent directors, but other structural elements may differ significantly.

  Chair of the board. The chair (or chairman or chairperson, depending on the organization) leads the board of directors and facilitates board meetings, ensuring that discussions focus productively on strategic and important issues. The chair works closely with the CEO to align board oversight with company objectives.

  Vice chair. A board of directors may have a vice chairperson to support the board’s leader. The vice chair is responsible for leading the board in the chairperson’s absence and may handle specific tasks or focus on areas that are a priority for board oversight.

  Chief executive officer. The corporation’s CEO often holds a seat on the board of directors, serving as the primary link between C-level leadership and the company’s advisors. CEOs participating as board members commonly provide updates on company performance, strategy, and operations to other board participants.

  Independent directors. Independent directors, who are not employed by the company, are a key role for many boards of directors. Typically industry experts, independent directors help set goals and conduct impartial oversight of corporate management teams. Like all board members, directors have a fiduciary responsibility to the corporation’s shareholders.

  Lead independent director. A board of directors may include a lead independent director to coordinate the collective activities of independent directors. The lead independent director serves as a liaison between independent directors and the board’s chair.

  Secretary of the board. A board of directors may designate a secretary who prepares meeting agendas, records meeting minutes, and maintains meeting records. Board secretaries facilitate effective communication among board members and with the management team.

  The bottom lineCorporate structures are designed to achieve a delicate balance of power. CEOs and their management teams have operational control, but share responsibility for strategic planning with the board of directors. The board of directors typically has the final say on major decisions and setting long-term goals.

  If you hold shares of a company (or are considering an investment), take some time to learn about the board and its chair, as well as the C-suite that’s managing the operation. As a shareholder, you have the opportunity to vote each year on certain company decisions and proposals submitted by other shareholders (some of whom are activist investors). Plus, shareholders have the final thumbs-up/thumbs-down say on each nominee for the board of directors. Do your homework and vote your shares.

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