Chairman of the Board

Description of Chairman of the Board. Explanation.

Definition Chairman of the Board. Description.

Chairman of the Board is the highest-ranking corporate officer. His formal function is to preside over board meetings.

Corporate Governance

In countries with a one-tier board structure (USA, Great-Britain and Japan) the Chairman also holds the position of Chief Executive Officer. The Chairman then heads the (combined) Board of Directors.

In countries with a two-tier board structure (Germany, The Netherlands, Finland) the Chairman is not the CEO and there is a formal division of power. The Chairman only heads the Supervisory Board, but not the Management Board. The last is headed by the CEO.

In some other countries there is a choice for a one- or two tier board structure.

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Power of the Chairman

Besides the mentioned one- or two-tier board structure, the power and authority of the Chairman depends on a number of additional factors including:

• The personality and clout of the chairman and the CEO.

• The culture or climate of board meetings.

• The composition of the board.

• The boards' level of participation in the selection of the CEO and of the other top managers.

• The board's ability to shape, monitor and/or control the implementation of the strategy.

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End of description Chairman of the Board. An explanation.