Chief Executive Officer

Description of Chief Executive Officer. Explanation.

Definition Chief Executive Officer. Description.

The Chief Executive Officer (CEO) is the highest ranked manager of a corporation. He or she is primarily responsible to carry out the strategic plans and policies as established by the board of directors. He runs the corporation at the highest level. A CEO of a large corporation has without a doubt one of the most complex and demanding jobs that exist. A CEO job description typically involves overseeing highly related and complex activities and issues such as the Corporate Mission, the Corporate Purpose, the company's future Scenario Planning and Corporate Vision, the creation and implementation of the Corporate Strategy, and the Corporate Reputation. Often he also deals with Investor Relations and Stakeholder Management at the highest level. Furthermore he hires, fires, and leads the senior management team, which in turn hire, fire, and lead the rest of the organization. Last but not least he is also responsible for informing the Board about significant issues. He may or may not also hold the title of Chairman of the Board.

Corporate Governance and the CEO

In countries with a one-tier board structure (USA, Great-Britain and Japan) the CEO often also holds the position of Chairman of the Board. The CEO 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 Managing Board is headed by the CEO.

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

The CEO reports directly to the Chairman and Board of Directors (one-tier) or to the Supervisory Board (two-tier).

More on Corporate Governance

Power of the CEO

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

• The personality and clout of the chairman and the CEO. Compare: Charismatic Leadership

• 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.

Leadership

Some CEOs, such as GE's Jack Welch have been almost almighty and became cultural hero's during the stock boom of the 90s. But after the reports on accounting fraud and the executive incentives scandals at the end of the first Internet boom, many CEOs adopted a more careful, consensus-building attitude and avoid unnecessary media contacts.

Chief Executive Officer Forum

Hickman - United States

Chairman of the Board vs CEO

"Does the CEO work for the Chairman of the Board and does the Chairman have the right to fire the CEO?"

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Ludi Strydom - South Africa

CEO and MD of a Corporation

"Is the CEO effectively the MD of a Corporation, or do the two fulfil differend roles?"

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End of description Chief Executive Officer. An explanation.