Chairman of the Board

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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 System and the CEO

  1. Compulsory one-tier system: In countries with a one-tier board structure (USA, UK, Ireland, Canada, Spain, Japan) the Chief Executive Officer normally also holds the position of Chairman of the Board. He then heads the (combined) Board of Directors.
  2. Compulsory two-tier system: In case of a two-tier board structure (Germany, Austria) there are two boards: the Board of Directors and the Supervisory Board. In this corporate governance system, the CEO is only the chairman of the Board of Directors, but not of the Supervisory Board. There is a formal division of power. Italy and Portugal require a Board of Auditors separate from the board.
  3. Choice: In many other countries (France, Belgium, The Netherlands, Luxembourg, Greece, Italy, Denmark, Finland, Slovenia, Bulgaria, Hungary) there is a choice for a one- or two tier board structure.

More on Corporate Governance.

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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