Who has the most power in a company, CEO, President or a Chairman?

I have watched your question hang around, and was hoping that it would
be available when I had a few minutes, and lucky me, it was!

I have spent 30 years now in various corporate environments and have
seen practically every combination and permutation of corporate
structure. The one rule that I have learned is that there is no one
rule concerning titles relating to specific job functions. But
nevertheless, let’s try to make some sense out of all of this.

1. Yes, members of a board of directors are sometimes informally
called “board members.”

2. “The governing body of a corporation elected by the shareholders is
called a board of directors.” A board is usually composed of both
senior officers of the corporation (referred to commonly as “inside
directors”, and people who are not employed by the corporation, but
who serve on the board, for which they receive a fee, and these folks
are called “outside directors.”

3. The board is empowered to elect and/or appoint officers and agents
to act on behalf of the corporation. They also declare dividends, and
act on other major matters involving the corporation. They pay
attention to the “big picture” corporate policy issues, and (usually)
leave the day-to-day management issues to the officers of the
corporation.

4. The Board of Directors is almost always led by its Chairman – the
Chairman of the Board of Directors. Since the Board is charged with
executing “executive functions” the Chairman is, usually the CEO or
Chief Executive Officer. CEO’s may or may not have day-to-day
responsibility at the corporation, although these days you would
typically find the CEO is an officer of the company, maintains an
office in the corporate headquarters, and many times (though not
always) has “come up through the ranks” and has been a manager ‡ vice
president ‡ executive vice president ‡ president ‡ CEO. Many people
analogize the President of the United States to a CEO. It is the top
job, but the day to day function is to set policy, make sure board
policy is being implemented and managed appropriately, and to
coordinate the activities of the policy setting Board with the day
–to-day operations of the company. This is particularly true in
conglomerates, where the corporation owns a number of different
businesses, perhaps in different parts of the world, each perhaps with
its own president – all reporting to the CEO.

5. The President of a corporation is typically the Chief Operating
Officer – All of the operations report up through junior officers
(vice presidents) to the President. There will be vice presidents for
various divisions of the company, or for various important functions;
for example, there may be vice presidents for finance, marketing,
accounting (many times called a controller or comptroller),
information services, public relations, corporate affairs (also called
a secretary), law, and the various operating divisions. There may be
a number of flavors of vice president: Assistant VP, VP, Senior VP,
Executive VP – I’ve even seen Sr. Exec. VP.

6. The president’s role is to manage and be responsible for the
day-to-day affairs of the company. The board sets policy, the
president executes that policy and reports back to the board, and the
board then reports to the shareholders, or owners, of the company.

7. The issue of inside directors versus outside directors is an
interesting one. Some companies believe that inside directors, at the
risk of losing their jobs if too outspoken, will not challenge their
superiors or think too far outside the box. Those companies would
therefore severely limit inside directors, perhaps only to the
president. All the other directors are outsiders, who are seen to be
better able to create and debate policy initiatives.

Other companies do the opposite – they are very much in favor of
stacking the board with inside directors, typically justifying this
structure with the theory that insiders know the company
extraordinarily well, are totally vested in the affairs and interests
of the companies, and are best able to determine the policies that
would best drive the company profitably into the future.

As an aside, I have served a number of years on various boards of
corporations, and have felt that boards comprising largely outside
directors were the most effective. I have seen a lot of senior
corporate officers sitting on boards afraid to state their opinion
when they know their boss, also a board member, has a different
opinion on the topic. Typically, again in my limited experience,
boards with a large number of insider directors, many times but not
always, have a CEO who is very, very powerful and that power is
enhanced by minimizing outside director content on the board.

Keep in mind too that most outside directors are CEO’s in their own
companies and are serving on another company’s board because of their
success with their own company. They may be serving on a board in
their retirement so as to “keep an oar in the water.”

Here is an interesting article concerning the inside versus outside
director question: http://rev.tamu.edu/stories/02/071502-5.html

8. Here then is the theoretical structure:

A. Shareholders
B. Board of Directors – led by its Chairman (who may be CEO)
C. CEO – (Chairman)
D. COO – President
E. Executive Vice Presidents
F. Vice Presidents
G. General Managers
H. Managers
I. Supervisors
J. Workers
Of course there are many permutations.

9. To really confuse things sometimes (at least it seems that way),
some corporations have an executive position called a “Director” that
is senior to a Manager or General Manager, but is junior to a Vice
President. This is particularly true in staff positions (like
accounting, marketing, etc.) This “Director” position is not to be
confused, and is certainly not the same as a member of a Board of
Directors, also referred to as “a Director.”

I hope that I have been able to make corporate hierarchy more
understandable for you. IF YOU HAVE ANY QUESTION, please click the
Ask for Clarification BUTTON and I will get right back to you.

Thanks for visiting us.

Weisstho-ga

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