Chief executive officer

highest-ranking corporate officer
(Redirected from Managing Director)

A Chief Executive Officer (CEO), or Chief Executive, is the highest ranking corporate officer, administrator, corporate administrator, executive, or executive officer, in charge of total management of a corporation, company, organization or agency.

In some places the chief executive officer is also the chairman of the board. Another person takes the presidency or may become chief operating officer (COO). Underneath that there may be an Executive Vice President (U.S.) or executive director (UK). In publicly held corporations, the CEO and chairman positions can be separated but there are implications in corporate governance by doing so.

In some European Union countries, there are two separate boards, one executive board for the day-to-day business and one supervisory board for control purposes (elected by the shareholders). In these countries, the chief executive officer runs the executive board and the chairman runs the supervisory board and these two roles will always be held by different people. This ensures a distinction between management by the executive board and governance by the supervisory board. This allows for clear lines of authority. The aim is to prevent a conflict of interest and too much power being concentrated in the hands of one person. This is like the structure of governments, which tend to separate the political cabinet from the management civil service.

In rare circumstances an Executive Chairperson can be appointed but this is either illegal in many jurisdictions or frowned upon by Regulators.

In the United Kingdom many Charities and Government Agencies are headed by a Chief Executive who is answerable to a Board of Trustees or Board of Directors. In the UK, the Chairman (of the Board) in public companies is more senior than the Chief Executive. Most public companies now split the role of chairman and Chief Executive.

Reporting structure

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Typically, a CEO has a cadre of subordinate executives, each of which has specific functional responsibilities. These direct reporting relationships most often include: Chief Financial Officer, Chief Operating Officer, Chief Marketing Officer, and Chief Information Officer. Although not an Executive, the Director of Human Resources plays a vital role within any corporation.

However, depending on the industry in which the company operates and/or the organizational structure, various other functional areas may be highlighted through the CEO's direct span of control. Some of these less common titles include: Chief (Business) Development Officer, Chief Knowledge Officer/Chief Learning Officer, Chief Strategy Officer, Chief Risk Officer, and Chief Credit Officer.

According to Don Schmincke, to be a strong executive, "one cannot act in business differently from how he acts in family life or society". Meaning being a successful executive requires a man’s conduct to be “correct in all points”, his actions must follow his words at all times.[1]

Chief executives of companies on the American S&P 500 index were paid a median of $14.1 million in 2022. FTSE 100 chief executives were paid a median £3.91 million. This was 118 times that of the median worker in the United Kingdom. In 2021 the difference was 108 times. In 2020 it was 79 times.[2]

References

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  1. Schwincke, Don. The Code of the Executive. Boston: Charles E. Tuttle Publishing, 1997
  2. Pickard, Jim; Parker, George; O’Dwyer, Michael (2023-08-21). "FTSE 100 bosses given average 16% pay rises". Financial Times. Retrieved 2023-08-22.