A:

In general, the chief executive officer (CEO) is thought of as the highest ranking officer in a company while the president is second in command. However, in corporate governance and structure, many permutations can take place, so the roles of both CEO and president may be different across various firms. For this reason it is important to have a general understanding of the corporate environment and how different positions ultimately fit into it.

First of all, the board of directors is elected by the shareholders of a company and is composed usually of both inside directors (senior officers of the company) and outside directors (individuals independent of the company). The board establishes corporate management policies and decides on "big picture" corporate issues. Because the board is in charge of executive functions, and as the CEO is responsible for integrating company policy into day-to-day operations, the CEO often (but not always) fills the role of chairman of the board.

Another factor that determines the positions of company officers is corporate structure. For example, in a corporation with many different businesses (a conglomerate), there may be one CEO who oversees a number of presidents, each running a different business of the conglomerate and reporting to the one CEO. In a company with subsidiaries, it would be unusual to have one person carry out the roles of both CEO and president.

Presidents often hold the position of chief operating officer (COO). The COO is responsible for day-to-day operations and has vice-presidents for different parts of the company reporting to him or her. Generally, the board of directors sets the policy; the president executes the policy and reports back to the board; and finally, the board reports back to the shareholders who are the ultimate owners.

A company without subsidiaries may have one person execute the roles of CEO and president (and perhaps even chairman). As such, greater communication and contact can be achieved between the board of directors, which sets policies, and the president, who oversees the day-to-day operations of the company.

Keep in mind that these are examples of general scenarios. The CEO is not always the chairman of the board, and the president is not always the COO. The ultimate goal in corporate governance is to effectively manage the relationship between owners and decision-makers and increase shareholder value.

For further reading on corporate structure, check out the article The Basics of Corporate Structure, Lifting the Lid on CEO Compensation and Get Tough On Management Puff.

RELATED FAQS
  1. Who is responsible for protecting and managing shareholders' interests?

    The average shareholder, who is typically not involved in the day-to-day operations of the company, relies on several parties ... Read Answer >>
  2. How are C-suite officers measured on performance?

    Find out how C-suite officers are evaluated. Learn about the evaluation process, what makes traits a CEO should exhibit and ... Read Answer >>
  3. How do a corporation's shareholders influence its Board of Directors?

    Find out how shareholders can influence the activity of the members of the board of directors and even change official corporate ... Read Answer >>
  4. How do the C-suite members work together to make a successful company?

    Learn more about the C-suite titles and how the executive team successfully runs a large or small organization. Find out ... Read Answer >>
  5. What are the different groups involved in corporate governance?

    Learn about the challenges inherent to defining and executing corporate governance, and understand why different groups work ... Read Answer >>
  6. What is a staggered board?

    A staggered board of directors (also known as a classified board) is a board that is made up of different classes of directors. ... Read Answer >>
Related Articles
  1. Investing

    The Basics Of Corporate Structure

    CEOs, CFOs, presidents and vice presidents: learn how to tell the difference.
  2. Managing Wealth

    What CEOs Actually Do

    CEOs are responsible for the overall operation of a business, and are usually elected by shareholders and the board of directors.
  3. Managing Wealth

    3 Reasons To Separate CEO And Chairman Positions

    Separating these high-profile positions can help to strengthen the overall integrity of a company.
  4. Investing

    What Does the Board of Directors Do?

    Every public company must have a board of directors. These boards establish administrative policies including the hiring and firing of executives, the distribution of dividends, and executive ...
  5. Managing Wealth

    Retired Execs: How Much Do Corporate Boards Pay?

    If you have the right skill set, getting a seat on a company board can be a lucrative and stimulating way to spend some of your new free time.
  6. Managing Wealth

    How To Become A Corporate Board Member

    We look at how corporate boards are constructed, and how investors can get involved.
  7. Small Business

    Corporate Governance

    Corporate governance refers to the formally established guidelines that determine how a company is run. The company’s board of directors approves and periodically reviews the guidelines, which ...
  8. Investing

    Will the New President Impact Your Portfolio?

    The U.S. President is often called the most powerful person in the world, but they don’t run the economy any more than they run Congress or the courts.
  9. Insights

    Retirement Money for Ex-Presidents: How Much Will Obama Get?

    Last year, the federal government spent a total of $3.25 million on the four former presidents still living.
  10. Small Business

    What does C-Suite Mean?

    C-Suite is a slang term used to describe the highest level senior executives of a corporation. This is the decision-making, power center of a company. These individuals are usually paid well, ...
RELATED TERMS
  1. Chief Operating Officer - COO

    The senior manager who is responsible for managing the company's ...
  2. Board Of Directors - B Of D

    A group of individuals that are elected as, or elected to act ...
  3. Chairman

    An executive elected by a company's board of directors that is ...
  4. Chief Executive Officer - CEO

    A CEO is the highest ranking executive in a company whose main ...
  5. Inside Director

    A board member who is an employee, officer or stakeholder in ...
  6. Executive Director

    The senior operating officer or manager of an organization or ...
Hot Definitions
  1. Efficient Frontier

    A set of optimal portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a ...
  2. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  3. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the ...
  4. Border Adjustment Tax

    A tax levied on goods based on where they are sold – exported goods are exempt from tax; those imported and sold in the ...
  5. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  6. Blind Trust

    A trust in which the trustees have full discretion over the assets, and the trust beneficiaries have no knowledge of the ...
Trading Center