Chair Of The Board - COB

What is a 'Chair Of The Board - COB'

A chair of the board (COB) holds the most power and authority on the board of directors and provides leadership to the firm's officers and executives. The chair of the board ensures that the firm's duties to shareholders are being fulfilled by acting as a link between the board and upper management.

BREAKING DOWN 'Chair Of The Board - COB'

The chair of the board is voted into his or her position by a majority vote within the board of directors. Because the position has substantial interaction and influence with both the board and management, the chair is arguably the most powerful position in the company. Frequently, but not always, the chair is the member of the board with the greatest stake in the organization, holds a controlling interest in the organization, and holds the most voting power of any individual. Long-term decisions, such as whether or not to pursue a merger or sale of the organization, may be determined by the board under the chair's leadership.

How the Chair May Also Serve as Chief Executive

The chair may or may not be involved in the daily operation of the company, sometimes serving in a more remote advisory role but providing ultimate oversight of the actions taken by the executives. Whereas a president or chief executive officer (CEO) is directly involved in planning and putting a company's strategies into action, the chair may set goals and objectives, with the input of the rest of the board, that the executives are expected to achieve.

Such goals may include reaching profitability targets, expansion of market share, growth of the client base, and presenting a favorable image for the company in the public eye.

It is not unheard of for the chair to simultaneously hold the CEO position within an organization. This may occur if the board wishes to elevate the CEO to chair as a sign of confidence in their leadership, granting them direct executive authority as well as serving as the architect for the broader strategies the company will pursue. CEOs who become chair may eventually seek to separate themselves from their executive duties and maintain a leadership position strictly with the board. A chair might also step into the CEO role if there is a sudden shakeup in leadership that removes the current chief executive. In such instances, the chair might hold the CEO position on an interim basis until a permanent replacement is hired. The dual position could be made permanent if no suitable executive can be found.