What Is a Chief Executive Officer (CEO)?

What Is a Chief Executive Officer (CEO)?

Let me tell you directly: a chief executive officer (CEO) holds the top spot in a company. As the highest-ranking executive, you need to know that their main duties involve making key corporate decisions, guiding the workforce and resources toward strategic objectives, and serving as the primary bridge between the board of directors and the rest of the organization's operations. In many instances, the CEO also becomes the public face of the company.

CEOs get elected by the board and its shareholders. They report to the chair and the board, who are appointed by those same shareholders.

Key Takeaways

Understand this: the CEO is the highest-ranking individual in any company. While every organization is different, CEOs typically handle expanding the business, boosting profitability, and, for public companies, improving share prices. They oversee the entire operations of the company and are usually elected by the board of directors. Research shows that CEOs can influence up to 45% of a company's performance, though some studies peg it at 15% of the variance in profitability.

CEO’s Roles and Responsibilities

A CEO's role shifts depending on the company's size, culture, and structure. In large corporations, CEOs like me would focus on high-level strategic decisions that steer overall growth. They work on strategy, organization, and culture, examining capital allocation or team building for success. CEOs set the tone, vision, and often the culture of their organizations.

In smaller companies, CEOs tend to be more hands-on with daily functions. A 2018 Harvard Business Review study broke down how CEOs spend their time: 72% in meetings, with the rest divided as 25% on relationships, 25% on business unit reviews, 21% on strategy, 16% on culture and organization, just 1% on crisis management, and 3% on customer relations.

Examples of a CEO’s Tasks

CEO tasks vary by industry and company size, but here's what you can generally expect. They oversee the strategic direction, synthesizing day-to-day results from lower managers to shape long-term plans. After setting that vision, CEOs, along with executive leadership, implement changes—though operational managers handle the details, it's the CEO's job to ensure follow-through.

CEOs engage in media and public relations as the company's face, speaking at conferences or addressing changes publicly. They interact with other executives, relying on them to manage their areas while gaining high-level insights. CEOs maintain accountability to the board, reporting on plans and getting feedback. They monitor performance using financial or nonfinancial metrics, requesting reports to guide maneuvers. Finally, CEOs set the working culture and environment, creating the tone that drives success.

CEO Pay and Notoriety

CEOs receive substantial benefits, with the highest paid in 2024 reportedly earning $101,497,009—that went to James Robert Anderson of Coherent Corp. On average, compensation is about $25.6 million, up 9.5% from the prior year. Many CEOs gain fame or infamy through public dealings, like Elon Musk of Tesla or Steve Jobs of Apple, whose life inspired films after his 2011 death.

Related Chief Positions

Corporate America uses many 'chief' titles, known as the C-suite. In small or startup companies, the CEO might also act as CFO or COO, which can cause confusion and overwork, potentially harming long-term profitability. Titles and functions can overlap quickly at executive levels.

The Difference Between CEO and COB

The CEO handles operational aspects, while the board, led by the chair (COB), oversees the whole company. The COB can't overrule the board, but the board can overrule the CEO. The COB is a peer among board members, and sometimes the CEO and COB roles are combined, though splitting them improves governance.

The Difference Between CEO and CFO

The CFO focuses on finances, analyzing strengths, recommending improvements, tracking cash flow, and planning investments. They drive returns through financial discipline. In contrast, the CEO manages general operations and receives reports from the CFO.

The Difference Between CEO and COO

The COO, often second to the CEO, handles recruitment, legal, payroll, training, and HR duties.

The Difference Between CEO and Other Leadership Titles

Other titles may overlap with CEO. The founder starts the company, setting bylaws and strategy, and could be the current CEO. A chairperson oversees a group or board, sometimes called president, and a CEO might hold this if managing a committee. An owner has equity and profits stake; a CEO can be an owner. Director refers to board members or upper management, with CEOs typically above directors but sometimes reporting to them.

The Impact of a CEO Change

CEO transitions can sway markets positively or negatively. Studies show CEOs influence 45% of performance or 15% of profitability variance. Stock prices might fluctuate based on perceptions of the new CEO's leadership. Consider the incoming CEO's agenda, strategy shifts, and C-suite transition management. Investors prefer CEOs familiar with the industry, with proven records in market share, cost reduction, or expansion.

The Bottom Line

In summary, the CEO makes major decisions, drives direction, supervises executives, and oversees growth. They answer to the board or stakeholders, often as the public face, with extensive industry experience to guide success and profitability.