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What Is a Chair?
Let me tell you directly: a chair is an executive elected by a company's board of directors, and their main job is to preside over board or committee meetings. As the chair, I would set the agenda and hold significant sway in how the board votes. You need to know that the chair ensures meetings run smoothly, stay orderly, and work toward achieving consensus in board decisions.
Key Takeaways
- A chair is an executive elected by a company's board of directors who is responsible for presiding over board meetings.
- A chair often sets the agenda and has significant sway as to how the board votes.
- The CEO runs the company and is the person that company executives report to, but since the CEO is appointed by the board, the chair can influence who will be chosen as CEO.
- In some companies, the roles of CEO and chair are combined, which can reduce transparency and accountability due to fewer checks and balances.
Understanding a Chair
The chair heads up the board of directors for a company, and you should understand that the board is a group of individuals elected to represent shareholders. Their mandate is to establish policies for corporate management and oversight, making decisions on major company issues. The board represents both management and shareholder interests, typically consisting of internal and external members, and every public company must have one.
This board handles important decisions like corporate officer appointments, executive compensation, and dividend policy, so the chair holds significant power and clout in influencing those board decisions.
The chief executive officer (CEO) runs the company and is who the executives report to, but remember, the CEO is appointed by the board. That means a chair can influence who gets chosen as CEO or to lead the company. In most cases, though, the chair stays out of the CEO's responsibilities to maintain clear roles and separation of powers.
As more women take on these chair positions at leading organizations, there's been some confusion over titles like 'chair' or 'chairwoman.' For instance, Christine Lagarde, as managing director of the IMF, went with 'Madame chair of the executive board' for her position.
Chair vs. CEO
The chair position differs from the CEO and can be either non-executive or executive. In some companies, they combine CEO and chair roles, which can cut down on transparency and accountability because it reduces the checks and balances from having separate positions with distinct functions.
While the chair has supervisory abilities over the board, the CEO's primary responsibilities cover all major corporate decisions, from day-to-day operations to managing resources, and they serve as the main communication link between the board and other executives. Often, the CEO also sits on the board.
The CEO's role varies by the company's size, culture, and industry. In small companies, the CEO gets hands-on, making lower-level choices like interviewing and hiring staff. In larger ones, like Fortune 500 firms, the CEO focuses on macro-level strategy and growth direction, delegating other tasks to division executives. CEOs set the tone and vision for the organization and execute the strategy to achieve it. Major corporation CEOs are usually well-known to investors, shareholders, and analysts, while chairs tend to stay out of the spotlight.
Even though the CEO runs the company, the chair is a peer among board members, and it's possible for the board to overrule a CEO's decisions if they vote together. The chair holds significant power in influencing board decisions, including choosing the CEO.
Examples of a Chair
Take JP Morgan Chase & Co. (JPM), where they combine the positions with Jamie Dimon serving as both CEO and chair of the financial services company.
Apple Inc. (AAPL) splits the roles, with Tim Cook as CEO and Arthur D. Levinson as chair. Levinson was formerly CEO and chair of Genentech and is now CEO of Calico.
On the other hand, Meta (META), formerly Facebook, has Mark Zuckerberg in one role as Founder, Chair, and CEO of the social media giant.
As I mentioned, some companies keep CEO and chair as separate positions, while others combine them. In founder-led companies, it's common for the founder to hold multiple roles like chair and CEO. But over time, these roles might split if financial results aren't strong or if the founder wants to pursue other endeavors.
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