Business, Legal & Accounting Glossary
The highest-ranking position in a corporation; the member of the board of directors who presides over board meetings. However, the chairman of the board may not always have the greatest actual authority; this is reserved for the Chief Executive Officer. Sometimes the title is honorary. In small companies, it is common for one person to hold several titles.
The Chairman of the board is the head of a company’s board of directors.
The Chairman of the Board is a senior corporate figure who presides over the board of directors. Much like other members of the board, the Chairman of the Board is elected by the company shareholders, and like the rest of the directorate, the Chairman of the Board is an active representative of the investors. In addition to being the highest officer in a corporation, the Chairman of the Board is responsible for overseeing the function of the board of directors, which includes presiding over the board meetings. The Chairman of the Board must also work closely with chief executive officers and other senior staff to ensure a smooth strategic operation of the company. Other duties of the Chairman of the Board may include devising business strategies and maintaining corporate integrity. A Chairman of the Board may or may not have executive authority. Typically, the Chairman of the Board is elected from the board of governors.
The Chairman (or Chair) of the board’s function is to ensure that the board of directors’ decision-making process proceeds in an orderly fashion and to help build consensus decisions within the board. As a result of their primary duty, the key asset a successful Chair must have is good people skills.
A chair is selected by his/her fellow board members for the position.
In modern times this term has been increasingly replaced by Chairperson and/or Chair to recognize the more inclusive nature of today’s workplace although the term Chairman is still commonly used.
The Chairman of the board does not have to be a separate individual from the CEO of the same company although the Chair’s authority in most cases supersedes that of the CEO. The Sarbanes-Oxley Act strongly encourages boards to have independent directors among their membership but does not formally forbid the practice of an executive dual serving as both chair of the board and CEO. Many investors consider a CEO who dually serves as both chair and CEO to be a sign that corporate governance at the company is not sufficiently strong for investment.
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This glossary post was last updated: 4th August, 2021 | 5 Views.