Outside the C-suite, the closely related roles of Executive Chair and Chief Executive Officer (CEO) are frequently misinterpreted. And it’s not surprising. These pivotal positions share several characteristics within the corporate governance structure and often work together. Yet, fundamentally, their authority, key responsibilities, and overall function within an organization differ sharply.
This article clarifies the distinctions between the Executive Chair and CEO roles and addresses common misconceptions. Understanding these two executive leadership positions offers insight into the structure and dynamics of corporate governance.
Who Is an Executive Chair?
The Executive Chair serves as the board of directors’ leader and the CEO’s strategic partner, engaging in both boardroom governance and executive leadership. Executive chairs are typically active in company operations and decision-making in this hybrid role.
To elevate to this position, an individual must have extensive industry or organizational expertise, a proven track record in executive-level roles, and experience working with corporate boards. In a study of 500 executive chair positions, Harvard Business Review found that in 46% of cases, the executive chair is a former founder of a company or a member of the founding family, and 40% were the firm’s retired CEO, illustrating that deep knowledge of the organization is essential.
Key Responsibilities of an Executive Chair
As head of the board and a strategic executive leader, the Executive Chair presides over:
- Board meetings and discussions
- Corporate governance and risk management
- Organizational regulatory compliance
- Strategic initiative development and launch
The Executive chair also provides mentorship and guidance to the CEO, aligns board decisions with operational actions, and represents the organization to key stakeholders, both internal and external.
Salary and Compensation of an Executive Chair
Executive Chairs typically receive compensation packages including a base salary, benefits, performance bonuses, stock awards, and both short- and long-term incentives. Packages vary across industries based on factors such as organizational size, annual revenue, and market position. An individual’s experience level, background, education, and scope of responsibilities also influence compensation.
The compensation relationship between Executive Chairs and CEOs differs across organizations, reflecting governance structure, leadership philosophy, and the distribution of executive duties. At publicly traded companies, compensation details are disclosed in annual proxy statements. At the same time, organizations like Binder Dijker Otte (BDO) produce studies and reports on both private and public executive salary benchmarks.
Who is a Chief Executive Officer (CEO)?
The CEO is a more operationally-focused leader of an organization and a key implementer of strategies and initiatives approved by the board. The CEO has direct accountability for day-to-day management decisions, senior leadership discussions, and company results. The CEO reports directly to the board of directors and is a critical link between the board and the organization.
CEO candidates must have demonstrated business acumen, operational expertise, and a proven track record of leadership and measurable results. Most CEOs hold an advanced degree in the relevant field and significant prior management experience.
Key Responsibilities of a CEO
As a top executive and the operational leader, the CEO oversees:
- Daily business operations
- Execution of business plans and board-approved strategy
- Spending and resource allocation
- Executive leadership development
- Regular board communication
In addition, the CEO is an active public face, influencing organizational culture and representing the company to investors, customers, and the media.
Salary and Compensation of a CEO
A Chief Executive Officer typically receives a comprehensive compensation package, including base salary, performance-based bonuses, equity awards, benefits, and both annual and long-term incentive plans. The packages vary significantly by industry and are influenced by factors such as company size, revenue, and market position. An individual’s professional experience, history, and scope of authority also come into play.
The compensation relationship between CEOs and other executives often reflects organizational hierarchy as well as the authority, expectations, and accountability of each position. As with most top-tier executive positions, compensation details of public companies are disclosed in regulatory filings. This information is often available for private companies from annual surveys conducted by executive consulting companies.
Understanding Key Differences of the Executive Chair and CEO
Executive Chair and Chief Executive Officer positions are at the top of the corporate leadership structure and have interrelated responsibilities and goals. However, the two roles are separated for a reason, and they have distinct and essential functions within an organization.
Understanding these differences helps to clarify each position’s relationship to the other and its authority, boundaries, and dynamics.
Authority Level
The Executive Chair has the authority of board governance and strategic oversight over long-term direction. The chair leads the board of directors and has the power to shape and approve important company decisions and initiatives. In most corporate structures, the Executive Chair significantly influences CEO hiring and replacement.
The CEO’s authority revolves around managing operations, with direct control over business decisions, resource allocation, and putting board-approved strategies into action.
Executive Chairs and CEOs often share authority in key areas that require collaborative leadership, such as strategic planning and crisis management. This overlap is intentional and beneficial, allowing a company to establish protocols and create a strong connection between overall governance and business management.
Reporting Structure
The Executive Chair typically reports to the full board of directors, who have the authority to hire, remove, or replace the individual in the role. Since the Executive Chair is also a board member, they participate in board decisions, while also being subject to board oversight.
The CEO reports directly to the board of directors. In companies with an Executive Chair, the CEO often reports to the Executive Chair for certain matters, while ultimately accountable to the board. The Executive Chair and CEO generally meet more often together than with the board, allowing the chair to have regular oversight and support of the CEO.
The CEO and Executive Chair are both responsible to the company’s shareholders, whose best interests they are bound to serve and protect.
Position Stability
The Executive Chair position is generally secure and well-protected due to its governance power and oversight extension outside of performance-related measures. Its longevity is also due to the frequent occurrence of company founders undertaking the Executive Chair position.
Executive Chairs frequently serve multi-year terms with renewal options. Their removal usually requires board consensus. A recent analysis of S&P 1500 firms in the Journal of Management reported the average tenure of Executive Chairs to be 4.4 years.
CEO positions tend to be more vulnerable to performance reports, as they are directly accountable for company results and face greater scrutiny over adverse reports. According to the Harvard Law School Forum on Corporate Governance, the median S&P 500 CEO tenure is 4.6 years, with about 8% spending 20 years or more in the role.
Public Representation
Each of these roles is responsible for representing the organization to the public. These positions serve as the company’s face and voice. Since there are various contexts and audiences to address, this vital function is divided between the CEO and Executive Chair to ensure full stakeholder coverage and engagement across all segments.
The table below highlights situations where an Executive Chair and CEO represent their organization.
| Executive Chair | CEO |
| Annual shareholder meetings | Quarterly earnings and performance updates |
| Meetings with investors | Media interviews and press events |
| Industry forums for regulatory issues | Product launches and consumer-focused events |
| Communicating vision and values to stakeholders | Employee town halls, internal communication |
| High-profile, mission-specific events and conferences | Industry trade shows and conferences |
| Representing the company in merger, acquisition, or partnership discussions. | Building relationships with strategic business partners |
Operational Involvement
The Executive Chair maintains a high-level view of operations, focused on strategy and oversight, rather than being on the ground and making routine operational decisions. The Executive Chair:
- Examines business performance
- Monitors trends
- Offers guidance on major decisions
- Ensures company action aligns with board strategy
- Supports the CEO through operational challenges
- Identifies risks and opportunities
The CEO maintains direct responsibility for daily business operations and management decisions. Their involvement is comprehensive, hands-on, and focused on timely and accurate execution and performance. The CEO:
- Leads the executive team to implement board-approved strategies
- Manages resource allocation and related priorities
- Oversees performance across all business functions
- Manages organizational structure
- Drives efficiency and problem-solving
- Ensures targets and milestones are met
Salary
There are more similarities than differences between compensation for the Executive Chair and the CEO. Both roles receive competitive packages with base salary, equity components, and benefits. A board of directors’ compensation committee generally reviews these packages.
CEO compensation tends to be higher overall than that of the Executive Director, and CEO packages often have more performance-based incentives, due to the nature of the role. CEOs typically receive larger performance bonuses and more extensive equity grants, while the Executive Chair’s salary often leans towards a fixed salary and long-term incentives.
Should the Roles of CEO and Chair Be Combined?
The debate over combining or separating the CEO and Executive Chair roles remains contentious in corporate governance. The choice has the potential to impact company leadership, oversight, and performance, and often depends on the organization’s circumstances, priorities, and market position.
While there is no one-size-fits-all answer to this question, the table below illustrates situations where one approach might be beneficial over the other.
When Both Roles Can Be Combined | When Both Roles Exist Separately |
| Founder-led companies | Large public companies |
| Crisis situations | Regulated industries |
| Smaller organizations | Complex organizational structures |
| Longstanding, proven leadership | For recalibration after a significant leadership/governance issue |
| Companies with strong independent leaders | To assist CEO development or succession planning |
| During organizational transition | To incorporate diverse perspectives |
Overall, the combined-role strategy works best when an organization is small or has exceptional leadership that has full confidence of the board. Combined roles can also provide decisive guidance during turbulent periods or organizational transitions.
Separating the roles best serves complex organizations or heavily regulated industries like health care or financial services, where additional layers of oversight are essential. Separation might be particularly valuable during leadership succession, restructuring, or when diverse perspectives are beneficial to address a challenge.
Best Practices for Effective Chair-CEO Relationships
The best Chair-CEO relationships thrive on a foundation of mutual respect, clear communication and well-defined roles and boundaries. Some characteristics that help this relationship prosper include:
- Regular, structured meetings
- Transparent information sharing
- Alignment on strategic priorities
- Conscious leverage of each leader’s strengths
- Maintenance of respective boundaries
- Established protocols for decision-making authority
- Clear framework for board communication
- Regular evaluation and check-ins of the relationship
Healthy organizations have established protocols for addressing significant tensions between senior leaders. These safeguards allow an organization to sustain productive working relationships, ensure organizational effectiveness, and ultimately, protect shareholder interests.
Final Thoughts
The Executive Chair and CEO relationship represents one of the most interdependent and nuanced leadership dynamics. To those outside of the corporate structure, these subtle differences make the two positions confusingly similar. They both report to the board and stakeholders. They both influence strategy, operations, and performance.
However, each leadership role has specific responsibilities, authority, decision-making abilities, and operational involvement. As businesses navigate increasingly complex markets, the thoughtful design and choreography of these two roles becomes essential to effective governance and operational execution. With the right balance of CEO and Executive Chair roles, organizations create a foundation for sustainable growth.
FAQs
Is the Executive Chair Higher Than the CEO?
In a formal corporate organizational chart, the Executive Chair typically outranks the CEO. This is because the chair leads the board of directors, and the CEO reports to the board. However, in practice, the relationship is highly collaborative and less hierarchical.
Who Is Above the Executive Chair?
The Executive Chair is accountable to the full board of directors and company shareholders. While this position leads the board, they are also a board member subject to the board’s decisions and can be removed through board action. Since shareholders elect board members in public companies, their voting power influences the Executive Chair appointment.
Does the CEO or the Chair Have More Influence on Company Performance?
Both roles impact the company’s performance, but in different ways and on varying timelines. Usually, the CEO has more direct and immediate influence through daily operations, routine decision-making, resource allocation, and strategy execution. The Executive Chair’s impact is more structural and long-term, shaping strategic continuity. Research suggests that a healthy balance between the CEO and Executive Chair roles creates the conditions for sustainable company performance.
