“From providing leadership and setting expectations to facilitating effective communication and ensuring good corporate governance, a chairman’s role is far from superficial,” says John G. Courtney, CEO of Boardroom Advisors.
Indeed, the chairman’s role is pivotal for every organization. But how is it different from other leadership roles? What does an executive chairman do? Is the executive chairman more senior than the CEO? Find out the answers in this article.
What is an executive chairman?
An executive chairman is a senior management position within a company, typically held by a former CEO or a seasoned executive with extensive experience in the industry. The role of an executive chairman combines the responsibilities of a traditional board chairman with a more active role in the company’s operations and strategic direction.
The executive chairman sits at the top of the organizational hierarchy, working closely with both the board of directors and the executive management team. The role is distinct from but complementary to that of the CEO.
Executive Chairman vs. CEO: Roles and responsibilities
CEO and Chairman roles are crucial to an organization’s success, each with distinct duties and areas of influence. For example, while a chairman focuses on governance and guiding the board, the CEO assumes responsibility for the organization’s daily operations. Research indicates that 45% of a company’s reputation is directly linked to the CEO’s actions and decisions.
Let’s compare the CEO vs. executive chairman in terms of several aspects, including their unique responsibilities and decision-making authority.
| Aspect | Executive chairman of the board | Chief Executive Officer (CEO) |
| Primary focus | Long-term strategy, governance, and oversight | Day-to-day operations and execution of strategic plan |
| Responsibilities | Provides strategic leadership and direction Leads the board of directors Ensures effective governance Mentors and supports the CEO and senior executives Maintains relationships with key stakeholders Oversees special projects requiring high-level strategic input | Manages daily company operations and overall performance Implements the company’s vision set by the board Develops and executes business plans and initiatives Leads the executive team and makes key operational decisions Acts as the primary spokesperson for the company Monitors company performance and takes corrective actions |
| Day-to-day operations | Less involved, focuses on high-level strategic issues | Directly involved in managing daily operations |
| Decision-making authority | Significant influence over major strategic decisions | Primary decision-maker for operational and tactical decisions |
| Strategic influence | Shapes the long-term vision and ensures strategic alignment at the highest level | Implements strategic vision through day-to-day management |
| Corporate governance | Leads board members, ensuring effective governance and alignment | The CEO reports directly to the board of directors and executes the board’s strategic directives |
| Stakeholder relations | Maintains and nurtures relationships with investors, regulators, business partners, and industry leaders | Communicates with employees, investors, the public, and other stakeholders |
| Required skills | Strategic vision, governance and leadership, industry experience, stakeholder management, mentorship, and crisis management | Operational leadership, strategic thinking, problem-solving, financial acumen, people management, risk management, and communication |
The key difference between the chairman and the CEO role can be summarized as follows: the CEO is responsible for managing the company’s daily operations, while the chairman oversees governance and strategic direction.
Understanding the executive chairman role
The role of executive chairman involves many important responsibilities. Let’s explore them in detail:
- Board leadership. The executive chairman presides over board meetings and sets the agenda in collaboration with the CEO, the lead independent director, and other board members. They ensure that board meetings are effective and inclusive, and foster meaningful discussions.
- Strategic oversight. They lead the development and implementation of the company’s long-term strategic plans, aligning them with mission and vision. This involves working closely with the CEO to translate strategic objectives into actionable plans, while continuously monitoring industry market trends, competitive landscape, and market growth opportunities.
- Corporate governance. The executive chairman ensures the company adheres to all relevant legal and regulatory requirements, maintaining high standards of compliance. They oversee governance policies and practices, ensuring the board fulfills its fiduciary duties effectively.
- Stakeholder engagement. They build and maintain strong relationships with major shareholders and other stakeholders, addressing their concerns and interests, and ensuring that stakeholder perspectives are considered in board decisions.
- Risk management. The executive chairman identifies key risks facing the company, including financial, operational, reputational, and strategic risks. They develop and oversee risk management frameworks, ensuring their integration into the company’s strategic planning process.
- Crisis management. During times of crisis, such as financial downturns, regulatory issues, or public relations challenges, the executive chairman provides leadership and direction. They develop and implement crisis management plans to ensure the company can respond effectively to emergencies, and communicate clearly with stakeholders during crises.
- Financial oversight. Overseeing the company’s financial health, the executive chairman reviews financial statements, budgets, and forecasts. They ensure the company maintains an adequate capital structure, liquidity, and financial controls, working with the CFO and audit committee to ensure accurate financial reporting and transparency.
Qualifications
To qualify as an executive chairman, candidates typically need advanced education such as an MBA or related fields. More importantly, they should have a proven track record in executive roles, ideally as a CEO.
Additionally, extensive experience on corporate boards is highly valued. This experience allows candidates to demonstrate their strategic thinking, governance skills, and understanding of board dynamics. Practical experience is also crucial.
While not always required, professional certifications such as Certified Board Member (CBM) or Chartered Director (C.Dir) can enhance credibility. These certifications demonstrate a commitment to governance best practices and further validate their expertise in guiding corporate strategy and compliance.
Salary
The salary for an executive chairman varies significantly. For example, in 2024, in the United States, the average annual salary for executive chairmen is approximately $425,000. However, individual salaries can range between $320,000 and $545,000 per year.
This range is influenced by factors such as the executive’s educational background, professional certifications, years of experience in leadership roles, and the specific industry and company size they are involved with.
Hierarchical considerations
Let’s explore the differences between an executive chairman, a non-executive chairman, and a chairman.
Is the executive chairman more senior than the CEO?
The hierarchy between the executive chairman and CEO typically places the first one in a higher governance position. This role often involves leading the board of directors, ensuring effective governance practices, and providing strategic oversight.
Often, executive chairs are company founders or former CEOs who remain in the position to offer continuity and pass on their institutional knowledge to the current or incoming CEO and executive team.
Executive chairman vs. chairman
The difference between the chairman and executive chairman lies in their level of involvement and responsibilities within a company. A chairman typically leads the board of directors, ensuring meetings are productive, governance practices are followed, and the board’s decisions align with the company’s strategic goals. They don’t usually have a day-to-day operational role within the company.
On the other hand, an executive chairman holds a dual role. They not only lead the board but also play a part in the company’s operations and strategic direction. This is because an executive chairman often has previous experience as a CEO and stays on to provide guidance to the current or new CEO. This role is more hands-on than that of a traditional board chair, involving oversight of special projects, mentorship of senior management, and sometimes direct involvement in major decisions.
Executive chairman vs. non-executive chairman
An executive chairman is the highest-ranking executive within a company who holds a senior executive position and also serves as the head of the board of directors. Their responsibilities can vary depending on the company’s structure, but they typically play a crucial role in shaping the company’s long-term strategic plans.
In contrast, a non-executive chairman doesn’t have an operational role within the company. Non-executive chairs focus primarily on overseeing the governance of the board and ensuring that the company is managed effectively by the executive team.
Therefore, the role of a non-executive chair is more about providing strategic guidance and ensuring accountability, rather than direct involvement in day-to-day operations and decision-making.
How board portals can enhance the efficiency and effectiveness of governance
A board portal is a secure online platform that enables corporate boards and executives to manage, collaborate on, and streamline various governance-related tasks. It provides a centralized hub for accessing board materials, facilitating communication, and conducting meetings efficiently while ensuring data security and compliance with regulatory standards.
Here are the advantages it offers for executive chairmen:
- Enhanced security. Board portals offer robust security features such as access controls and role-based document permissions, ensuring that sensitive executive communications are protected from unauthorized access.
- Meeting optimization. Optimize executive session board meeting processes with collaboration features that enable real-time note-taking and capture of voting results.
- Engagement tracker. Gain insights into preparation and reading progress, ensuring all members are well-informed and engaged. Send tasks and reminders effectively to keep discussions productive.
- Streamlined voting. Easily cast votes, comment, and approve decisions within the portal. Enable voting on behalf of others and facilitate unanimous decisions seamlessly during board meetings.
- Real-time updates and notifications. The portal provides instant updates and notifications on important developments, ensuring executives stay informed and can act promptly when needed.
- Centralized reporting. Board portals streamline executive reporting by centralizing all relevant documents, reports, and metrics in one accessible location, making it easier for executives to review and analyze critical information.
- Audit trail and compliance. Board portals maintain a comprehensive audit trail of activities, document revisions, and meeting minutes, supporting regulatory compliance and providing transparency.
If you’re interested in enhancing executive governance, explore iDeals Board. Contact our representatives today to learn how iDeals Board can optimize your board efficiency.
Key takeaways
- An executive chairman is a senior executive who leads both the board of directors and the company’s strategic direction, often bridging governance responsibilities with operational leadership.
- The key responsibilities of an executive chairman include board leadership, strategic oversight, corporate governance, stakeholder engagement, performance monitoring, risk management, crisis management, and financial oversight.
- The difference between a CEO and executive chairman lies primarily in their focus and responsibilities. CEO responsibilities include managing daily operations, implementing the board’s strategic vision, and leading the executive team. The executive chairman’s responsibilities are providing strategic leadership, leading the board of directors, ensuring effective governance, mentoring the CEO, and overseeing key strategic projects.
- Board portals are secure online platforms designed to streamline governance-related tasks. They help executive chairmen and their teams manage board communications, collaborate on documents, conduct and facilitate board meetings, and ensure compliance with regulatory standards.