Chief Executive Officer Definition

Learn more about what a Chief Executive Officer is in business.

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chief executive officer definition

The definition of a chief executive officer is the highest position in a company. A chief executive officer runs the business and reports directly to the company’s board. The board typically hires the chief executive officer. The chief executive officer definition includes being the public face of the company.

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Because the chief executive officer is the highest-ranking position in a company, they’re considered the company’s leader.  The chief executive officer business definition varies depending on the company. However, they’re usually responsible for creating strategies to achieve growth.

A chief executive officer has a lot of responsibility. The chief executive officer is responsible for corporate governance, which means they shape all the company’s policies. They’re also responsible for overseeing budgets, investment strategies, and the production of products and services. Furthermore, a chief executive officer is responsible for ensuring that the company meets its legal obligations.

The chief executive officer is the title typically used in a for-profit corporation. However, sometimes non-profit organizations and limited liability companies (LLCs) also use this term. Each state’s corporate law dictates whether you can use this term for a business. 

Chief Executive Officer Benefits

There are a number of benefits of a chief executive officer. The chief executive officer runs your company. Their primary task is to achieve your company’s goals. 

If you’re considering taking on this role, the chief executive officer’s advantages are many. A chief executive officer reports only to the board, so they have independence in executing their role. The board of directors tells the chief executive officer what they want but not how to do it. The chief executive officer isn’t limited by a particular boss’s whims and can create their own role.   

The chief executive officer’s purpose is to lead a company, so their compensation can be significant. Chief executive officers earn a base salary plus bonuses. They may also receive stock options. 

Chief Executive Officer Considerations

One of the chief executive officer’s disadvantages stems from its job description. Because the chief executive officer is the company’s leader, the company’s failures are often seen as the chief executive officer’s failures. Plus, because the chief executive officer reports only to the board, it can sometimes be challenging to remove a chief executive officer who may achieve results but is a terrible manager. 

Other Names for a Chief Executive Officer

Another way people refer to a chief executive officer is by the acronym CEO. Companies may use the terms president, chief executive, or executive director. 

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Chief Executive Officer Examples

You may still be curious about what a chief executive officer is. You can look to the media for some of the most famous chief executive officer examples. Today, you’ll see Jeff Bezos for Amazon or Mark Zuckerberg for Meta (Facebook) in the news. However, your local bagel shop or restaurant may have a chief executive officer who shapes how that business runs.

Summary

A chief executive officer is the leader of a company or organization whose responsibilities include creating policies, crafting growth strategies, and overseeing the entire staff. The chief executive is the company’s public face and reports directly to the board of directors.

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You need the right leaders in place to make sure that your company achieves its goals. While we can’t select the leader for you, we offer many resources to help ensure your business gets off to a good start. With our Business Formation service, you can quickly form your corporation or LLC. Plus, we offer a Worry-Free Compliance service that takes the burden of ongoing compliance off your chief executive officer’s back. 

Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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