I found this phrase on a different thread about BNSF: (( Matthew K. Rose, BNSF Chairman, President and Chief Executive Officer))
Does this mean he is doing the job of 3 people? Are there different duties for each of these job titles? Why not just call a guy the “Grand Pooh-bah” and get it over with? With an intro like that, there shouldn’t be any question about who is the man in charge.
I have never quite understood the difference between “President” and “Chief Executive Officer”. Perhaps someone here can give me a good explanation.
As far as “Chairman of the Board” that is quite different from the others. When the board convenes, he is the obvious leader of that corporate governance group. I really dont like for the same person to be CEO and COB as it creates just a bit too much power. The COB can influence who will be picked for the rest of the board, creating a bit of conflict of interest.
All boards have a designated “lead director” who will manage the meeting when the COB is not available or has been excused from the meeting (usually to discuss his/her performance).
Quite a bit of pressure on CEO’s these days. There is rapid turnover. It is not quite the job security it was years ago. Too many “oops” going on. Board of Directors are finally beginning to take their jobs seriously instead of rubber stamping the CEO/COB desires.
ed
Chairman probably means Chairman of the Board of Directors, this is a separate position is often held by a different person in many firms.
President and Chief Executive Officer is a long title for one position, CEO is an adjectival phrase that describes where the position fits in the hierarchy.
The difference has to do with state corporation laws.
In a corporation, the office of president is created in the Articles of Incorporation and is legally required for a corporation to exist as a corporation. Under the laws of most states, corporations are legally required to have the following officers - President, Treasurer, and Secretary in addition to a Board of Directors. Thus, these positions will be created in the articles of incorporation.
The Board of Directors is required to be created in the Articles of Incorporation - it is required to have at least two members, but there is no requirement to have a Chairman of the Board under state law. However, many corporations create a position of Chairman of the Board, but the Chairman legally has no more power than any other member of the Board of Directors.
The position of Chief Executive Officer is created by many large corporations - its just an additional title - the one that gives him the legal authority over the corporation is President, but CEO is an additonal title (similar to how in many corporations the Secretary is also the General Counsel and the Treasurer is also the Chief Financial Officier). As the term CEO implies, this is the person with day to day authority over the corporation - however, it is possible there could be a separate President of the Corporation who has delegated the day to day power over the corporation to the CEO - so they aren’t necessarily the same person. Generally, they would be, because the job of overall oversight of the corporation under the Articles of Incorporation (and thus state corporation law) belongs to the Board of Directors.
So President is a legal position to comply with State Corporation Law, CEO is essentially a meaningless title, and Chairman of the Board isn’t quite meaningless, because it shows membership on the legally meaningful Board of Directors, but doesn’t give any more legal power (as opposed
Zach:
Thanks for the answer.
ed
The previous posters have it mostly right.
The person designated as President is the legal head of the Corporation. The Chairman of the Board is just that, the leader of the Board of Directors, the Board represents the Shareholders. In Matt Rose’s case the title of CEO is superfluous since he is both COB and President. The CEO is most commonly the President of the Corporation, but he can be the COB. If the Chairman is the CEO, then he will formulate the strategic plans for the corporation, present them to the rest of the Board, and allow the President to execute them. If the President of the Corporation is the CEO then he will create the strategic plan and present it to the Board for approval and if its accepted, he will direct the execution of the plan day to day. It is very rare for the President of a Corporation not to be a member of the Board, but it is not unusual for him to not be the Chairman. The title of CEO shows where the strategic power of the Corporation lies. If the Chairman of the Board is the CEO, then the President usually has the title of COO, Chief Operating Officer. The most common situation where this occurs is with a Holding Company, where the Holding Company generates no revenue directly. This is the situation at BNSF. The stockholders own stock in BNSF Corp., the main asset of BNSF Corp. is the stock that it owns in BNSF Railroad Corp.
What’s the advantage of having one person being the Pres./CEO and Chairman of the Board? Doesn’t this put a lot of power and workload onto just 1 person?
Not really, since President is the only title that has any legal significance (member of the Board has legal significance, but as mentioned, Chairman of the Board has no rights beyond a general member of the board). The other two are primarily ceremonial titles - thus they don’t add many actual duties. In companies where the “roles” are separate, there is generally a reason - such as the Chairman might be semi-retired from the company and play little role in day to day operations but remain influential within the company. Or a CEO might be picked based on his connections and also have little day to day control over the company (in fact, one of the reasons why often the President who is the legal head of the company may be given a different title like COO is to free the President from the CEO’s social obligations since often a CEO is more chosen for social skills and connections over business skills).
Of course, while I studied Corporate law, I didn’t study business). So, the other poster who gave a more business answer may tell you a more business based answer - but legally it doesn’t make any difference - he could just be called President and be a member of the Board of Directors and he’d be doing the same job. CEO is, in this case, purely an extraneous title.
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Maybe this is a common thing in the corporate world. Anybody know how the other Class 1’s are set up in this regard?
CSX - Michael Ward - CEO, President, Chairman of the Board
NS - Charles Moorman - CEO, President, Chairman of the Board
UP - Richard Davidson - Chairman of the Board
James Young - President, CEO, Director
KCS - Michael Haverty - Chairman of the Board, CEO
Arthur Shoener - President, COO, Director