Chairman - Public Corporations

Public Corporations

There are three types of chairman in public corporations.

  • The CEO may also hold the title of chairman, resulting in an executive chairman. In this case, the board frequently names an independent member of the board as a lead director.
  • Executive chairman – the chairman's post may also exist as an office separate from that of CEO, and it is considered an executive chairman if that titleholder wields influence over company operations, such as Steve Case of AOL Time Warner and Douglas Flint of HSBC. In particular, the Group Chairmanship of HSBC is considered the top position of that institution, outranking the Chief Executive, and is responsible for leading the board and representing the company in meetings with government figures. Prior to the creation of the group management board in 2006, HSBC's chairman essentially held the duties of a chief executive at an equivalent institution, while HSBC's chief executive served as the deputy. After the 2006 reorganization, the management cadre ran the business, while the chairman oversaw the controls of the business through compliance and audit and the direction of the business.
  • Non-executive chairman – also a separate post from the CEO, unlike an executive chairman, a non-executive chairman does not interfere in day-to-day company matters. Across the world, many companies have separated the roles of Chairman and CEO, often resulting in a non-executive chairman, saying that this move improves corporate governance.

The non-executive Chairman's duties are typically limited to matters directly related to the board, such as:

  • Chairing the meetings of the board.
  • Organizing and coordinating the board's activities, such as by setting its annual agenda.
  • Reviewing and evaluating the performance of the CEO and the other board members.

Many U.S. companies have an executive chairman, and this method of organization is sometimes called the American model. Having a non-executive chair is common in the United Kingdom and Canada, and is sometimes called the British model. Expert opinion is rather evenly divided over which is the preferable model overall.

Companies with both an executive chairman and a CEO include Ford, HSBC, Google, and HP.

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