CEO, COO, CFO, who are you people?
moneyrelations :: Sep.24.2007
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At Money Relations, I like to ask the tough questions.
Yep, today I’m questioning corporate company titles: CEO, COO, CFO. Who are these people along with the chairman, president and vice-president sidekicks?
I consider tough questions to be ones that people think are too dumb to ask, but it’s important for us to know these things to assure ourselves that management is properly handling our investment dollars. In fact, as shareholders of voting shares in a corporation, we are capable of electing members to the board of directors to oversee our best interest. So who are the players in on this board?
Chairman of the Board – Is Frank Sinatra the leader of the board of directors made up of company insiders and non-biased outsiders. He presides over board meetings on behalf of shareholders’ interest and makes sure that the company is well-managed. This position is elected within the board of directors but for all intents and purposes, it’s usually the founder of the company who is the majority shareholder.
Chief Executive Officer (CEO) – Is the executive responsible for the entirety of the company’s operations. He formulates long-term business strategies and implements decisions made by the board.
President – is the executive who manages the day-to-day operations of a company and reports back to the board on the execution of board policies.
Chief Operating Officer (COO) – is much like the President who oversees the daily operations of a company, marketing strategies, and production operations.
Chief Financial Officer (CFO) – is the executive in charge of reporting of financial information and makes sure that the company is in good financial health.
Due to the fact companies differ in size, and that an executive can inhabit one or more positions, confusion about roles and responsibilities often arise.
The Chairman often doubles as CEO. Therefore, he will usually delegate the operational tasks to the President/COO. However, the Chairman can relinquish his role as CEO and a scenario of CEO/President might result. To offload daily operational tasks, a COO might be hired.
In the case of conglomerates, a singular CEO might hire multiple Presidents to oversee each business entity with Vice-Presidents helping with the responsibilities.
In any event, the structure of a company is not set in stone but it is useful for shareholders to investigate if upper management is experienced and trustworthy. The qualitative analysis of a company is one of the more obscure practices but in a world of multi-million dollar executive packages and Enron scandals, do you not owe it to yourself to know who is in charge of your money?
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