What is a Corporate Officer?
Who are the officers of a corporation?
What do they do?
In this article, I will break down the Corporate Officer meaning so you know all there is to know about it!
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Let me explain to you who are officers in corporation and what they do!
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What Is A Corporate Officer
A corporate officer, or an officer of a corporation, is a person who is given the mandate to run a company’s business operations.
In other words, an officer of a company is a person holding a high-level management role within the organization and is either hired by the company’s board of directors or the company owners.
For example, a CEO (or chief executive officer) is a high-level manager who is typically hired by the board of directors.
Corporations are legal entities that are separate and distinct from their shareholders.
The shareholders are those who own the corporation and elect the directors to steer the company in the direction of profitability and the shareholders’ best interest.
The company directors, or board members, represents a group of people mandated to oversee the company’s overall strategy, plans, and mission.
In turn, the company’s board of director’s will deleage the responsibility of managing the daily affairs of the company in accordance with the mission and the goals they’ve established to corporate officers.
Corporate officers are high-level managers or executives within the corporation who carry out and implement the objectives set by the board.
Corporate Officer Role
Corporation officers may have varying roles and responsibilities depending on the nature and size of the company they operate in.
In very large companies, there may be many officers appointed to oversee the company’s activities.
On the other hand, in very small companies, the same person can assume the role of many offices all at once.
Corporate Officer Definition
According to the Legal Information Institute, officers in a corporation are:
Chosen by the board of directors to do the day-to-day running of the company. The exact number and roles of the corporate officers vary based on state law and the company’s articles of incorporation, but typically there is a president (or chief executive officer), a vice president, a treasurer and a secretary.
As you can see, corporate officers are responsible to run the day-to-day operations of a company.
Board of Directors
The board of directors refers to a group of people that are appointed by the shareholders of a company.
The company board is ultimately responsible for the company’s operations, strategy, mission, and direction.
They must act in the best interest of the corporation, the shareholders, and other stakeholders (this is called the fiduciary duty).
In larger organizations, the board of directors will be composed of three to nine members who will serve on the board for a specified term.
Generally, the board members serve for a one-year term that gets renewed.
However, you can also have board members appointed for two, three, four, or five years (this is called a staggered board).
The board of directors will typically have the following role and responsibilities:
- Decide on the company’s strategic direction
- Set corporate objectives
- Participate in board meetings
- Appoint qualified company officers to carry out their goals
- Act in the best interest of the company and shareholders
- Avoid placing himself or herself in conflict of interest
- Approve certain specific types of transactions (like mergers, acquisitions, divestitures, large contracts etc)
- Act in accordance with the company’s articles of incorporation and bylaws
Types of Corporate Officers
Let’s look at the typical corporate officers you may see in larger organizations.
Chief Executive Officer (CEO)
The Chief Executive Officer or CEO is the person who is mandated to oversee all the day-to-day activities of a company.
In large organizations, CEOs are typically hired by the board of directors.
They can also sit on the company board as well as assuming the company’s day-to-day business.
In general, the company CEO will hire other company executives such as Chief Financial Officer, Chief Operating Offier, and so on.
Chief Financial Officer (CFO)
The Chief Financial Officer is a person who is typically hired by the Chief Executive Officer, or in larger organizations, by the board of directors, and is responsible for the financial affairs of the company.
In smaller companies, the CFO can have a wide range of responsibilities that may include maintaining the company’s financial records.
In larger organizations, the CFO’s role will be more strategic and will evaluate the company’s overall financial position and make strategic decisions in line with the company’s overall vision and mission.
Chief Operating Officer (COO)
The Chief Operating Officer is typically a company executive hired by the Chief Executive Officer.
The main role of the COO is to manage the company’s daily operations.
Quite often, a company CEO and COO will work closely with one another as they both have the responsibility of ensuring that the company’s day-to-day affairs is properly managed.
Chief Information Officer (CIO)
The Chief Information Officer or CIO is a company executive in charge of the company’s technology infrastructure and systems.
The main function of the CIO is to make sure that everyone within the company has the property technological tools and services to be productive.
The CIO establishes the technological needs based on the company’s overall mission and direction.
A company president is the highest-ranking executive, just like the CEO, who is in charge of a company’s operations.
Just like the CEO, the company president will typically report to the board of directors and may even have a seat on the board.
In very large organizations, a company may have many different business units and each business unit may have its own president.
In that case, the presidents are the highest ranking officers of the company’s division but in their they each report into a company’s global president or chief executive officer.
A Vice President is a person who reports directly to the President of the company.
Depending on the size of the company, there can be a few or even hundred of vice presidents in an organization.
A vice president can be an officer of the company but it is not necessarily the case all the time.
In some companies, the title of vice president is given to a person for them to have a more “credible” customer-facing title but the person does not truly not an officer within the company.
The corporate secretary is an officer who is responsible for maintaining the corporate records.
Maintaining corporate records is an important function within corporations as in many jurisdictions, companies are legally required to keep accurate record of their decisions and resolution over time.
The corporate secretary will keep the company’s minute book up-to-date, ensure board meeting minutes kept, ensure corporate resolutions are properly maintained, and so on.
A company treasurer is a person who is in charge of the financial affairs of a company.
Depending on the company, a person may be called a treasurer, comptroller, or VP Finance, or CFO.
In North America, larger companies tend to use titles such as CFO, or VP Finance as opposed to treasurer to refer to their “financial” officer.
Corporate Officer Frequently Asked Questions
Let’s look at some common questions related to officers of company.
What does a CEO do
The CEO will typically have the following responsibilities:
- Develop the company’s strategic plan
- Manage the company’s budget
- Study the competitive landscape and take action
- Implement the objectives set out by the board of directors
- Manage other company executives
- Report to the board of directors
- Deal with key corporate stakeholders and investors
What does a CFO do
The CFO will typically have the following responsibilities:
- Create and develop the corporation’s financial reporting system
- Ensure the corporation complies with financial and tax laws
- Prepare the company’s financial statements
- Manage the company’s budget
- Track the company’s cash flow and cash outflow
- Deal with banks, governments, investors, and external parties
What does a COO do
The COO will typically have the following responsibilities:
- Work closely with the CEO to manage the corporation’s daily affairs
- Work with department heads to ensure that the overall objective of the company is met
- Ensure departments respect their budgets
- Manage company managers
- Manage external parties
- Replace the CEO in his or her absence
What does a CIO do
The CIO will typically have the following responsibilities:
- Manage the corporation’s technological needs and systems
- Understand the technological needs of every business unit
- Centralize and oversee technological processes
- Manage corporate vendors and suppliers
- Ensure that the company systems work efficiently at all times
- Reduce technological risk faced by the company
What does a CTO do
The CTO will typically have the following responsibilities:
- Assess the client needs to develop new products and services
- Work with other business stakeholders to understand the market needs
- Manage the company’s development roadmap
- Work with external parties related to the development operations
What does a corporate secretary do
The corporate secretary will typically have the following responsibilities:
- Maintain the company’s minute book
- Send notices to shareholders and directors as required
- Create meeting agendas
- Keep meeting minutes at shareholder meetings
- Keep meeting minutes at board of director meetings
- Ensure compliance with the record-keeping laws
Is A Corporate Officer An Employee of The Corporation
A corporate officer is a high-level manager or executive in charge of managing the company’s day-to-day business.
From a tax perspective, someone hired by the company to perform a set of tasks and duties is an employee.
From a legal perspective, a company officer will have a greater legal liability exposure than a standard employee.
Since company officers have the ability to make important decisions for the corporation, they will have a higher level of accountability to internal and external company stakeholders.
For example, in some jurisdictions, company officers may be personally held liable to pay employee salaries if the company becomes insolvent.
Alternatively, it is more likely that an officer of the company be sued by someone claiming damages against the company and alleging that the damages were caused by the officer’s failure or negligence.
Since company officers are employees with significantly higher liability exposure, in many cases, the corporation will take a directors and officers liability insurance and enter into an indemnification agreement with the director in question.
Corporate Officers Takeaways
So there you have it folks!
What is an officer of a corporation?
Who manages a corporation?
In summary, a corporate officer, corporation officer, or company officer, refers to a person who is typically elected by the company’s board of directors to manage its daily operations.
Corporations typically have three types of stakeholders:
The shareholders are those who own the corporation.
The directors are those that are appointed by the shareholders to oversee the direction of the entire business.
The officers are high-level managers who manage the daily operations of the company like the CEO, CFO, COO (or President, Vice President, Treasurer, Secretary).
I hope I was able to explain to you the notion of officers in a corporation so you know who they are and what they do.
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