LeoGlossary: CEO

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Abbreviation for Chief Executive Officer, one of the C-level positions within a corporation.

The CEO is the highest ranking of all officers. He or she is responsible for the management of the company.

Some of the roles of a CEO are:

  • making major corporate decisions
  • running the operations and managing the resources
  • communicating with the board of directors and corporate operations

The CEO is elected by the board and the shareholders. It is not uncommon for the CEO to be the founder.

Face of the Company

Often the CEO is the face of the company. Some do not seek out attention whereas others are well known. In the Internet and media age, CEOs can become celebrities.

Some CEOs who are known by the general public:

These are people who tend to do a lot of media interviews. They also can garner a lot of attention on social media.

Both positive and negative news can be attached to the CEO of a corporation. For example, people such as Angelo Mozilo of Countrywide and Richard Fuld, CEO of Lehman Brothers, gained more fame for their roles in the Great Financial Crisis (GFC).

CEOs can also garner a lot of attention due to the wealth they amass. Some have substantial incomes while most of the heads of the largest corporations has significant stock options as part of their compensation plan. This often makes them the target of politicians and media personalities.

Business Strategy

The scope of a CEO could be broad or limited, depending upon how things are laid out.

CEOs of larger firms tend to take a more strategic role, spending the majority of time in meetings. Those who are in smaller companies usually are more hands on, diving into the day-to-day operations. This is common when one is the founder.

All can be summed up under the heading if business administration.

The CEO is tasked with implementing the goals, targets and strategic objectives as determined by the board of directors. He or she is is ultimately accountable for a company's business decisions, including those in operations, marketing, business development, finance, human resources, etc.

This is the highest ranking executive in an organization and sets the direction. The CEO interacts with other high level managers to get the strategies implemented.

Overrating of CEOs

Ever since the time of JD Rockefeller and Henry Ford, the general population was enamored by the heads of major corporations. Business journalists picked up on this promoting these leaders to a cult level.

There are instances such as with Steve Jobs and Elon Musk where the company took on the personalities of the leader. The reality is that tens of billions of dollars in revenues cannot be generated by a single person.

Research revealed that award winning CEOs tend to underperform the market and provide lower returns than average.

This puts to rest the fallacy of "Turnaround CEOs". The rockstar status that many of acquire leads boards to think they are superstars. Failure tends to ensue if the corporate culture isn't designed for success. This is normally a larger factor in the results an organization gets.

Short-Term Focus

One of the knocks on Wall Street over the last couple decades is the shift in CEO (and corporate) focus from the long-term viability of the business to short-term moves of the stock market.

This led to the accusations that the timeframe is now 90 or 180 days. Most CEOs are making decisions to move the stock price in the near term, often kicking off bonuses. Boards are evidently aligned with this vision. Business shows on channels such as Bloomberg and CNBC turned the market price into the primary focus.

Financial institutions have long been accused of engaging in tactics that place immediate gains over everything else. This moved to many other sectors.

Investors tend to look at companies as stocks instead of as a business. The trading mentality spread throughout the entire system.


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