chief executive officer
Definition of chief executive officer
: the person who has the most authority in an organization or business
Word by Word Definitions
: accorded highest rank or office
: of greatest importance or influence
: the upper part of a heraldic field
: the head of a body of persons or an organization : leader
: the principal or most valuable part
: of or relating to the execution of the laws and the conduct of public and national affairs
: belonging to the branch of government that is charged with such powers as diplomatic representation, superintendence of the execution of the laws, and appointment of officials and that usually has some power over legislation (as through veto) — compare judicial, legislative
: designed for or relating to execution or carrying into effect
: the executive branch of a government
: the person or persons who constitute the executive magistracy of a state
: a directing or controlling office of an organization
Financial Definition of CHIEF EXECUTIVE OFFICER
chief executive officer
What It Is
The chief executive officer (CEO) oversees the entire operation of a company or organization. A CEO is responsible for coordinating effective operating, marketing, financial, cultural and legal strategies that maximize shareholder value.
How It Works
In some organizations, the CEO is called the president, the executive director or even the chief administrative officer, though many organizations have a CEO and people with these titles, too. In small companies, especially start-ups, the CEO does everything. As organizations get bigger, CEOs delegate duties to subordinates.
In most cases, the company's board of directors hires and evaluates the CEO. The board of directors is elected by the shareholders and has a duty to protect and preserve the interests of the shareholders. The CEO informs the board of the company's activities and plans on a regular basis. The CEO often has a seat on the board of directors, but the board can also fire the CEO -- that is, the CEO "serves at the pleasure of the board."
Good CEOs have skills in a variety of areas, but the CEO's job is not to be an expert in every area of a business. The CEO must focus on the broader picture and lead an entire organization towards a strategic goal. There are a variety of ways to measure CEO performance, but most boards look at changes in share price and company strategy.
CEOs have four general responsibilities:
Why It Matters
The CEO is largely responsible for the success or failure of an organization. Because of the inherent pressure involved with the position, it takes a very strong person to do the job well. In many cases, however, the bulk of a CEO's daily interaction occurs with only a handful of people. This sometimes makes it difficult for the CEO to obtain a completely objective evaluation of a company, especially when direct reports are usually reluctant to give honest and open feedback.
Overall, it is the managerial skills and experience of a CEO that can make or break a company. An effective CEO can bring a floundering company back from near bankruptcy, or vice versa, can fail to lead a promising company into prosperity.
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