Chairman vs. CEO Role of Chairman (1) Chairman is the leader of the board of directors. Chairman isresponsibl
Role of Chairman
(1) Chairman is the leader of the board of directors. Chairman isresponsible for ensuring the board’s effectiveness.
(2) Setting the agenda of the board and ensuring the board meetingsheld regularly.
(3) Ensuring the board receives relevant information in advance ofboard meetings.
(4) Encouraging active engagement of members of the board andfacilitating & coordinating the relationship between executive andnon-executive directors.
(4) Representing the company’s ‘public face’ to the outside investorand other stakeholders.
(5) Communicating effectively with shareholders e.g. at annual orextraordinary general meeting.
Role of CEO
(1) CEO is responsible for managing the company and implementing thedecision of the board.
(2) CEO has the responsibility to report to Chairman and board ofdirectors for the performance of corporation and management team as well asmaking recommendations to the board committee.
(3) CEO is responsible for proposing and developing of corporation’sobjectives and strategy, and ensuring these objectives being achieved.
(4) CEO is responsible for managing the risk and ensuring appropriateinternal controls are in place.
Separation of the role of Chairman and CEO
(1) It is important to have a division of responsibilities at the headof a company in order to avoid the situation where one individual hasunfettered control of the decision-making process.
(2) The common way is to require the roles of Chairmen and CEO held bytwo different people.
(3) The separation provides a position (Chairman) that is expected tobe a representative of shareholders, and with no conflict of interest having arole of manager.
(4) The separation makes the CEO concentrate on the management and tobe truly accountable for the management.
(5) The separation reduces the risk of a conflict of interests.
Continuing Professional Development (CPD) of directors
(1) To ensure directors have sufficient skills and ability to beeffective in their role and remain an effective board.
(2) Directors should extend and refresh their knowledge and skills continuously.Meanwhile companies need to provide resources for the CPD or directors.
(3) There are some important issues should be covered by CPD, whichincluding the technical background of company’s operation, the effectivebehavior of director, risk management issues, legal and regulatory issues andstrategy issues.
(4) Chairman should address the developmental needs of the boards aswhole and also lead in identifying the development needs of individualdirectors.
Performancemeasurement of boards
Assessmentcriteria for performance of boards
(1) Appropriate composition of board and committees
(2) Adequacy of board meeting and decision-making
(3) Quality of feedback to management
(4) Performance against objectives
(5) Contribution to strategy
(6) Contribution to robust effective risk management
(7) Contribution to develop corporate philosophy
(8) Responses to problems or crises
(9) Internal and external communication
Performancemeasurement criteria of individual directors
(1) Independence– free thinking, avoiding conflicts of interest
(2) Preparedness – know key staff, organization and industry, aware ofstatutory and fiduciary duties
(3) Practice – participates activity, questioning, insists on obtaininginformation, undertakes professional education
(4) Committee work – understands process of committee word, exhibitsideas and enthusiasm
(5) Development of the organization – makes suggestions on innovation,strategic direction and planning, helps with the support of outsidestakeholders