How corporations are structured
Corporations are formed as separate legal entities from their owners, which allows the business to enter into contracts, raise capital and take out loans. Corporations are also liable for debts and lawsuits, so they’re required by law to have a specific hierarchy to ensure accountability.
- The shareholders are the owners of a corporation who elect directors to represent their interests.
- The directors are the governing board that oversees the company’s mission. They ensure bylaws are followed and set goals that are delegated to executive officers.
- The officers of a corporation are key management executives who carry out the daily work of the business. They’re appointed by and report to the board of directors, and oversee specific business functions based on their background and expertise.
What do the officers of a corporation do?
Some states require a corporation to have specific officers, such as president, treasurer and secretary. Otherwise, you have flexibility in how you organize corporation positions, and can have any number of officers needed to carry out your operations.
- Directors can serve as officers, as long as they’re appointed according to the corporation’s bylaws
- Small companies can have one person that serves as shareholder, director and officer
- In most states, one person may hold more than one officer position
- Additional officers can be added as a company grows and more expertise is required
Here are seven common positions in a corporation and summaries of what each officer is responsible for.
1. Chief executive officer (CEO)
The chief executive officer is the top ranking officer of a corporation, reporting directly to the board of directors. Acting as the link between the directors and staff, the CEO guides the company’s daily operations.
This role oversees all aspects of the business according to goals set by the board. This includes:
- Developing short and long-term strategic plans
- Managing budgets
- Understanding competitive trends
- Ensuring profitability
- Creating a positive company culture
- Motivating employees
- Representing the company publicly
- Developing partnerships and finding investors
- Making high level decisions
- Supporting other officers and executives in their work
2. Chief operating officer (COO)
The chief operating officer is the next highest ranking officer and takes on a hands-on role with day-to-day operations so the CEO can focus on high level business strategies.
The responsibilities of a COO include:
- Working with officers, executives and department heads to ensure objectives are met
- Designing and implementing processes to improve efficiency
- Ensuring departmental budgets are on track
- Evaluating performances
- Keeping the CEO up to date on business operations
- Managing external partnerships and relationships
- Filling in for the CEO as required
3. Chief financial officer (CFO)
The chief financial officer serves as the treasurer or comptroller of a corporation, managing its finances and reporting to the CEO on the company’s financial health.
A CFO’s responsibilities include:
- Creating internal reporting systems and overseeing record keeping
- Ensuring compliance with state laws, IRS and industry accounting standards
- Preparing financial statements
- Analyzing data and reports to identify areas of profitability and weaknesses
- Preparing budgets, tracking cash flow, and monitoring expenditures
- Making recommendations to reduce costs
- Providing input on financial planning strategies, loans, investments and risk
- Managing banking activities
- Overseeing financial contracts and agreements
- Liaising with government, banks and investors
4. Corporate secretary
The secretary maintains records of the corporation according to articles of incorporation, bylaws, and federal and state laws. This role may be combined with another position or expanded into an executive position, such as chief governance officer.
The responsibilities of the secretary include:
- Issuing meeting notices to shareholders and directors
- Creating agendas
- Taking minutes at shareholder and director meetings
- Maintaining shareholder and director lists
- Ensuring corporate documents are filed with the state and in the company’s corporate records
5. Chief marketing officer (CMO)
The chief marketing officer ensures the corporation’s brand message is delivered clearly to customers and stakeholders.
The scope of a CMO position includes:
- Overseeing marketing, advertising, sales and promotion strategies through traditional and digital channels
- Creating and implementing campaigns through print, web, mobile and social media
- Conducting market research
- Understanding customer needs and expectations
- Improving customer experience
- Identifying technology and marketing trends
- Adapting strategies and maximizing opportunities to reach customers
- Handling reputation management and PR crises
6. Chief information officer (CIO)
The chief information officer focuses on a company’s internal technology needs and ensures employees have the necessary systems in place to meet the corporation’s business goals.
The CIO’s job includes:
- Overseeing the internal technology infrastructure
- Understanding needs of each business unit
- Standardizing processes across functions
- Recommending software and hardware to improve workflows
- Working with suppliers and vendors to implement solutions
- Ensuring systems are running smoothly
- Understanding security risks and protecting data
7. Chief technology officer (CTO)
Technology is changing at a rapid pace, and a corporation’s chief technology officer is responsible for harnessing technology to create new products and services to reach customers. This position may report to the CIO or directly to the CEO.
A CTO’s role includes:
- Understanding the impact of technology on customers, products and services
- Identifying profitable opportunities using technology, information and data
- Developing products and services to meet customer needs
- Designing technical frameworks and overseeing product development
- Working with engineers, vendors and suppliers
- Tracking metrics and monitoring performance
Corporate officers FAQs
How do you appoint an officer to a corporation?
The board of directors appoints the officers of a corporation according to company bylaws. The directors determine each officer’s compensation and outline detailed responsibilities in employment contracts.
What is the difference between a director and an officer of a corporation?
Directors are elected by shareholders and are the highest level of governance in a corporation. They oversee the company and set goals for staff to meet. Officers are appointed by the directors and carry out the day-to-day operations of the business on behalf of the company.
What is the average salary of a CEO of a small business?
The average base salary of a CEO in the United States is $118,500 per year, with additional profit-sharing averaging about $25,000. Salaries differ depending on geographic region. CEOs earn an average of $194,000 per year in Los Angeles, $154,000 per year in New York, $141,200 in Chicago, and $118,400 in Washington, D.C.
Does an LLC have corporate officers?
A limited liability company (LLC) is owned by its members and isn’t required to have officers. The LLC may be member-managed, in which members take an active role in running the business, or manager-managed, where professionals are appointed to handle tasks. In either case, you can appoint officers and use corporate titles to indicate each person’s role in the company.