21. What is the role “managers” in the corporation?
Managers control the daily operations of the corporation. The senior managers are the officers of the corporation. The most senior positions are often directly chosen by the board of directors. The board then defers to the judgment of these officers with regard to all decision making and actions taken on behalf of the corporation. This includes allowing officers to fill the subordinate management positions in the corporation. The corporate management structure generally includes any of the following senior-level positions:
• Chief Executive Officer – The senior management position is generally centered in a single individual, the chief executive officer (CEO). This person is ultimately responsible for all corporate operations. Other executive officers, such as the chief operating officer or chief financial officer, may report to the CEO.
• Corporate Secretary – The corporate secretary is the only mandatory corporate official. The board appoints and confirms the corporate secretary. She is charged with maintaining all corporate records, maintaining the minutes for shareholder and director meetings, certifying corporate documents, and orchestrating director and shareholder meetings (including all formal actions taken at the meeting).
• Chief Financial Officer – The CFO generally oversees all accounting and finance operations for the corporation. Oversight of the accounting process is critical, as the majority of the information disclosed to shareholders and the SEC derives from corporate accounting. Corporate finance deals with how operations of the corporation are financed, including the sources of capital and the budgets allocated to each department in the company.
⁃ Note: The chief corporate accountant ( the “controller”) reports to the CFO.
• Chief Operating Officer – The COO generally oversees all aspects of corporate operations. The role of the COO will vary considerably depending upon the nature of the corporate business. Often these individuals are subject-matter experts in the company’s business practice and have extensive training in operational efficiency methods.
Other executive positions may be in charge of marketing, information or communication, technology, innovation, etc.
• Discussion: How do you feel about the board of director’s authority to select senior management? Why do you think corporations typically hire executives in this operational structure to oversee the primary corporate functions? Can you think of any structures that could arguably operate better than this structure?
• Practice Question: What is the role of the chief executive officer and corporate secretary, and how do their roles relate to corporate governance?