What is a president?
A president is an executive elected by the board of directors of a company who is responsible for chairing board or committee meetings. A chairperson often sets the agenda and has a big influence on how the board votes. The president ensures that the meetings go well and remain orderly and strives to reach a consensus in the decisions of the board of directors.
Understanding the duties of a president
The president heads the board of directors of a company. A board of directors is a group of people elected to represent the shareholders. The mandate of a board is to establish policies for the management and oversight of the business and to make decisions on major business issues. The board of directors should be a representation of the interests of management and shareholders and generally be made up of internal and external members. Each public enterprise must have a board of directors.
The board of directors is responsible for making important decisions, which may include the appointment of corporate officers, executive compensation and the dividend policy. As a result, the President has significant power and influence when it comes to influencing decisions made by the Board of Directors.
The CEO runs the business and is the person on whom the executives of the business depend, but the CEO is appointed by the board of directors. Thus, a president can influence who will be chosen as CEO or head of the company. In most cases, however, the President does not get involved in the responsibilities of the CEO, which helps to maintain clarity of roles and the separation of powers.
As more and more women hold the office of president in leading organizations, some confusion has arisen about the correct title to use (ie “president”). Christine Lagarde, the current Managing Director of the International Monetary Fund (IMF), has decided on the mandate of the President of the Executive Board for the post.
President Versus CEO
The President occupies a position different from that of the Director General (CEO) and can be either non-executive or executive. In some companies, the roles of CEO and President are combined, which can reduce transparency and accountability due to fewer checks and balances created by having two separate positions with separate work functions.
While the chairman of the board has multiple supervisory capabilities, the main responsibilities of the CEO include all important business decisions, from day-to-day operations to managing the company’s resources, serving as the primary point of communication between the board directors and other officers. In addition, a CEO often has a position on the board of directors.
The role of the CEO depends on the size, culture and industry of the company. For example, in small businesses, the CEO will often take on a more practical role, making a range of lower-level choices, such as interviews and hiring staff.
In large companies (for example, Fortune 500), the CEO usually takes care of macro-level strategy and direction of growth. Other tasks are delegated to the heads of division. CEOs set the tone and vision for their organization and are responsible for executing the strategy to achieve that vision. In general, CEOs of large companies are well known to investors, shareholders and analysts, while presidents or presidents are usually kept out of the spotlight.
Although the CEO runs the business, the president is considered a peer with the other members of the board, and it is possible to reverse a CEO’s decisions if the board votes together.
The president can have significant power and influence when it comes to influencing decisions made by the board of directors, including the choice of CEO.
Examples of Presidents
JP Morgan Chase & Co. (JPM) combines positions with Jamie Dimon as CEO and President of the financial services company.
Apple Inc. (AAPL) shares the roles, Tim Cook serving as CEO while Arthur D. Levinson serving as President. Mr. Levinson was the former CEO of Genentech.
On the other hand, Facebook Inc. (FB) has a role for Mark Zuckerberg as the founder, president and CEO of the social media giant.
Key points to remember
- A president is an executive elected by the board of directors of a company who is responsible for chairing board meetings.
- A chairperson often sets the agenda and has a big influence on how the board votes.
- The CEO runs the business and is the person on whom the executives of the business depend, but since the CEO is appointed by the board of directors, the president can influence who will be chosen as CEO.
- In some companies, the roles of CEO and President are combined, which can reduce transparency and accountability due to fewer checks and balances.
As noted earlier, some companies have CEO and President roles as separate positions while others combine the roles. In the case of companies headed by the founder, it is common to see the founder play several roles, including that of president and chief executive officer. However, over time, the roles could be bifurcated in companies led by the founder if the financial results are not up to par or if the founder wishes to move on to other projects.