What is Chairman?

A chair, convener, or seat is a seat of office, authority, or dignity, such as a professorship at a college or university, or the holder of that office, such as the chair of a committee. Chair usually refers only to the head of a governing body, while a seat refers to any position in that governing body.

Chair (and chairman) are sometimes used, predominantly in Australia, or the UK public sector as gender-neutral terms, to describe the position of the person who chairs a committee.

The use of the term Chairman remains widespread: for example, the overwhelming majority of the (FTSE 100) companies in the United Kingdom have a "Chairman" and the boards of most Fortune 500 companies in the United States are also presided over by a "Chairman".

Corporate governance

A chair is selected by a company’s board to lead it, chair meetings and lead the development of a final consensus from the disparate points of view of its members. The chair is the presiding director over the other directors on the board and is expected to be fair, a good listener, and a good communicator. Directors have a high level of fiduciary responsibility for overseeing the operation of a corporation.

Traditionally, the chair also holds the title of 'chief executive officer' (CEO) and, combined, these are the highest ranking positions in a corporation. The term president is often used interchangeably with chair, although this usage is much more prevalent in the United States. The CEO is the head of the Management Committee and usually reports to the board, which is headed by the chair.

As far as the boards of public companies are concerned, the role of the chairman of the board as distinct from that of the company's CEO or managing director has more recently been brought into focus, stemming from alleged corporate governance shortcomings observed in companies where the two roles are combined. It is believed that the separation of functions within the board of directors or in the structure of the supervisory board and management board would facilitate control over the workings of the company and increase the accountability of the Chief Executive Officer or chair of the management board. In an attempt to inject transparency into the relationship between executive management and the board of directors as well as between management and the market or shareholders, a pivotal document regarding effective governance in the United Kingdom, the Cadbury Report, was published in 1992. Its recommendations have been adopted to a greater or lesser extent by some countries within the European Union, the United States, the World Bank, and others.

Types

In the case of companies and similarly-organised bodies, there are generally two types of chair: non-executive and executive.

A non-executive chair is a part-time officeholder who sits on and chairs the main board of a company, and also usually provides support and advice to a Chief Executive Officer (CEO). This position usually entails fulfilling a similar function on a number of ancillary board committees, as well as being a political figurehead of the Company.

An executive chair is a full-time officeholder who typically leads the board and also takes a hands-on role in the company's day-to-day management. Because of the dual role, some say there is a significant agency cost to having someone be the head of both the board of directors and executive officers. An imbalance of the "checks and balances" of corporate governance is thus created.

Academic position

Chairs at academic institutions refer to the position, rather than the individual, and are often named after the person who donated the money to support the position. Such a chair often comes with guaranteed funding, which makes them highly coveted. A given school, especially an older and well financed one, may have many such chairs. See, for example, the list of Professorships at the University of Cambridge.

Some of the best known examples are the Lucasian Chair of Mathematics at Cambridge University and the Quain Chair of Jurisprudence at University College London, both in England. This former chair was held by Isaac Newton, Charles Babbage, Paul Dirac, and Stephen Hawking, and the latter was held by John Austin, H.L.A. Hart and Ronald Dworkin among others.

References

• (French) MEDEF on corporate governance

See also

• Board of Directors
• Convener
• Moderator
• Presiding Officer
• Chair (academic)
• Agency cost