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View Full Version : In a public company what's the definition of "officer"?


aaelghat
02-25-2004, 10:55 PM
I have two questions:

Question #1:

I work in a fairly large company in an internal position. Some of the people I work with self-describe themselves to others as "Chief Learning Officer" or "Chief Diversity Officer" or "Chief Knowledge Officer".

I don't begrudge the CIO or CFO calling themselves Chief Information Officer or Chief Financial Officer, but Chief Learning Officer seems to be a stretch. So are there any criteria around who can be an "officer"?

Question #2:

Are there any criteria around people calling themselves a director? What is a "director-level" position?

Thanks in advance.

Exapno Mapcase
02-26-2004, 12:08 AM
There are legal definitions of the terms and then there are also everyday uses of the terms, and they are not the same thing.

A title can be anything, and during the Internet boom "hip" companies liked to call its top people by cutesy names like Knowledge Guru or whatever. These people are now finding it useful to alter their resumes to purge the namey nonsense so they can get rehired by real companies.

So you can call yourself a CEO or CIO or CLO or C[anything]O. It means nothing.

But if you are a corporation, then you must have a certain number of people that fill a few legally required positions and these are the corporate officers.

http://www.incorporating-online.org/Definition-officers.html
Officers are the people appointed by the directors to manage the daily affairs of the corporation. A corporation's officers usually consist of a president, vice-president, treasurer and secretary. In most states, one person can hold all of these posts.

This is U.S. law, but I believe it is not wildly different in other countries.

This leads us to those "directors." The legal definition comprises those people who are on the Board of Directors and they have legal liability for the affairs of the company and can be prosecuted for any failures. (It has gotten much harder to get people to be on the Boards of certain companies, heh, heh, heh.) The Chair[man] of the Board is just that, the person who leads the Board of Directors (and, metaphorically, the head honcho of anything, cf. Frank Sinatra). Usually the final authority in any company belongs to that person, who is the one - with the approval of the rest of the Board - who hires (and fires) the CEO and COO and all the rest of the Os.

But because this makes "director" a jazzy-sounding name, companies also stick it in the titles of very ordinary management positions, people who are not officers and not even top-level executives.

And don't get paid anywhere near what they are worth, says the man who is married to one.

Walloon
02-26-2004, 03:53 AM
The answers to your questions depend on: in what state was the corporation incorporated? Most public corporations are incorporated under state laws, and so the defintions of "directors" and "officers" may vary from state to state.

aaelghat
02-26-2004, 08:54 AM
The company I work for was incorporated in Delaware. FWIW, these folks were referring to themselves as "officers" even when the company was private.

LemonThrower
02-26-2004, 09:31 AM
you need to understand the difference between shareholders, directors, and officers. Shareholders own the corporation. They elect directors, who oversee the corportion. Typically, there is a significantly larger number of shareholders than directors. Directors are akin to elected representatives in a government. The board determines the long range policies and elects officers to run the day to day affairs of the business. Under state corporate law, there are certain specific offices like President, Secretary, etc. but in the business world an officer is anyone who has a fancy title. It has ramifications for third parties dealing with the business, because if you have a fancy title they will reasonably assume that you can bind the company to contacts, etc. For public companies, an "executive officer" has special meaning and is only those officers who set important policies of the company, and as a result a VP of sales or human relations in many companies does not make the cut. Additional disclosure and regulations apply to executive officers.

As for directors, if more accurate to say they have a fiducuiary duty to act with care and loyalty on behalf of the shareholders and corproation, and this can include a duty to supervise. They are not automatically liable for something if it goes wrong.

I understand that in Europe, or at least Germany, the distinction between officers and directors is a bit blurred and instead you have a Managing Director. If there are more than 1 director, they typically have an are of responsibillity. In the U.S., an officer will have an area of responsibility but directors do not. Directors typically are not employees and serve part time, the exception being that the founders and other senior officers often serve on the board and these persons typically are employees.

to get back to the original question, there is no bright line as to what the title 'officer' means. Some companies, especially banks and sales organizations, name people "vice president" at a very low level.

Billdo
02-26-2004, 12:05 PM
To add to what LemonThrower has said, generally, the shareholders of a public or private corporation elect a board of directors with overall supervision of the company, and the board of directors appoints corporate officers to implement the board's resolutions and conduct the day-to-day operations of the corporation. Typically the board of directors has a chairman/woman, who may or may not be a corporate officer.

Generally, the board of directors has very few restrictions on what titles they can give corporate officers. Historically, the officers were president, vice president(s), secretary, treasurer (and sometimes with assistant secretaries and assistant treasurers). More recently, corporations gave a few descriptive job titles like chief executive officer, chief Financial Officer and (sometimes) chief operating officer, to designate the people that were in overal charge, in charge of finances and in charge of operations because that was often not clear (i.e. is the board chairman the chief executive in charge of everything, or only a director who heads board meetings).

In the last 10-20 years, descriptive job naming has expanded, with corporations having a chief [whatever] officer to head up the [whatever] function, where previously these officers would most likely have been the vice president for [whatever]. In addition, the title managing director has become common, particularly in financial companies, to denote someone above the Vice President level but below the Senior/Executive Vice President level (which is in contrast to the European naming scheme, where the MD is often the guy in charge of the whole shooting match).

The difference between someone who is a corporate officer and who is not has some legal distinctions (can he or she sign certain documents or accept legal process for the corporation), but few operational ones. Still, a good rule of thumb is if the person has one of the traditional titles in their corporate title (president, VP, secretary, treasurer) or the word officer (CEO, CIO, loan officer), he or she is an officer.

As to director, it can refer to two things. First is to members of the board of directors. Second is to a level of non-officer employees typically below the corporate officers and above managers. For instance, the vice president of marketing and sales might oversee the director of marketing who oversees the advertising manager.

These titles may vary significantly by industry and company. For instance, industrial companies typically have very few vice presidents and above, while financial companies will often have hundreds or thousands of assistant vice presidents, vice presidents, managing directors, and senior and executive levels of those, who often will be doing equivalent jobs to what is done by managers and directors (or below) in an industrial company.