What Is a Corporate Officer?
By Linda Long, J.D. | Legally reviewed by J.P. Finet, J.D. | Last reviewed June 06, 2024
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The role of a corporate officer is to manage the business activities of a corporation. The company's directors usually appoint the corporate officers.
The organizational structure of a corporation typically includes officers who serve as:
- Chief executive officer: The highest-ranking manager with the company who makes most of the major corporate decisions and serves as the public face of the company
- Chief financial officer: The senior executive who is responsible for managing a corporation's finances
- Chief operating officer: The executive responsible for overseeing the day-to-day operations of the corporation
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Key Takeaways
1. Corporate officers are usually appointed by the board of directors.
2. Corporate officers make major corporate decisions and manage the company's day-to-day operations.
3. Corporate officers are employees who must be paid reasonable compensation if they provide more than minor services to the company.
Corporate Officers Integral to a Functioning Corporation
A corporation has many parts, and the business structure of the organization has many roles. Each role is dependent upon others in the organization. Shareholders are the owners of the corporation. The shareholders appoint the board of directors. The board of directors names the officers.
You can think of the corporate structure as a flow chart that shows responsibility starts with the shareholders as owners and ends with the officers as managers with the everyday responsibility of running the corporation.
Corporate Officers Manage Day-to-Day Operations
The officers conduct routine business for the corporation. In addition to what some may think of as traditional officer positions, there are members of the team that fulfill different roles, including:
- Chief design officer: A chief design officer oversees the company logo, website, and other advertising.
- Chief marketing officer: A chief marketing officer is in charge of, as the title suggests, the marketing and advertising of the business.
- Chief diversity officer: A chief diversity officer focuses on diversity and inclusion within the business.
- Chief risk officer: A chief risk officer (CRO) is an executive who understands and evaluates corporate risk. The CRO helps the corporation take smart risks.
- Chief value officer: A chief value officer is an executive that works to increase the corporation's value and maintain the value of the business long-term.
- Chief procurement officer: A chief procurement officer is in charge of acquiring goods or getting services for the corporation.
There are often many additional officers in a large corporation. Each of these officers plays a vital role in corporate management. Whether the officer focuses on administrative duties or the executive is in an advisory role, each person has a critical job.
The actual duties of each officer may vary from corporation to corporation. However, state law may impose specific legal duties on the officers. Officers in a corporation also carry fiduciary responsibilities on behalf of the corporate directors and the shareholders.
Corporate Officers Must be Reasonably Compensated
Officers who perform services for the company must be reasonably compensated as an employee. Therefore, an officer who is also a shareholder can't only be compensated using shareholder distributions or dividends. However, if a corporate officer performs only minor services—or none whatsoever—they will not be considered an employee.
Officers can also have concurrent titles. That means that an officer can be both an employee and an officer at the same time. Corporate profit should be used to pay the executives the money owed for their work.
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