CEO vs Chairman: Who Really Holds the Power?

The Question Behind the Question

Ask most people who runs a company and they will name the chief executive. Ask a governance specialist and they will tell you the board does, led by the chairman. Both answers are partly right, which is why the question of who really holds the power between the CEO and the chairman comes up so often in boardrooms, investor meetings and board evaluations.

The formal position is straightforward. In a well-governed UK company the chair leads the board and the chief executive runs the business. The board, under the chair’s leadership, appoints the chief executive, sets the strategy framework, oversees performance and can remove the chief executive if it loses confidence. On paper, then, the chair and board hold ultimate authority.

In practice, power follows information, relationships, track record and ownership as much as it follows the governance chart. A long-serving, successful chief executive can dominate a board on paper designed to oversee them. A chair who represents a controlling shareholder can effectively run the company from the boardroom. This article explains both situations and why the real test is accountability rather than raw influence. For a structured look at the factors that decide the balance, and how the picture differs in the United States, see our companion piece: who is the most powerful in the boardroom, the CEO or the chairman?

What UK Governance Actually Says

The UK Corporate Governance Code, published by the Financial Reporting Council, applies on a comply-or-explain basis to companies with a premium or equivalent listing, and many other organisations use it as a benchmark. Its position on the two roles has three main parts.

The chair leads the board. The Code’s principles describe the chair as leading the board and being responsible for its overall effectiveness in directing the company. The chief executive’s job is to lead the business and deliver the strategy the board has agreed.

The roles should be separate. Provision 9 says the roles of chair and chief executive should not be exercised by the same individual. It also says the chair should be independent on appointment, and that a chief executive should not go on to become chair of the same company. If a board exceptionally proposes that step, it should consult major shareholders in advance and explain its reasons publicly.

Responsibilities should be written down. The Code expects the responsibilities of the chair, chief executive, senior independent director, board and committees to be clear, set out in writing, agreed by the board and made publicly available. That division of responsibilities is the practical foundation of a healthy relationship.

Behind the Code sits company law. Under the Companies Act 2006, every director, executive or not, owes the same duties, including the duty to promote the success of the company. The chair has no special legal powers over the chief executive; their authority comes from leading the board, which acts collectively. Our guide to what a company chairman does covers the role in full.

When the Chief Executive Holds More Power

The most common imbalance is a powerful chief executive and a deferential board. It tends to arise in a few recognisable situations.

The founder-CEO. When the person who built the business also runs it, they usually know more about the company than anyone else in the room, may own a significant stake, and are closely identified with its success. Challenging them on strategy or performance takes confidence and standing that a new chair may not yet have.

The long-tenure, high-performing CEO. A chief executive with years of strong results, deep relationships with major shareholders and a hand in appointing several of the current directors can accumulate informal authority well beyond their formal role. The chair may be newer and less visible to investors than the person they are meant to oversee.

Information asymmetry. Non-executive directors see the business through board papers and occasional site visits. The chief executive controls what reaches the board, when, and in what form. A board that does not insist on the information it needs is, in effect, governed by its executive.

A weak or disengaged chair. Some chairs treat the role as ceremonial, or are reluctant to have difficult conversations. The result is a board that endorses rather than challenges.

Corporate history shows that these conditions are often most visible shortly before a significant governance failure. That is why boards should watch for the warning signs early rather than react after the event.

When the Chairman Holds More Power

The reverse imbalance is less common but just as important.

The shareholder chair. Where founders or a family retain a controlling stake and one of them chairs the board, the chair’s authority reflects ownership, not just governance. The chief executive may run day-to-day operations while major decisions are effectively taken elsewhere.

The investor chair. In private equity-backed businesses the chair is usually chosen by, and works closely with, the investor. Their influence over the chief executive reflects the fund’s position. That is legitimate and expected in a PE structure, but it is not independence, and boards should be clear about the difference. Our guide to the role of a PE chair explains how this works.

The board in crisis. When a chief executive loses the confidence of the board through underperformance or misconduct, the formal structure comes into its own. The board, led by the chair, can remove the chief executive. No amount of public profile or operational knowledge protects a chief executive who has lost the board.

The chair who drifts into management. Some chairs, especially former chief executives, find it hard to step back. They attend management meetings, speak to staff directly and second-guess operational decisions. Over time this undermines the chief executive and blurs accountability. It is one reason the Code discourages a chief executive from becoming chair of the same company.

A Case That Shows the Stakes

The Tesla case is one of the best-known examples of the debate. Elon Musk was both chief executive and chairman of Tesla until 2018, when, as part of a settlement with the US Securities and Exchange Commission over his statements about taking the company private, he agreed to step down as chairman while remaining chief executive, and Tesla agreed to appoint two new independent directors. The separation was imposed by a regulator rather than chosen by the board.

The case illustrates three points. First, a combined chief executive and chairman role can persist for years in a public company when the individual is prominent and the business is successful. Second, external pressure can achieve governance change that internal processes did not. Third, formal separation does not on its own change the practical balance of power: what matters is whether the board, and its chair, are able and willing to exercise independent judgement.

The Real Test: Who Is Accountable to Whom?

Influence will always shift between the two roles depending on circumstances, personalities and performance. A better question than “who has more power?” is “is accountability working?” In a healthy company:

• The chief executive is accountable to the board, and the board actually holds them to account through clear objectives, honest performance reviews and succession planning.
• The chair is accountable to the board and, ultimately, to shareholders, through board evaluation and a senior independent director who can act as a sounding board for other directors.
• Both roles have written responsibilities that the board has agreed, and both stay within them.
• The board receives the information it needs to form its own view, not just the information management chooses to provide.

The senior independent director plays a particular role here. The SID leads the annual appraisal of the chair, provides a channel for directors and shareholders who have concerns, and leads the search for a new chair when the time comes.

What This Means for Non-Executive Directors

Non-executive directors are the counterweight in the relationship. Their independence gives the board its authority over the executive, and their collective view keeps the chair honest. In practice, that means:

• Insisting on good information. Ask for the data you need, in time to read it, and test what you are told.
• Using the committees. Audit, risk, remuneration and nomination committees give NEDs structured routes to oversight. Our guide to board committees explains where NEDs add most value.
• Taking board evaluation seriously. An independent board evaluation is often the safest way to surface concerns about how the chair and chief executive work together.
• Planning succession for both roles. Boards that plan ahead are far less likely to end up with an imbalance by default. See board succession planning.
• Protecting independence. NEDs appointed through the chief executive’s personal network can find it hard to challenge them. Our guide to independent and affiliated NEDs covers the distinction.

Private Companies and the Combined Role

Private companies are not bound by the UK Corporate Governance Code, and in many owner-managed businesses the founder is both chair and chief executive. That can work while the business is small and the owner bears the consequences of their own decisions. It becomes a problem as the business grows, takes on outside investment or debt, or plans for a sale.

The usual first step is appointing an independent non-executive director, followed in time by an independent chair. Our pieces on whether private and family businesses need a NED and building a board for a family business explain how to make the transition without losing the founder’s energy.

The Wates Corporate Governance Principles for Large Private Companies, also from the FRC, give larger private companies a framework that includes an effective chair and a clear division of responsibilities.

Getting the Appointment Right

Most imbalances start at the point of appointment: a chair chosen for availability rather than fit, a chief executive appointed without a clear brief, or a board assembled through personal connections. A rigorous, independent search for either role is the most effective protection.

When we run chairman of the board recruitment, we test how candidates have handled disagreement with a chief executive, how they define the boundary between oversight and management, and whether they have the standing to lead a board through a crisis. For independent chairs from outside the business, see non-executive chair recruitment, and for regulated firms, SMF9 chair appointments. Searches are run by our senior search team under founder Adrian Lawrence FCA.

Frequently Asked Questions

Can the same person be chair and chief executive in the UK?
The UK Corporate Governance Code says the roles should not be exercised by the same individual. Companies that apply the Code must explain any departure. Private companies are free to combine the roles, though it becomes harder to justify as the business grows.

Does the chair have authority over the chief executive?
Not personally. The chief executive is accountable to the board as a whole, which the chair leads. The board appoints, evaluates and can remove the chief executive.

Can a chief executive become chair of the same company?
The Code says they should not. If a board proposes it exceptionally, it should consult major shareholders beforehand and explain its reasons publicly.

Who holds the chair to account?
The board, through annual evaluation led by the senior independent director, and ultimately the shareholders who elect the directors.

What is an executive chairman?
A chair who also takes on executive responsibilities. The role is more common in private and smaller listed companies, and boards that use it need strong independent directors to provide balance.