Ask a room of directors who holds the most power in the boardroom and you will get two answers. Some will say the chief executive, because the CEO runs the company, controls the budget and leads the people who do the work. Others will say the chair, because the chair runs the board, and the board can remove the chief executive. Both answers are right, and both are incomplete.

Our companion article, CEO vs chairman: who really holds the power?, sets out what UK governance says about the two roles and who is accountable to whom. This article looks at the other side of the question: how power actually works between the two people in practice. It covers the informal sources of influence, what happens when the chair and chief executive disagree, how the balance shifts in a crisis, and why private equity, companies run by their founder and combined roles change the answer. If you want the chair’s role set out in full, start with what does a company chairman do?

Formal Power and Real Power

On paper, the position in a UK company is clear. The board is collectively responsible for the company. It delegates the running of the business to the chief executive and the executive team, and it appoints, oversees and if necessary removes the chief executive. The chair leads the board: setting its agenda, shaping its composition and making sure it does its job. Shareholders, in turn, can remove any director, including the chair, by ordinary resolution under section 168 of the Companies Act 2006.

For listed companies, the UK Corporate Governance Code reinforces the separation. It expects the chair to be independent on appointment, the two roles to be held by different people, and a chief executive not to go on to become chair of the same company. The structure is designed so that no single individual has unfettered powers of decision.

Formal power, though, only tells you who can act. It does not tell you who will. In most boardrooms, most of the time, the formal powers are never used. Nobody calls a vote to remove the chief executive, and nobody tests whether the chair can be outvoted. What decides outcomes day to day is informal power, and that is where the balance often looks very different from the organisation chart.

The Five Sources of Informal Power

When we look at how influence really flows between a chair and a chief executive, five sources come up again and again.

Information. The chief executive and the executive team know far more about the business than the board does. They decide what goes into board papers, how risks are framed and which problems are raised early. A chief executive who controls the flow of information has a great deal of power over what the board even knows to discuss. This is why good chairs insist on direct access to the finance director, the auditors and the heads of risk and compliance, and why the audit committee chair matters so much.

Time and presence. The chief executive is in the business every day. Most chairs are there for a few days a month. Familiarity, relationships with staff and the ability to act quickly all sit with the person who is there full time.

Relationships with investors. Whoever holds the confidence of the major shareholders holds a great deal of power. In a listed company, investors usually look to the chair on governance and to the chief executive on strategy and performance. In a private equity-backed company, the investor’s own board representative may matter more than either.

Control of the board’s process. The chair sets the agenda, decides how much time each item gets, manages the discussion and leads on board appointments and evaluation. A chair who uses these tools well can make sure difficult issues reach the board and are properly tested. This is the chair’s main source of power, and it is easy to underestimate.

Track record and credibility. A chief executive who has delivered results earns latitude. A chair with deep sector experience or a record of steering companies through difficulty earns deference. Personal authority often counts for more than any title.

Looking at the balance through these five lenses explains why two companies with identical governance structures can feel completely different. In one, the chief executive dominates because the chair is part-time, new and reliant on management for information. In the other, the chair dominates because they have the investors’ confidence and the chief executive is newly appointed.

What Happens When the Chair and the CEO Disagree

Disagreement between a chair and a chief executive is normal. Handled well, it is one of the ways a board adds value: the chief executive proposes, the chair and the non-executives test, and the decision is better for it. Most disagreements are resolved in private before they reach the boardroom, through the regular one-to-one meetings that the best chairs and chief executives hold between board meetings.

When a disagreement does not resolve, it tends to move through a recognisable escalation.

Private discussion. The chair raises a concern directly with the chief executive. Most issues end here.

Testing with the non-executives. If the concern persists, the chair takes soundings from the other non-executives, often through the senior independent director. This tells the chair whether the concern is shared or personal.

The board decides. If the issue is a matter for the board, such as a major investment, an acquisition or a change in strategy, it goes to the board for a decision. At this point the chair’s power over process matters: how the paper is framed, whether independent advice is commissioned and how much time is given to debate.

Confidence. If the disagreement becomes one about the chief executive’s judgement or performance, the question becomes whether the board retains confidence in them. This is where formal power becomes real. The chair, working with the non-executives, leads the process. The chief executive cannot block it.

The reverse case matters too. Sometimes the chief executive is right and the chair is wrong, or the chair overreaches into running the business. Here the senior independent director is the safety valve. Part of their role is to lead the evaluation of the chair’s performance and to act as an intermediary for other directors when the chair is the problem. A chief executive who believes the chair is undermining management can, in the last resort, take the issue to the non-executives and to shareholders. Boards that function well rarely get this far, because the chair and chief executive agreed early on where the line between them sits.

Power in a Crisis

Crisis changes the balance of power quickly. When results fall sharply, a major customer is lost, a regulator intervenes or the company faces a cash shortfall, the board’s role moves from oversight to active involvement, and the chair’s role moves with it.

In a performance crisis the chair’s power usually increases. Investors look to the chair to assess whether the management team can fix the problem. The board may commission independent reviews, bring in restructuring advisers or appoint an interim chair or interim executives. If confidence in the chief executive is lost, the chair leads the search for a successor and may take on a more hands-on role in the interim.

In an operational crisis, such as a cyber attack, a safety incident or a product failure, the chief executive’s power usually increases at first, because decisions need to be made in hours, not at the next board meeting. The board’s job is to make sure the response is sound, that communication with regulators and stakeholders is right and that lessons are learned. Our guide to the role of a crisis management non-executive director looks at how boards work in these moments.

In an insolvency or near-insolvency, directors’ duties shift towards creditors, and every director, executive or not, needs to take advice. Neither the chair nor the chief executive can carry the decision alone. Our article on directors’ duties under the Companies Act 2006 explains why.

Private Equity-Backed Companies

In a private equity-backed company, the answer to “who is most powerful?” is often neither the chair nor the chief executive. It is the investor.

The private equity house controls the capital structure, sets the value creation plan, holds consent rights over major decisions through the investment agreement and usually appoints one or more investor directors. The chair, often appointed by or with the investor, plays a bridging role: holding management to the plan, keeping the investor informed and making sure the board functions as a board rather than a monthly investor review.

The chief executive in a PE-backed business often has a large equity stake, which aligns them with the investor but also means their personal wealth depends on the exit. If performance falls behind the plan, the investor’s tolerance can be short, and the chair is usually the person who delivers the message. Our guides to the role of a PE chair and how private equity governance works explain the dynamics in more detail.

Companies Run by Their Founder

Where the chief executive founded the business and still owns a large share of it, formal governance and real power can be very far apart. A founder who owns a majority of the shares can, in the last resort, remove any director who disagrees with them. The board’s power is the power to persuade.

That does not make the board powerless. Founders appoint independent chairs and non-executives because they want challenge, experience and credibility with lenders and future investors. The chair’s power here rests on trust: the founder has to believe the chair is on the side of the business, even when the advice is unwelcome. The most effective chairs of founder-owned businesses we see agree the ground rules early, including which decisions come to the board, how disagreements are handled and how the founder’s succession will eventually be planned.

Many founder-owned companies appointing their first independent chair or NED come to us at a point of change, such as taking on investment or preparing for a sale. Our page on governance for high-growth boards covers the transition from founder control to board oversight.

When One Person Holds Both Roles

The clearest concentration of power is the combined role: one person acting as both chair and chief executive, sometimes titled executive chair. In UK listed companies this is unusual, because the Code expects the roles to be separate and a company that combines them must explain why. In private companies, family businesses and smaller AIM companies it is more common, and it can work well for a period, particularly in a young business.

The risk is that nobody is positioned to challenge the person at the top. Where the roles are combined, good practice is to appoint a strong senior independent director or lead independent director with a clear mandate, to make sure the non-executives meet without the executive chair, and to set a date for separating the roles. Our guides to appointing a senior independent director and board structure, composition and independence explain the safeguards.

FCA-Regulated Firms

In regulated financial services, the balance of power is partly set by the regulator. Under the Senior Managers and Certification Regime, the chief executive (SMF1) and the chair (SMF9) hold separate senior manager functions, each with a statement of responsibilities and personal accountability. The chair is responsible for leading the board and its oversight of the executive, and the regulator expects the chair to be capable of challenging the chief executive. Our guide to the SMF9 chair role covers what that means in practice.

Signs the Balance Has Gone Wrong

The right balance is one where the chief executive has the authority to run the business and the chair has the authority to hold them to account. Non-executive directors should watch for signs that it has tipped too far either way.

Signs of a dominant chief executive include board papers that arrive late or say little, decisions presented as already made, non-executives who learn about major issues from the press, a chair who never disagrees with the chief executive in the boardroom, and a board with no real succession plan for the top job.

Signs of a dominant chair include a chair who speaks for the company externally on operational matters, direct instructions from the chair to executives below the chief executive, a chief executive who has to clear routine decisions with the chair, and non-executives who defer to the chair rather than to the evidence.

Either pattern is a matter for the board as a whole. Regular independent board evaluations are one of the best tools for spotting it early, because an outside reviewer can say what the directors find hard to say to each other.

So, Who Is More Powerful?

Day to day, the chief executive usually holds more power, because they run the business, control the information and are present every day. At the decisive moments, such as a crisis, a failure of performance or a question of succession, the chair usually holds more, because the chair leads the board and the board appoints and removes the chief executive. In PE-backed companies the investor often holds more than either, and in companies controlled by their founder the founder’s shareholding can override both.

The healthiest boards are the ones where the question rarely needs an answer. The chair and chief executive have agreed how they work together, each respects the other’s role, and both accept that the board, not either of them, is the final authority. Building that kind of board starts with appointing the right chair, which is why we treat chair recruitment as one of the most important searches a company runs.

Frequently Asked Questions

Can a chairman fire the CEO?
Not alone. In most UK companies the board appoints and removes the chief executive, and the chair leads that process. In practice the chair takes soundings from the non-executives and major shareholders before proposing a change, and the decision is made by the board.

Can a CEO remove the chairman?
No. The chief executive has no power to remove the chair. The board can change its chair, and shareholders can remove any director by ordinary resolution under section 168 of the Companies Act 2006. A chief executive who has lost confidence in the chair would normally raise it with the senior independent director.

Who does the CEO report to?
The chief executive is accountable to the board, and in practice their main working relationship is with the chair. The chair usually leads the chief executive’s objective-setting and performance review on behalf of the board.

Is an executive chair more powerful than a CEO?
Usually, yes. An executive chair combines leadership of the board with an executive role, which concentrates power in one person. That is why the UK Corporate Governance Code expects listed companies to separate the roles and to explain themselves if they do not.

Who is more powerful in a private equity-backed company?
Often the investor. The private equity house controls the capital, holds consent rights over major decisions and appoints directors to the board. The chair usually acts as the bridge between the investor and management.

What should a NED do if the chair and CEO are in conflict?
Talk to the senior independent director, make sure the facts are in front of the whole board and keep the focus on the company’s interests rather than on personalities. If the conflict is affecting the company, the board needs to address it directly, and an independent board review can help.