A board of directors broadly oversees a company’s or organizations activities. The company's chief executive officer (CEO) reports to the board of directors and acts as a liaison between the company and the board.
There are corporate CEOs, entrepreneurial CEOs and CEOs for medium-size companies. A board of directors also is known as a board of trustees or an executive board.
The CEO has high-level responsibilities over all the management activities of a company. Some of the functions of the board of directors include approving the annual budget and dealing with stakeholders.
Members of the board of directors are elected or appointed, and their activities are determined by a company’s bylaws. CEOs are appointed by the board of directors. The board also reviews a CEO’s job performance.
A CEO is the face of a company or organization and takes the hit or pat on the back if a company fails or succeeds. The board of directors is there to steer a company in the right direction.
In July 2002, Congress passed the Sarbanes-Oxley Act, which sets strong accountability standards for U.S. company boards of directors for companies on the U.S. stock exchanges.