Chief executives · the role
What does a CEO do?
The short answer · updated
A chief executive officer (CEO) is the most senior executive in a company. The CEO proposes the strategy to the board, then runs the business to deliver it: setting priorities, leading the executive team, deciding where money and people go, and answering to the board, usually through the chair, for the results.
What a CEO is responsible for
The FRC’s guidance on the UK Corporate Governance Code puts the job in one line: as the most senior executive director, the chief executive is responsible for proposing company strategy and for delivering the strategy as agreed by the board. Everything else follows from that.
In practice the work falls into a handful of areas. In a smaller company the CEO does more of it personally; in a larger one, the CEO leads the executives who do it.
- Strategy. Proposing where the company should go, and taking the plan to the board for agreement.
- Delivery. Turning the agreed strategy into priorities, budgets and targets, and holding the executive team to them.
- People. Building and leading the executive team: hiring, developing and, where needed, replacing its members.
- Money. Deciding, with the finance lead, where capital, budget and headcount go, and when to raise funds.
- Culture. The FRC guidance gives the chief executive primary responsibility for setting an example to the workforce and communicating what is expected of them.
- Stakeholders. Representing the company to investors, customers, partners, regulators and the public, alongside the chair.
- Risk. Making sure the business manages its risks and meets its legal and regulatory obligations, and telling the board when it does not.
Who a CEO reports to: the board and the chair
The CEO reports to the board of directors. The board appoints the CEO, agrees the strategy, sets the targets, decides the CEO’s pay (in a larger company, through a remuneration committee) and can remove the CEO. Day to day, the relationship runs through the chair.
The Institute of Directors describes the chair’s job as making the board effective in setting and implementing the company’s direction and strategy, and lists supporting the chief executive among the chair’s essential tasks. The FRC calls the chief executive’s relationship with the chair a key influence on board effectiveness, and advises paying particular attention to where their responsibilities overlap.
The two roles are meant to be held by different people in a listed company. The FRC’s UK Corporate Governance Code says the roles of chair and chief executive should not be exercised by the same individual, and that a chief executive should not become chair of the same company. It also asks the board to set out the responsibilities of the chair and the chief executive in writing. The IoD notes that in smaller companies the chair and CEO roles are often combined; the Code applies to listed companies, though many others choose to follow it.
In a founder-led or investor-backed company, the CEO also answers to the shareholders: in practice, the investors who hold board seats or consent rights under a shareholders’ agreement.
A CEO’s legal duties as a director
Most CEOs sit on the board, and a CEO who is a director owes the company the general duties in sections 171 to 177 of the Companies Act 2006: to act within their powers, promote the success of the company, exercise independent judgement, use reasonable care, skill and diligence, avoid conflicts of interest, refuse benefits from third parties and declare interests in proposed transactions.
Companies House guidance adds that directors are legally responsible for running the company and for sending information to Companies House on time, including the confirmation statement and the annual accounts. A director can hire an accountant to help, but stays responsible for the company’s records, accounts and performance.
Other duties sit with the directors too. The HSE’s Leading health and safety at work sets out the leadership actions expected of directors and board members for health and safety. In banks, insurers and other regulated financial firms, the chief executive is a senior management function and needs FCA or PRA approval before starting the role.
Fractional and interim CEOs vs a permanent CEO
A permanent CEO is employed full-time with no fixed end date. This is the usual choice once a company has the scale, and the funding, to need a chief executive every day.
An interim CEO works full-time for a fixed period: after a sudden departure, through a turnaround or a sale, or while the board searches for a permanent appointment. Our interim CEO page covers when boards use one.
A fractional CEO works part of the week, often for a smaller company or a founder who needs senior leadership for a period without a full-time salary. Some act as chief executive; others work alongside a founder who keeps the title. Our page on how to hire a fractional CEO sets out how the arrangement works.
An interim or fractional CEO who works through their own company may fall within the off-payroll working rules (IR35). Status turns on how the engagement runs in practice, and a medium or large client makes the determination. Our IR35 guide sets out the tests.
What a CEO costs
The cost depends on the form of the engagement. A permanent CEO costs a salary plus employer costs, benefits and often a bonus or equity. An interim CEO is usually paid a day rate for every working day of the assignment. A fractional CEO is paid a day rate, or a monthly amount, for the days actually worked, so the cost scales with the time the company needs.
The size, sector and stage of the company move the figure more than the title does. We set out the pay or day rate of every candidate on the shortlist, so the board sees the cost before it meets anyone. Our rate calculator converts a day rate into monthly and annual equivalents.
What a CEO earns
CEO pay varies widely: from a modest salary at an early-stage company, often topped up with equity, to large packages at listed companies, where the remuneration committee sets pay under a published policy.
We do not publish a pay band here. Our CEO salary page sets out full-time CEO pay by company size and fractional and interim day rates, each figure with its source. For charities, see charity CEO salary.
How to hire a CEO
Start with the board’s reason for the hire: growth, a turnaround, a sale, a founder stepping back or a successor. That decides whether the company needs a permanent, interim or fractional chief executive, and what the first year must deliver.
Agree the brief with the chair and the investors before the search starts, including the reporting line, the board seat, the pay and any equity. Then test every candidate against the same brief, take references, and check directorships and any disqualification before appointment.
We recruit fractional, interim, part-time, temporary and permanent executives, and non-executive directors. For a chief executive brief we send a shortlist of 3–5, each with pay or day rate, availability and IR35 position set out, after our five-stage vetting. Our page on how to hire a CEO covers fractional and interim chief executives; our interim executive recruitment page covers interim hires across the C-suite. For a charity, see charity CEO recruitment.
Questions people ask
What is the difference between a CEO and a managing director?
Often none: many private companies call the most senior executive the managing director. Where a group has both, the CEO usually leads the group and a managing director runs a subsidiary, a division or a country. Read the role’s responsibilities, not the title.
What is the difference between a CEO and a chair?
The chair leads the board; the CEO leads the business. The IoD describes the chair’s job as making the board effective, and the FRC’s Code says a listed company should not give both roles to one person. In smaller companies they are often combined.
Does a CEO have to be a director?
No, but most are. A CEO who sits on the board owes the directors’ duties in sections 171 to 177 of the Companies Act 2006. Companies House guidance says those duties can also apply to someone who acts as a director without being formally appointed.
What does a CEO do day to day?
Meetings with the executive team on priorities and performance, time with customers, investors and partners, decisions on hiring and spending, and preparation for the board. How the week splits depends on the company’s stage: an early-stage CEO spends more time selling and raising money, a larger company’s CEO more time on people and the board.
Can a CEO work part-time?
Yes. A fractional CEO works part of the week, usually for a smaller company or during a defined period of change. See our page on how to hire a fractional CEO.
How much does it cost to hire a CEO?
It depends on whether the role is permanent, interim or fractional, and on the size and stage of the company. Our CEO salary page sets out sourced pay figures. We set out pay or day rate for every candidate on the shortlist.
How do I hire a CEO?
Agree the brief with the chair and investors, choose between permanent, interim and fractional, test every candidate against the same brief, and check references and directorships before appointment. Our fractional and interim CEO page sets out the process; we send a shortlist of 3–5, each with pay or day rate, availability and IR35 position set out.
