Corporate Officers

Corporate officers are the senior managers of a corporation who are appointed by the board of directors to carry out its policies and manage day-to-day operations. Typical officers include the president or chief executive officer (CEO), the chief financial officer (CFO), the chief operating officer (COO), one or more vice presidents, the treasurer and the corporate secretary. Their titles, duties and method of appointment are set out in the corporation's bylaws and in state corporate law.

Officers differ from directors. Directors are elected by shareholders to oversee the company and set strategy; officers are employees or agents who run it. One person can be both, as when a CEO also sits on the board. Officers have authority to sign contracts, open bank accounts and bind the corporation within the limits the board grants them.

• Chief executive officer or president: has overall responsibility for running the business and reports to the board.
• Chief financial officer: oversees accounting, financial reporting, budgeting, tax and financing, and is often the principal financial officer for regulatory purposes.
• Treasurer: manages cash, banking relationships, borrowing, investments and financial risk; in larger companies this role reports to the CFO.
• Controller: heads the accounting function and is frequently designated the principal accounting officer; see the entry on the controller.
• Corporate secretary: keeps minutes of board and shareholder meetings, maintains corporate records and manages governance filings.
• Other officers, such as a general counsel or chief compliance officer, as the bylaws or board provide.

Officers owe fiduciary duties to the corporation and its shareholders, mainly a duty of care, to act on an informed basis, and a duty of loyalty, to put the company's interests ahead of their own. Delaware courts confirmed in 2009 that officers owe the same fiduciary duties as directors. Officers can also face personal liability in specific areas. Under the Internal Revenue Code, any "responsible person" who willfully fails to pay over payroll taxes withheld from employees can be charged a trust fund recovery penalty equal to the unpaid amount, and officers are often the people assessed.

For US public companies, the Sarbanes-Oxley Act of 2002 gave officers direct responsibility for financial statements. Under section 302, the CEO and CFO must certify in each quarterly and annual report that they have reviewed it, that it contains no material misstatement or omission, and that they are responsible for disclosure controls and internal control over financial reporting. Section 906 adds criminal penalties for knowingly certifying a false report. Section 402 generally bans personal loans from public companies to their directors and executive officers. Officers' pay is disclosed in proxy statements filed with the Securities and Exchange Commission (SEC), including a summary compensation table for the CEO, CFO and the next three highest-paid executive officers.

Officers' salaries, bonuses and share-based awards are recorded as expenses like other compensation, usually within general and administrative costs. Corporations filing Form 1120 with total receipts of $500,000 or more report compensation of officers separately on Form 1125-E. For a closely held S corporation, the IRS expects shareholder-officers who work in the business to be paid reasonable wages subject to payroll taxes. For example, if an S corporation earns $300,000 and its sole shareholder-officer takes no salary but withdraws $250,000 as distributions, the IRS may recharacterize part of those distributions as wages, making them subject to Social Security and Medicare taxes plus penalties. Public companies also face a $1,000,000 annual limit under section 162(m) on the tax deduction for pay to certain covered executives. These rules make officer pay one of the more closely examined areas in both audits and tax reviews, and its disclosure is a key concern for each shareholder assessing governance.