Definition and Roles of Corporate Officers
A corporate officer is someone elected by the board of directors to manage the daily business operations. In a corporation, there are typically three types of stakeholders: shareholders, directors, and officers. Officers, such as the CEO and CFO, handle day-to-day tasks, while shareholders invest in the company hoping for financial returns and directors oversee the business to ensure shareholder interests are protected.
Corporate officers like the CEO, president, COO, CFO, treasurer, secretary, and vice presidents manage various aspects of the company. Their specific roles can depend on the company’s structure. For example, the COO typically assists the CEO with daily management tasks.
Employee Status and Legal Considerations
Officers of a corporation are considered employees, also known as "statutory employees," both under state and federal law. They generally receive wages for their services, which include management, sales, or labor. This stands in contrast to an owner-officer who simply accepts profits without performing services; they are not deemed an employee.
Officers have more legal responsibility compared to regular employees due to their decision-making authority. This can include personal liability for certain obligations, such as ensuring employee salaries are paid if the company becomes insolvent. Corporate officers operate under the authority of the directors and can be replaced or appointed as needed.
Despite their high status and crucial roles, corporate officers typically serve at the will of the directors.
Legal Protection and Compliance
Corporate officers have liability protection if the company faces lawsuits or financial struggles. However, they must ensure that the corporation remains in good standing by fulfilling compliance responsibilities on time.
Ownership and Shareholder Relations
The corporation itself is a distinct legal entity separate from its owners. It is owned and controlled by shareholders according to their share percentage. This ownership structure differs from individual officers’ roles, who might also be shareholders but perform active duties within the corporation.
To summarize, officers perform integral services for the company and are compensated with wages for their work. They have a distinct status as employees, substantial responsibilities, and must maintain corporate compliance, whereas shareholders have an investment role with different expectations and legal implications.