For the first part of this answer I am going to ignore the CEO part.
It is very unlikely that the benefit will be tax free.
IRS pub 15-bdescribes what needs to be done to have the fringe benefit not be taxable for the employee: The document is from the view of the employer.
Lodging on Your Business Premises
You can exclude the value of lodging you furnish to an employee from
the employee's wages if it meets the following tests.
It is furnished on your business premises.
It is furnished for your convenience.
The employee must accept it as a condition of employment.
Different tests may apply to lodging furnished by educational
institutions. See section 119(d) of the Internal Revenue Code for
details.
If you allow your employee to choose to receive additional pay instead
of lodging, then the lodging, if chosen, isn’t excluded. The exclusion
also doesn't apply to cash allowances for lodging.
The document also gives examples.
Then it has one more caveat:
S corporation shareholders.
For this exclusion, don't treat a 2% shareholder of an S corporation
as an employee of the corporation. A 2% shareholder is someone who
directly or indirectly owns (at any time during the year) more than 2%
of the corporation's stock or stock with more than 2% of the voting
power. Treat a 2% shareholder as you would a partner in a partnership
for fringe benefit purposes, but don't treat the benefit as a
reduction in distributions to the 2% shareholder. For more
information, see Revenue Ruling 91-26, 1991-1 C.B. 184.
Is the CEO a 2% shareholder? Is the corporation a S corp?
More digging would be needed to understand this additional wrinkle..