I want to invest in a public company and I want to know:

  • Exactly how much power does the CEO has over what the public company does?
  • Can a CEO control a public company even though he doesn't own a large proportion of shares?

For example, Steve Jobs has only 5.5 million shares of the 914 million shares outstanding (not even 1 percent). If Steve Jobs were to decide to try to kill Apple, does he have the power to do so?

  • This is subjective. This is similar to Prime Minister of a country. He is elected by a fraction of the population and yet rules the country. Can he do something so destroy the country?
    – Dheer
    May 17, 2011 at 10:05
  • 2
    @Dheer this is not subjective. I want to know who has what privileges specifically
    – Pacerier
    May 17, 2011 at 23:03

4 Answers 4


The shareholders elect the board of directors who in turn appoint a CEO. The CEO is responsible for the overall running of the company.

To answer your specific questions:

  • The CEO (typically) has the power to make all decisions for the company. It's customary for very large decisions to first seek the approval of the board, but that differs between companies and the type of decisions.
  • Yes, a CEO can "control" a public company. That's exactly the point of having a CEO.

Yes, Steve Jobs could make decisions that are harmful to the well-being of the company. However, it's the responsibility of the board of directors to keep his decisions and behavior in check. They will remove him from his position if they feel he could be a danger to the company.

  • 2
    Just wanted to add that if the CEO is doing a bad job, and the Board of Directors doesn't remove him, the shareholders can elect a new Board of Directors that will. The BOD's job is to represent the interests of the shareholders. May 17, 2011 at 17:11
  • 5
    Oh, and the bylaws of the company probably defines certain major actions that require a vote by Board of Directors and/or a Shareholders meeting (e.g. can't be done by the CEO on his own). Some examples would be: selling the company, aquiring another company, and issuing more shares of stock. May 17, 2011 at 17:17
  • Note finally that the CEO typically receives a lot of company stock, stock options, and related instruments. These are worth more if the company does well, so the CEO has a monetary incentive to do a good job.
    – user296
    May 17, 2011 at 18:34
  • 1
    Of course, none of the reasons stated in the comments are guaranteed to prevent the CEO from ruining the company, on purpose (Google "DHB/Point Blank) or via stupidity (Lehman Brothers)
    – user2932
    Jun 1, 2011 at 6:29

If Steve Jobs [Tim Cook] were to decide to try to kill Apple, does he have the power to do so?

Yes. But he would be held accountable.

In addition to the other answers, the CEO is a fiduciary of the corporation. That means his/her actions must be in good faith and look out for the well-being of the company. Otherwise, he could be sued and held liable for civil damages and even criminally prosecuted for malfeasance.

  • 1
    An important result of this timing distinction is that a CEO might be fired only after the damage has been done; the board's involvement, and particularly the shareholders' involvement (in voting-in the board) is a massive, infrequent change. This is the same as in a representational democracy (which is what a corporation is, in a way) - the people ultimately control government, but only to the extent that the elected officials do poorly enough to get ousted. Jul 19, 2016 at 19:22

This is a very good question and is at the core of corporate governance.

The CEO is a very powerful figure indeed. But always remember that he heads the firm's management only. He is appointed by the board of directors and is accountable to them. The board on the other hand is accountable to the firm's shareholders and creditors. The CEO is required to disclose his ownership of the firm as well.

Ideally, you (as a shareholder) would want the board of directors to be as independent of the management as it is possible. U.S. regulations require, among other things, the board of directors to disclose any material relationship they may have with the firm's employees, ex-employees, or their families. Such disclosures can be found in annual filings of a company. If the board of directors acts independently of the management then it acts to protect the shareholder's interests over the firm management's interest and take seemingly hard decisions (like dismissing a CEO) when they become necessary to protect the franchise and shareholder wealth.


Also keep note - some companies have a combined CEO/Chairman of the board role. While he/she would not be allowed to negotiate contracts or stock plans, some corporate governance analysts advocate for the separation of the roles to remove any opportunity for the CEO to unduly influence the board. This could be the case for dysfunctional boards. However, the alternate camps will say that the combined role has no negative effect on shareholder returns.

SEC regulations require companies to disclose negotiations between the board and CEO (as well as other named executives) for contracts, employee stock plans, and related information. Sometimes reading the proxy statement to find out, for example, how many times the board meets a year, how many other boards a director serves on, and if the CEO sits on any other board (usually discouraged to serve on more than 2) will provide some insight into a well-run (or not well-run) board.

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