CEO duties and performance

CEO duties

Legal duties

Under the CATSI Act, the CEO may be considered an officer of the corporation. This is because CEOs often:

• are involved in making decisions that affect the business of the corporation
• can greatly affect the corporation’s financial standing.

Officers have some legal duties:

• a duty of care and diligence – for example, when preparing reports so the directors are well informed to make decisions in the best interests of the corporation
• a duty of good faith – make decisions in the best interests of the corporation and never for their personal gain
• a duty to not improperly use position or information – not use their position or information they get to benefit themselves or someone else, or to cause harm to the corporation.

Find out more about officers and their legal duties.

It is possible for a CEO to also be a director. But if a CEO is a director, they cannot chair a directors’ meeting. 

Job duties

What the CEO is responsible for should be made clear in a position description or duty statement. 

The board keeps the CEO accountable to their delegated duties. 

Reviewing CEO performance

Good CEOs have two key skill sets. Good CEOs have the skills to manage the day-to-day operations of the corporation in line with the board’s strategy. They are able to work well with the board to:

• provide reports in a manner the board expects and can understand
• provide advice to inform the board’s decisions without interference
• escalate issues and risks timely and appropriately so the board can consider and deal with them.

Directors must be able to separate the two and objectively assess the CEO’s performance. Good governance includes having clear lines of accountability. You also need a process for tracking and managing them.

To check in on the CEO’s performance, have a mix of:

• informal, two-way feedback
• a formal evaluation process, usually 6-monthly or yearly.

This will allow you to see how they’re going against their role set out in their position description and duty statement.

A performance review might also relate to job milestones, like the end of a probation period.

An effective review doesn’t just check a list. It’s a time for the board and CEO to strengthen their working relationship by:

• raising issues with how each other operates
• clarifying expectations and strategic direction
• identifying areas of development or signs of possible problems. 

Matters to be aware of when managing the CEO’s performance

If a director does not think a CEO is performing well, they need to raise their concerns with the other directors and the CEO directly. An individual director should not be commenting on the CEO’s performance to members or raising performance concerns with the CEO unless this has been agreed by the board.

Members often think they can vote to have a CEO removed, appointed or reinstated. This is not a right of members under the CATSI Act. Unless the corporation has a rule in its rule book saying members have a say on the appointment, removal or reinstatement of a CEO, these types of decisions are the responsibility of directors. If members have concerns about the performance of the CEO, they should raise their concerns with the directors.