Your CEO signs a $40 million acquisition term sheet on a Friday. The board hears about it on Monday. Was that within the CEO’s authority?
If you can’t answer that question in five minutes, with a signed document in hand, you don’t have a people problem. You have a governance gap. And it’s the General Counsel or corporate secretary who gets the call when someone asks.
This guide is for the people who have to make the CEO and board of directors relationship work on paper and in practice. You’ll get the short answer on roles, then a five-step method to define where the CEO’s authority ends and the board’s begins.
CEO vs board of directors: the short answer
The board of directors governs. The CEO manages. The board sets direction, approves major decisions and holds management accountable on behalf of shareholders. The CEO runs the company day to day and executes the strategy the board has approved.
Under US law, that hierarchy is written into statute. Section 141(a) of the Delaware General Corporation Law (Title 8 of the Delaware Code) states that the business and affairs of a corporation “shall be managed by or under the direction of a board of directors.” The CEO’s authority is delegated authority. It comes from the board.
| Board of directors | CEO | |
|---|---|---|
| Core function | Oversight, strategy approval, accountability | Execution, operations, leadership of management |
| Decides | Reserved matters: CEO appointment, major M&A, capital structure, dividends | Everything delegated: hiring below the C-suite, budgets within limits, commercial deals under thresholds |
| Accountable to | Shareholders | The board |
| Acts | Collectively, by resolution | Individually, within delegated limits |
| Time horizon | Multi-year strategy, risk appetite | Quarterly and annual delivery |
| Formal record | Minutes and resolutions | Delegations of authority, management reports |
That table answers the textbook question. The harder question is what sits in the middle column for your company, and whether anyone can prove it.
Who does the CEO report to?
The CEO reports to the full board. The chair coordinates that relationship, sets the board agenda and is usually the CEO’s main point of contact between meetings. If you want the chair’s side of the relationship in detail, our guide to the role of the chairman of the board covers agenda setting, CEO evaluation and board leadership.
Individual directors, including the chair, hold no personal authority over the CEO unless the board formally grants it. This matters when a single director starts issuing instructions. A director’s request is input. A board resolution is a decision.
Whether the CEO also chairs the board changes the dynamic. According to the 2026 Spencer Stuart U.S. Board Index, 59% of S&P 500 boards separate the chair and CEO roles, and 41% have an independent chair. In the UK, Provision 9 of the UK Corporate Governance Code, published by the Financial Reporting Council, states that the roles of chair and chief executive should not be exercised by the same individual, on a comply-or-explain basis.
If your CEO and chair are the same person, a lead independent director and a tight list of reserved matters can do much of the work that role separation would otherwise do.
Can the board overrule the CEO? Yes, on any matter within the board’s authority, by passing a resolution. In a typical corporation, the board also appoints the CEO and can remove them. That’s the ultimate lever, and it’s why the relationship needs clear rules long before anyone reaches for it.
How to define the split of authority between the CEO and the board
CEO and board friction often has less to do with bad intentions than with undefined boundaries. Here’s how to draw them.
Step 1: Start from the legal baseline
Before writing anything new, collect what already binds you. That means your certificate of incorporation, bylaws, shareholder agreements, any regulatory requirements for your sector, and the listing rules if you’re public.
These documents often contain decisions that must go to the board or to shareholders. Everything you build in steps 2 and 3 sits on top of them. If your bylaws require board approval for any borrowing above $5 million, no internal matrix can lower that threshold.
Step 2: Write a schedule of matters reserved for the board
A schedule of reserved matters is a short document listing the decisions only the board can take. The Chartered Governance Institute publishes guidance on matters reserved for the board that works as a starting template, even outside the UK.
Typical reserved matters include:
- Appointing, evaluating and removing the CEO
- Approving the overall strategy and annual budget
- Acquisitions, disposals and joint ventures above a set value
- Changes to capital structure, share issues and buybacks
- Dividend policy and declarations
- Significant borrowing, guarantees and security over assets
- Approving annual financial statements
- Setting risk appetite and approving the internal control framework
- Executive compensation policy (usually via the compensation committee)
- Entering or settling litigation above a set threshold
Keep it short. A 40-page schedule gets ignored. A two-page schedule gets used.
Step 3: Build a delegation of authority matrix
The reserved matters list tells you what the board keeps. The delegation of authority (DOA) matrix tells you everything else: who can approve what, up to what amount, and with whose co-signature.
| Decision | CEO alone | CEO + CFO | Board approval |
|---|---|---|---|
| Customer contract | Up to $2M | $2M–$10M | Above $10M |
| Capital expenditure | Up to $1M | $1M–$5M | Above $5M or outside budget |
| Hiring | Below C-suite | C-suite (excluding CFO) | CEO, CFO, General Counsel |
| Litigation settlement | Up to $250K | $250K–$1M | Above $1M |
| New subsidiary | None | None | Always |
The thresholds above are illustrative. Set yours based on company size, risk appetite and any limits in your bylaws.
Then cascade it. The CEO can sub-delegate to the executive team, but only within their own limits. If you run a group with subsidiaries, every local delegation should trace back to a parent board decision. Our guide to delegation of power covers how to set the boundaries of each delegation and follow up without micromanaging.
Step 4: Set escalation triggers
Thresholds cover predictable decisions. Escalation triggers cover the unpredictable ones. Agree in writing which events the CEO must bring to the board (or the chair) immediately, regardless of the amount involved:
- a material cyber incident or data breach
- a regulatory investigation or dawn raid
- a whistleblower allegation involving senior management
- a likely covenant breach or liquidity risk
- the loss of a top-five customer
- any matter creating a conflict of interest for the CEO
- reputational events likely to reach the press
“Immediately” should mean a defined window, such as 24 or 48 hours. Vague triggers invite judgment calls, and judgment calls made under pressure are exactly what boards later question.
Step 5: Record it and review it every year
A schedule of reserved matters and a DOA matrix only work if they’re approved by board resolution, minuted and accessible. Review both annually, and after any CEO change, major acquisition or restructuring.
Here’s the test. When an auditor asks who approved a specific $3 million contract 18 months ago, and under which delegation it was approved, can your team produce the answer before the meeting ends?
How to structure CEO reporting to the board
Reporting is where the split of authority becomes visible. The board can only oversee what it can see, and the CEO report is usually the main window.
What goes into a strong CEO report
A good CEO report is short, forward-looking and honest about problems. Aim for:
- performance against the board-approved strategy and budget
- the three or four issues the CEO most needs board input on
- material risks and how they’ve moved since the last meeting
- decisions taken under delegated authority that the board should know about
- people updates: senior hires, departures, succession
- upcoming items that will require board approval
Avoid the 60-page operational data dump. If directors need to read everything to find the problem, the report has failed.
How often the CEO should report
Many boards receive a formal CEO report at every board meeting, plus a short update between meetings. For large US companies, that is more than one meeting per quarter: S&P 500 boards met 7.5 times on average in 2026, according to the same Spencer Stuart Board Index. Fast-growing or distressed companies often meet more frequently still.
Agree the cadence explicitly, so silence between meetings isn’t mistaken for good news. Then allocate agenda time accordingly. If the CEO report gets 10 minutes at the end of a three-hour meeting, the board is signalling what it values.
How the board oversees and evaluates the CEO
Hiring and firing the CEO are among the board’s most consequential decisions, as Faegre Drinker partners note in a December 2022 Directors & Boards article on establishing a formal process for CEO oversight. The same authors recommend that boards set up a regular, well-articulated process for evaluating the CEO, rather than relying on informal impressions.
A workable annual evaluation looks like this:
- Set objectives at the start of the year: Agree financial, strategic and leadership goals with the CEO, approved by the board.
- Collect structured input: Gather director feedback, plus self-assessment from the CEO.
- Hold an executive session: Independent directors discuss performance without the CEO in the room.
- Deliver feedback through the chair or the lead director: One voice, one message.
- Link the outcome to compensation and succession planning: The compensation committee translates the review into pay decisions.
Evaluation is only half of oversight. Support is the other half. In Spencer Stuart’s 2025 survey of 2,400 CEOs and directors, only 22% of CEOs agreed that their board gives them effective support, compared with 43% of directors. CEOs who had explicit conversations with their board about expectations were more likely to feel supported (68% versus 50%).
The lesson for governance teams is practical. Write down what the board expects from the CEO, and what the CEO can expect from the board. Then revisit it.
Where the CEO and board relationship breaks down
These failure patterns come up often. Watch for:
- Undocumented delegations: Authority granted verbally years ago, never minuted, still relied on.
- Stale delegations: Powers held by executives who changed roles or left the company.
- Micromanagement: Directors reviewing operational decisions that sit well within the CEO’s limits.
- Rubber-stamping: Boards approving reserved matters with little challenge because papers arrived late.
- Information gaps: The CEO filters what reaches the board, so directors can’t spot problems early.
- Subsidiary drift: Local boards acting outside what the parent board approved.
Each of these can start as a documentation problem long before it becomes a relationship problem.
The role of the General Counsel and corporate secretary
If you’re the GC or corporate secretary, you own the infrastructure that holds this relationship together. You draft the schedule of reserved matters. You keep the DOA matrix current. You make sure the minutes record which decisions the board actually took, and on what basis.
You’re also the person directors and the CEO both trust to say, “That needs a board resolution.” That position carries weight only if your records are complete and searchable. If you manage board committees or several entities, the volume of mandates, delegations and resolutions multiplies quickly.
How governance software keeps the split of authority enforceable
Spreadsheets and email can hold a DOA matrix. They’re far less reliable at telling you when a delegation expires, who sub-delegated to whom, or which board meeting approved it.
DiliTrust’s Governance Suite connects the two halves of the CEO and board relationship.
In DiliTrust Entity Management, you record each Delegation (DOA) with the delegator, the delegatees, start and end dates, and the specific powers granted. You can view the full chain of delegation and set notifications before a power expires. Mandates record the position, appointment date, expiry date and supporting documents, such as the minutes of the appointing meeting, with a renewal history you can audit for each director and officer.
In the DiliTrust Board Portal, you build the agenda, add resolutions and generate a single meeting bundle that includes the CEO report. Directors annotate documents and vote, including by proxy. After the meeting, you can draft minutes manually or with AI assistance using the transcript, notes, agenda and voting records. AI drafts always go through human review before approval.
From authority to decision record
Entity Management
Delegations, mandates and powers
Board Portal
Agenda, resolutions, voting and minutes
Traceable record
Who decided what, under which authority
For groups, the Board Portal can circulate agenda items, decisions and documents between meeting rooms, for example, from a parent board to a subsidiary board. That helps keep local decisions aligned with what the parent approved. If you use both modules, Governance Reporting combines Board Portal and Entities data into governance KPIs.
The result is a traceable record of who decided what, under which authority. That’s what the auditor wants on Monday morning.
Can you prove who approved what, and under which authority?
See how DiliTrust links every board decision to the delegation and mandate behind it, from the meeting agenda to the signed minutes.
Frequently asked questions
Who has more power, the CEO or the board of directors?
The board. Under laws such as Delaware’s DGCL §141(a), the corporation is managed by or under the direction of the board, and the CEO exercises authority the board delegates. Typically, the board also appoints the CEO and can remove them.
Can the CEO sit on the board of directors?
Yes. In many companies the CEO is a board member, and in some the CEO also chairs the board. Governance codes such as the UK Corporate Governance Code recommend separating the chair and CEO roles, and 59% of S&P 500 boards now do so, according to Spencer Stuart.
Can a company have a CEO without a board of directors?
A corporation generally needs a board of directors, although some legal forms, such as many LLCs, can be run by managers or members without one. Check the rules for your entity type and jurisdiction.
What decisions must the CEO bring to the board?
Any matter on the schedule of reserved matters, anything above the CEO’s limits in the delegation of authority matrix, and any event listed as an escalation trigger, such as a major cyber incident or regulatory investigation.
What happens when the CEO and the board disagree?
On matters within the board’s authority, the board’s resolution prevails. Disagreements are usually easier to resolve earlier, through the chair or lead independent director, before positions harden in a board meeting.or lead independent director, before positions harden in a board meeting.
