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Chief Operating Officer

The Chief Operating Officer (COO) is a company executive, usually a second in command responsible for day-to-day operations.

Expanded Definition

The COO oversees day-to-day operations of the company in accordance with the direction provided by the board of directors and the Chief Executive Officer (CEO). If the company makes soap, the COO is in charge of seeing that this is done efficiently and that improvements are made.

The COO could also be the top person in the marketing and personnel departments. Job duties can vary by the size and needs of the company. Smaller companies might need a more hands-on COO or might not even have someone with this title.

Organizational charts can vary, but usually the Chief Operating Officer reports to the CEO, who reports to the Board of Directors and specifically the Chairman of the Board. In most companies, the CEO and COO divide responsibilities, with the CEO taking on external responsibilities such as acting as spokesperson for the company with the press and the investment community, while the COO takes care of day to day internal operations of the company.

As with other top executives, potential investors should check SEC filings including form DEF 14A or company documents/proxy statements to find out how much the COO is paid and whether that pay is tied to performance. Executives with compensation that rises with good performance have more incentive to make the company succeed. Are the executives' interests aligned with shareholders'? Compensation can include salary, benefits, bonuses, and stock options. Look to see how your COO's compensation compares to others in the same industry.

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