News just in from Mashable.com – Eric Schmidt is stepping down to allow Larry Page to take the driving seat at Google.
Eric Schmidt will become Google’s chairman. The news was released today as Google announced its fouth quarter profits.
According to Reuters, analysts expect $6.06 bln in Q4 net revenue. This is twice as much as Lloyds bank used to make in a year when I worked there (in 1997).
Google Inc (GOOG.O), the world’s No.1 Internet search engine and one of the most closely watched stocks in the options market due to its volatile earnings play, is expected to report a 22 percent jump in fourth-quarter revenue, thanks to a strong holiday season. Source: Reuters
So why is Eric Schmidt stepping down as Google’s CEO?
Full details have been announced in Google’s Press Release:
- Starting from April 4, Larry Page, Google Co-Founder, will take charge of Google’s day-to-day operations as Chief Executive Officer.
- Sergey Brin, Google Co-Founder, will devote his energy to strategic projects, in particular working on new products.
- Eric Schmidt will assume the role of Executive Chairman, focusing externally on deals, partnerships, customers and broader business relationships, government outreach and technology thought leadership–all of which are increasingly important given Google’s global reach. Internally, he will continue to act as an advisor to Larry and Sergey.
And what is the role of Google’s Chairman?
The CEO is the corporate executive responsible for the operations of the firm, so they essentially set strategies and ensure that the directors and managers are all doing their jobs probably. SEO is really the top boss.
“As Executive Chairman, I will focus wherever I can add the greatest value: externally, on the deals, partnerships, customers and broader business relationships, government outreach and technology thought leadership that are increasingly important given Google’s global reach; and internally as an advisor to Larry and Sergey.” From the Google blog.
The chairman manages the company meetings, and is also sometimes known as the president of the company. They ensure that discussion is fair and balanced and that all parties are fulfilling their objectives, from the CEO down.
The main duty of a chairman is also to protect shareholder interests. This is important in a company such as Google that is so innovative, as the chairman will ensure that the CEO is keeping budgets and risk under control as well as driving the business forward.
There is no determined balance of power between a CEO and Chairman in a company, it varies. Most likely in Google it is more to do with following correct business structure. Just because Eric Schmidt is stepping back from CEO it does mean that he will no longer play a key role in decision making with respect to major projects and developments. What is does mean is that if Google went tits up it would probably be his head on the block. The CEO is essentially responsible for operations (remember Tony Hayward, CEO of BP during the Gulf of Mexico oil spill) and the chair just keeps all the directors herded in the right direction.