Principal (person in charge)
A principal is the primary leader or main party responsible for an organization, project, institution, or legal relationship; distinct from the word 'principle'.
Overview
The term principal denotes the chief person or primary party in charge of an activity, organization, contract, or enterprise. It is a role name rather than a fixed job title: the word identifies who holds ultimate authority or responsibility in a given setting. Not to be confused with the homophone "principle," which refers to a rule, belief, or fundamental truth.
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Common contexts and examples
Principals appear in a variety of everyday contexts. In education, a principal is the head administrator of a school. In research, the leading investigator is often called the principal investigator on a project. In commerce and law, a principal may be the owner or main party to a business transaction or agency relationship, distinct from agents, employees, or contractors; businesses often refer to a company founder or senior executive as a principal, and financial documents may refer to the principal amount of a loan or investment.
Roles and responsibilities
- Decision-making: setting strategy, approving policies, and making final calls on key issues.
- Oversight: ensuring compliance, supervising staff or agents, and monitoring performance.
- Representation: acting as the official face of the organization or signing contracts on its behalf.
- Accountability: accepting legal, financial, or ethical responsibility for outcomes.
History and development
The use of "principal" to mean the primary party or main person of authority has roots in Latin (principalis, "first" or "chief") and developed across legal, educational, and business vocabularies over centuries. Specialized uses—such as "principal investigator" in science or "principal" in agency law—evolved as institutions formalized roles and responsibilities.
Distinctions and notable facts
It is important to distinguish a principal from related terms: an agent acts on behalf of a principal; a manager may run daily operations while reporting to a principal; and "principal" is different from "principle." In finance, "principal" refers to the original sum of money in contrast to interest. For further reading on institutional roles, see resources about educational leadership, research governance, and business law via relevant references.
Why the term matters
Understanding who the principal is clarifies responsibility and authority in contracts, organizations, and projects. Identifying the principal helps determine who is empowered to make binding decisions, who bears ultimate risk, and how accountability flows within an institution.
Regulations
Under German stock corporation law, a stock corporation must have a management board, but not a chairman of the management board. Instead, the law provides for the joint management (§ 77 AktG) and representation (§ 78 AktG) of the company by all members of the management board, unless the articles of association or rules of procedure provide otherwise. German stock corporation law does not know any express provisions for a prominent position of the chairman of the management board; the possibility of appointing a chairman of the management board arises solely from § 84 (2) AktG, which cannot be delegated to a committee in the supervisory board (cf. § 107 (3) sentence 2 AktG). The law uses the term "chairman", but not "spokesman".
Nevertheless, it is permissible for a joint-stock company to have a chairman or spokesman of the board of directors (but not at the same time), although this does not change the overall responsibility of the board of directors for the management of the company. Regulations in this regard can be found in the articles of association of the stock corporation. Almost all German stock corporations provide for a chairman of the management board in their articles of association, sometimes - especially in the case of banks - for a spokesman of the management board.
The supervisory board may appoint a chairman of the management board. In the event of a tie vote in the management board, the chairman of the management board shall have the casting vote if the articles of association of the stock corporation or the rules of procedure of the management board so provide. He can change the agenda of the board meetings, in particular initially cancel agenda items, which is interesting in the event that he fears a vote not in his favour and hopes to be able to convince other colleagues of his point of view before a new referral.
In the French economy, this corresponds to the position of Président-directeur général (PDG).
Chief Executive Officer in Germany
Among the top earners in Germany are the CEOs of the 30 DAX companies. An amendment to the German Commercial Code (HGB) and the German Act on the Appropriateness of Management Board Remuneration (VorstOG) require these companies to disclose the remuneration of their management board members as of fiscal 2006.
The top earner among DAX Executive Board members in 2009 was Josef Ackermann, Chairman of the Executive Board of Deutsche Bank, who received annual compensation of €9.9 million. RWE CEO Jürgen Großmann was in second place with €9.2 million. Siemens CEO Peter Löscher earned €7.1 million.
The remuneration listed is calculated on the basis of the often relatively low fixed remuneration and performance-related bonuses. In addition, there are stock options, the value of which can exceed the regular remuneration several times over.
Nevertheless, the financial compensation of German CEOs is considered low in international comparison.
List of the CEOs of DAX companies
| Company | Chairman of the Management Board (unless otherwise stated) |
| Kasper Rorsted | |
| Oliver Bäte | |
| Martin Brudermüller | |
| Werner Baumann | |
| Beiersdorf | Stefan De Loecker |
| Oliver Zipse | |
| Elmar Degenhart | |
| Daimler | Ola Källenius |
| Christian Sewing | |
| German Stock Exchange | Theodor Weimer |
| German Post | Frank Appel |
| German Telekom | Timotheus Höttges |
| E.ON | Johannes Teyssen |
| Fresenius | Stephan Sturm |
| Fresenius Medical Care | Rice Powell |
| HeidelbergCement | Dominik von Achten |
| Handle | Carsten Knobel |
| Infineon | Reinhard Ploss |
| Linden | Aldo Belloni |
| Lufthansa | Carsten Spohr |
| Merck | Stefan Oschmann (Chairman of the Management Board) |
| Munich Re | Joachim Wenning |
| ProSiebenSat.1 | Rainer Beaujean (Spokesman of the Executive Board) |
| RWE | Rolf Martin Schmitz |
| SAP | Christian Klein |
| Roland Busch | |
| ThyssenKrupp | Martina Merz |
| Volkswagen | Herbert Diess |
| Vonovia | Rolf Book |
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Author
AlegsaOnline.com Principal (person in charge) Leandro Alegsa
URL: https://en.alegsaonline.com/art/79225