We examine whether a firm’s operating environment influences the likelihood that the CEO is also the Chair of the board of directors. Specifically, we find that when a firm has greater advisory needs and is more reliant on managerial initiatives for innovation, the firm is more likely to appoint its CEO as the Chair. We also examine whether CEO-Chairs use their greater bargaining power to extract rents from their firms. We show that managerial rent extraction is multidimensional by providing evidence that CEO-Chairs extract rents through excess compensation and greater job security but that they do not manage earnings or negotiate for greater reliance on earnings- versus stock-based measures to determine compensation. These findings collectively provide evidence that the CEO-Chair role is beneficial to both the firm and the CEO and suggests that optimal contracting and rent extraction may not be mutually exclusive as is typically assumed in the literature. Based on its greater advisory and innovation needs, the firm benefits from appointing its CEO as Chair; and the CEO-Chair uses his/her greater bargaining power to extract rents from his/her firm via greater excess compensation and job security.