He was not the head of Shia Islam he was a grand Ayatollah, think of that as the head judge of a Supreme Court, an Ayatollah can be thought of as a judge who has spent their whole life dedicated to the study and application of religious law. Any time he makes a legal decision called a fatwa it is for people who choose to follow his, for lack of a better term, legal philosophy. Ayatollah Ali Khamenei was arguably the second most important grand Ayatollah in Shia Islam, he just also happend to be the Supreme leader of Iran. The most important Ayatollah is Ayatollah Sistani in Iraq.