CEOs walk tightrope in new era of corporate politics
Mary Barra of General Motors Co. wanted to stay close to the White House. Indra Nooyi of Pepsico Inc. was pressured to walk away. Kevin Plank of Under Armour Inc. got pushback when he did just that. Doug McMillon of Wal-Mart Stores Inc. took heat for rebuking President Donald Trump — and for not severing ties with him as three more members of a presidential advisory council resigned.
That was all just on Tuesday. On Wednesday, the chief executive of 3M resigned from the president’s Manufacturing Jobs Initiative panel, saying it is no longer an effective forum for the company to advance its goals.
Inge Thulin’s resignation is the sixth following President Donald Trump’s comments after the violence in Charlottesville, Virginia.
Rarely have business leaders had to tread as carefully as they suddenly are now, with the nation sharply divided under a combative president. Since Monday, they’ve been riding a wild cycle of expectations and disillusionment, banal statements and searing rebuttals. It began when Merck & Co.’s Kenneth Frazier took a public stand against Trump for his failure to quickly condemn white supremacists for deadly violence in Virginia, and it pushed many chief executive officers into strange new territory.
“CEO life has become politicized,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.
The fallout from the supremacists’ rally in Charlottesville on Aug. 12 also exposed a rift within corporate America unlike any in recent memory. “There’s a moral tension” and “a real wedge being driven,” said Rick Claypool, research director for the president’s office of the consumer-advocacy nonprofit Public Citizen. Some “companies feel they’re being tarnished by the association with the president,” he said. On the other hand, “there’s a fear that if they’re not at the table,” they’ll lose out.
Frazier and five others weighed the risks and rewards and over a period of some 36 hours and stepped down from the Manufacturing Jobs Initiative council that advises Trump, who dismissed them as “grandstanders.” Dozens more elected to remain members of that and similar panels and came under fire on social-media sites. The internet was awash with recriminations and calls for boycotts, with both pro- and anti-Trump forces weighing in.
“The negativity is so unbelievable that everything becomes an issue,” Elson said. “If you say nothing, if you say something, if you don’t say enough, you get in trouble.”
Trump continued the belligerent tone on Wednesday, accusing Amazon.com Inc. of taking away jobs in towns and cities across the U.S. “Amazon is doing great damage to tax paying retailers,” he wrote in a Twitter post. Amazon Chairman and CEO Jeff Bezos owns the Washington Post, a frequent target of Trump’s media critiques. Two hours later, he repeated his campaign mantra, "MAKE AMERICAN GREAT AGAIN!"
Wal-Mart’s McMillon criticized the president Tuesday in a memo to employees for not initially “unequivocally rejecting the appalling actions of white supremacists” but didn’t quit the Manufacturing Jobs Initiative. Twitter critics took after him, either pledging to stop shopping at Wal-Mart or assailing the CEO for “pandering to the left.” Some social-media posters called Under Armour’s Plank a “Nazi” before he resigned Monday, while others the next day labeled him a “sissy” for leaving.
Intel Corp.’s Brian Krzanich also withdrew from the panel Monday. On Tuesday, Scott Paul, president of the Alliance of American Manufacturing, and Richard Trumka and Thea Lee of the AFL-CIO did too. Trump complained at a press conference that the CEOs who departed weren’t taking their jobs seriously and said on Twitter that he could easily replace them.
At General Motors, Barra elected to stay on the White House’s Strategic and Policy Forum because she wants a voice in policy decisions and realizes she would face Trump’s wrath if she left, which could shred any chance of ever working with him, according to people familiar with the matter.
“It is not surprising that different CEOs make the calculus differently,” said Dan Eaton, a lecturer on management at the San Diego State University Fowler College of Business Administration. They have to balance the feelings of their customers, their shareholders and “the duty they have to their consciences.”
PepsiCo’s Nooyi is so far taking the same path as Barra. Nooyi was more vocal than many CEOs in calling out the racists at a rally in Charlottesville, where a participant rammed a group of counter-demonstrators with his car, killing one and injuring 19. “Hate and intolerance are a betrayal of what we stand for as Americans,” she said on Twitter. That was insufficient for Color of Change, a nonprofit racial-justice group that is demanding she resign as a Trump adviser with the #quitthecouncil campaign.
The pressure may be intense in corporate suites and boardrooms at companies whose CEOs belong to the various advisory councils. Should they stay? “It’s a discussion that’s going on more broadly than either you and I can imagine,” said Leslie Brun, lead director at Merck, one of the few large U.S. corporations with a black CEO.
Brun said he and other directors learned of Frazier’s plan on Sunday, and that the board was unanimously in support of his move. “This is not an off-the-cuff decision by Ken,” Brun said. “I’m glad to see others are following in Ken’s footsteps and taking a stand.”
Trump responded to Frazier’s resignation with angry tweets, calling Merck a leader in high prescription-drug prices and in moving jobs overseas. People close to Intel’s Krzanich said he was motivated to quit the council because of Trump’s Twitter attacks on Frazier.
The executives who exited this week weren’t the first. Uber Technologies Inc.’s Travis Kalanick left the strategy panel over Trump’s immigration policies earlier this year when he was still CEO of the rideshare company. Elon Musk of Tesla Inc. and Bob Iger of Walt Disney Co. stepped down after Trump pulled the U.S. out of the Paris climate accord.
That history shows how swiftly positions can switch. In March, Iger vigorously defended his presence on the advisory group, quoting from the musical “Hamilton” and saying he wanted to be “in the room where it happens” so he could express his opinions on issues important to his company. Three months later, he was gone.