Who's next? The big question as CEOs turn back on Trump
Could America's first CEO president lose America's CEOs? It was a question that came to the fore again this week when first Merck's Kenneth Frazier, then Under Armour's Kevin Plank and Intel's Brian Krzanich stepped down from a White House business group set up to advise Donald Trump. On Tuesday, Scott Paul, the president of the Alliance for American Manufacturing, said he was stepping down, because it was "the right thing for me to do".
While none mentioned the president, Frazier, one of the country's most-prominent black chief executive officers, quit the council as Trump was being assailed for failing to quickly condemn white supremacists for deadly violence at a rally in Charlottesville, Virginia. Frazier said he was acting on a "matter of personal conscience".
Trump shot back on Twitter Tuesday morning, saying, "For every CEO that drops out of the Manufacturing Council, I have many to take their place. Grandstanders should not have gone on. JOBS!"
Plank and Krzanich, who are white, referred to the charged atmosphere in the US. Plank said he was quitting because his athletic-wear company "engages in innovation and sports, not politics", and Krzanich, who leads the world's largest semiconductor maker, cited a "divided political climate" and declared, "the current environment must change, or else our nation will become a shadow of what it once was and what it still can and should be".
Trump on Monday eventually bowed to pressure and denounced racist hate groups, but the damage was done. Frazier and his compatriots joined the ranks of Elon Musk of Tesla, Bob Iger of Walt Disney, and Travis Kalanick of Uber Technologies - executives who walked away from business panels Trump touted, taking the unusual steps of publicly distancing themselves from a sitting president.
"The value of the advisory council goes down when respected members leave over issues of principle," said James Post, professor of management emeritus for the Questrom School of Business at Boston University.
"Whereas the president could have claimed to learn from the council, now it seems that he only listens when they agree with his opinion."
Frazier's departure earned the head of the pharmaceutical giant angry tweets from Trump, with one making an all-caps jab about costly prescription drugs and another griping that Merck is a leader in high prices and in sending jobs overseas.
Plank, who issued his resignation Monday evening, came under fire earlier this year from Under Armour brand ambassadors, including Golden State Warriors point guard Stephen Curry, for comments the CEO made about Trump being a pro-business asset in the White House. What's more, some of the white supremacists in Charlottesville were photographed in Under Armour apparel, a fact noted in posts on the company's Twitter page Monday, which was crowded with calls for a product boycott if Plank didn't resign from the council.
As for Intel's Krzanich, his Twitter account was peppered Monday by pleas for him to quit the White House group after he posted that "there should be no hesitation in condemning hate speech or white supremacy by name".
Whatever their motivations for exiting, any CEO joining the advisory council should have known what to expect because there was little mystery about Trump's policy positions, said Nick Donatiello, a lecturer on governance topics at the Stanford Graduate School of Business. "You can say 'gee, couldn't some of this have been anticipated?"'
Trump's Twitter fury does seem to hold less powder these days. While his critical posts have exacted retribution in the stock market in the past, Merck's stock never faltered on Monday - closing about half a percentage point higher for a second straight day of gains.
Still, most corporate leaders continue walking the narrow line, working with the Trump administration to help shape policies while aiming not to alienate customers and shareholders who oppose Trump.
"Having a place at the table when big issues are being discussed" is of great importance to executives and also to the president, Post said. "There is nothing more credible than the CEO's voice in issues that matter."
Business leaders, including JPMorgan Chase's Jamie Dimon and Apple's Tim Cook, denounced racial intolerance, condemned hate speech or expressed shock over Charlottesville, where a rally participant rammed a group of counter-demonstrators with his car, killing one and injuring at least 19 others.
But public applause for Frazier from colleagues was scant. One, Hewlett Packard Enterprise's Meg Whitman, said in a tweet: "I'm thankful we have business leaders such as Ken to remind America of its better angels." Unilever's Paul Polman praised Frazier for standing up "for the moral values that made this country what it is".
Who's next? That's the big debate, said Davia Temin, head of the New York-based crisis-management firm Temin & Co. "This conversation is viral in boardrooms right now." (Bloomberg)