CEOs should have known what to expect when they cosied up to President
Could America's first CEO president lose America's CEOs?
It was a question that came to the fore again yesterday when Merck & Co's Kenneth Frazier, then Under Armour's Kevin Plank, Intel's Brian Krzanich, and Scott Paul, president of the Alliance for American Manufacturing, stepped down from a White House business group set up to advise Donald Trump.
They were joined by Richard Trumka, president of the AFL-CIO, the largest group of labor unions in the country, last night.
While none mentioned the president, Mr Frazier, one of America's most prominent black chief executive officers, quit the council as Mr Trump was being assailed for failing to quickly condemn white supremacists for deadly violence at a rally on Saturday in Charlottesville, Virginia. Mr Frazier said he was acting on a "matter of personal conscience".
Mr Plank and Mr Krzanich, who are white, referred to the charged atmosphere in the US. Mr Plank said he was quitting because his athletic-wear company "engages in innovation and sports, not politics". Mr Krzanich, who leads the world's largest semiconductor maker, cited a "divided political climate" and said: "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."
Mr Trump eventually bowed to pressure and denounced racist hate groups, but the damage was done. Mr Frazier and his compatriots joined the ranks of Elon Musk of Tesla, Bob Iger of Walt Disney and Travis Kalanick of Uber - executives who walked away from business panels Mr 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, Boston University. "Whereas the president could have claimed to learn from the council, now it seems he only listens when they agree with his opinion."
Mr Frazier's departure earned angry tweets from Mr 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.
Mr Plank, who issued his resignation on Monday evening, came under fire earlier this year from Under Armour brand ambassadors for comments the CEO made about Mr Trump being a pro-business asset in the White House. Some of the white supremacists in Charlottesville were photographed in Under Armour apparel, a fact noted in posts on the company's Twitter page, which was crowded with calls for a product boycott if Mr Plank didn't resign from the council.
As for Intel's Mr Krzanich, his Twitter account was peppered on 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 Mr 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?'"
The CEOs remaining on the advisory group - including those from Dow Chemical, General Electric and Wal-Mart Stores - all have their own "risk calculations" to make, said John Rice, CEO of Management Leadership for Tomorrow, a non-profit that helps companies, including Goldman Sachs Group and Alphabet Inc's Google, find minority talent. "They know they will get called out."
Mr Trump's Twitter fury seems to hold less power these days. While his previous criticisms of companies or executives have exacted retribution in the stock market, Merck's stock never faltered on Monday. 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 Mr Trump.
"Having a place at the table when big issues are being discussed" is of great importance to executives and also to the president, Mr Post said. "There is nothing more credible than the CEO's voice in issues that matter."
Business leaders, including JPMorgan Chase & Co's Jamie Dimon and Apple's Tim Cook, denounced racial intolerance, condemned hate speech or expressed shock over Saturday's events in Charlottesville.
But publicly issued applause for Mr Frazier from his 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 Mr Frazier for standing up "for the moral values that made this country what it is".
It was glaring that there weren't similar comments from those CEOs advising the president as members of various councils, said Jeffrey Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management.
"They are all afraid, individually, to stand out," he said. "It's absolutely fine to have a seat at the table - but you have to open up your mouth."
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."