Risky Business for C.E.O.s: An Invitation From Trump

http://www.nytimes.com/2017/02/16/business/trump-ceo-invitations.html

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For the nation’s top executives, a summons to the White House has long been a much-coveted honor.

Now, less than a month into President Trump’s administration, it’s become something to be ducked, at least for some.

As the Dallas Mavericks’ owner, Mark Cuban, told The Fort Worth Star-Telegram: “It’s a tough situation for C.E.O.s. You want to make nice with the president because you’re a public company and you have shareholders, and it’s hard to balance doing the right financial thing versus doing what they think is the right thing, whatever your political beliefs are.”

Mr. Cuban, the billionaire investor and star of the reality TV show “Shark Tank,” has been engaged in a running Twitter feud with Mr. Trump. In the latest volley, the president tweeted that Mr. Cuban “backed me big-time but I wasn’t interested in taking all of his calls,” and “He’s not smart enough to run for president!”

A Trump invitation “has become a double-edged sword because the population is so divided,” said Jeffrey Sonnenfeld, a professor at the Yale School of Management who organizes meetings of chief executives there.

Things seemed different as recently as December, when the Blackstone Group’s chief executive, Stephen A. Schwarzman, announced the formation of the President’s Strategic and Policy Forum, whose members would “meet with the president frequently to share their specific experience and knowledge,” as Mr. Schwarzman put it at the time.

Then, executives were clamoring to make the cut, even those who had been cool or in some cases hostile to Mr. Trump’s candidacy. Well over 100 chief executives approached Mr. Schwarzman and the Trump transition team angling to be included.

Only two people declined, citing time pressures: Apple’s chief executive, Tim Cook, and the Microsoft co-founder Bill Gates.

The final list of 16 included such business luminaries as Jack Welch, the former chief executive of General Electric; Jamie Dimon of JPMorgan Chase; Bob Iger of Disney; Mary Barra of General Motors; and Virginia Rometty of IBM.

Soon after, Elon Musk of Tesla Motors, Travis Kalanick of Uber and Indra Nooyi of PepsiCo were added, buttressing the group’s expertise in technology and consumer products.

Then Mr. Trump was inaugurated and in short order unleashed his divisive immigration order, leading to chaos at airports and nationwide protests. Exactly one week later, on relatively short notice, he convened the first meeting of the forum, with live television coverage from the State Dining Room of the White House.

Even though nearly every company represented in the forum issued a statement that to varying degrees distanced it from the immigration order or even denounced it, the images of the meeting risked looking like an endorsement of the Trump administration and its policies.

Images of Mrs. Nooyi, an immigrant born in India (and now a citizen), who sat next to Mr. Schwarzman and within camera range of Mr. Trump, seemed especially incongruous.

And all of this was before the abrupt resignation of Michael T. Flynn as national security adviser and renewed questions about the Trump campaign’s contacts with the Russians.

Mr. Kalanick was the first on the forum to feel the wrath of consumers. Protesters accused Uber of “collaborating” with Mr. Trump and chained themselves to the doors of the company’s headquarters in downtown San Francisco. Soon after, the hashtag #DeleteUber trended on Twitter. Within four days of the immigration order, 200,000 users had deleted the Uber app, and one of the company’s rivals, Lyft, reported that downloads of its own app had more than doubled.

In an effort to quell the protest, Mr. Kalanick resigned from the forum the day before its first meeting. The “implicit assumption that Uber (or I) was somehow endorsing the administration’s agenda has created a perception-reality gap between who people think we are, and who we actually are,” he said in a memo to employees.

When I contacted him this week, Mr. Kalanick said: “Joining the group was not meant to be an endorsement of the president or his agenda but unfortunately it has been misinterpreted to be exactly that. There are many ways we will continue to advocate for just change on immigration, but staying on the council was going to get in the way of that.”

Protest flared and a social media boycott campaign took root after the founder of Under Armour, Kevin Plank, joined Mr. Trump’s 28-member Manufacturing Jobs Initiative, announced in January, and then praised the president’s pro-business policies on CNBC.

This week, in an open letter published as an advertisement in The Baltimore Sun (Under Armour’s headquarters is in Baltimore), Mr. Plank said, “I personally believe that immigration is the foundation of our country’s exceptionalism,” and “in a time of division, we aspire to be a force of unity, growth and optimism for our city and our country.” He pledged to oppose “any new actions that negatively impact our team, our neighbors or their families.”

Some Disney employees organized demonstrations in three cities this week, demanding that Mr. Iger resign from the forum, even though he didn’t attend the first meeting because of a conflict with a long-scheduled company board meeting. The demonstrations drew about 120 protesters, the company said.

At the same time, Out & Equal, an advocacy group for lesbian, gay, bisexual and transgender people, praised Mr. Iger’s membership in the forum in a letter to the company, citing his support for workplace equality and ability to influence the president.

Mr. Schwarzman himself received some criticism from a few Schwarzman scholars, who receive support under a program he established for study in China. In a letter to the scholars explaining his role in advising Mr. Trump, Mr. Schwarzman wrote: “In life you’ll often find that having influence and providing sound advice is a good thing, even if it attracts criticism or requires some sacrifice. However, I have always believed one’s obligation is to work for the common good.”

As the Uber experience suggests, the risks of engaging with Mr. Trump are highest for companies with direct exposure to consumers, especially those who can easily switch to a competitor less identified with the Trump brand. General Motors and PepsiCo could face more consumer reaction; the banks and money managers less so; and industrial concerns like General Electric even less.

At the same time, the benefits of being part of the forum and gaining the ear of the president are obvious: Virtually every Fortune 500 corporation has vitally important interests affected by the federal government, from antitrust, labor and trade policies, to tax reform and bank regulation, including changes to the Dodd-Frank Act.

Underscoring the value of access, the president singled out Mr. Dimon, whom the Trump campaign had courted as a potential Treasury secretary, saying at the meeting, “There’s nobody better to tell me about Dodd-Frank than Jamie.”

The comment seemed to underscore the degree to which Mr. Trump has turned regulation of Wall Street over to the bankers he railed against during the campaign. (Curiously, given Mr. Trump’s stated hostility to Dodd-Frank, Mr. Dimon is on record as supporting many aspects of the legislation, saying it has made the banking system safer but has also made it more difficult for smaller banks to compete.)

A spokesman for JPMorgan Chase declined to comment.

And refusing Mr. Trump’s invitations risks a presidential Twitter broadside, something that is unprecedented in American political and business history and whose impact is still being assessed. Yahoo Finance last week said it had sifted through more than 34,000 Trump tweets and identified attacks on 62 businesses, including at least two represented in the forum, General Motors and Boeing.

(I asked the White House on Thursday for comment on its interaction with business leaders, but received no response.)

Optics aside, Mr. Sonnenfeld of Yale said the president’s overtures to executives represented a welcome change from the Obama administration, which largely ignored big business and summoned bankers to Washington to browbeat them publicly over the financial crisis. By comparison, Mr. Trump embraced members of his business forum as “the best and the brightest” and said he welcomed their ideas.

“There’s always the danger that chief executives will be used as photo ops,” Mr. Sonnenfeld acknowledged. But he praised Mr. Trump’s decision “to give chief executives a seat at the table” and said he had talked to at least half of the participants since the meeting. “They’re telling me they found him very receptive to their ideas and willing to listen,” he said. “They’ve said they’re holding each other accountable to be truthful and candid and to raise key issues with him.”

Mr. Sonnenfeld has met with Mr. Trump since the election and offered advice. “He’s very charming and open to new ideas,” Mr. Sonnenfeld said. “I’ve seen business executives melt in his presence.”

Charles Elson, a professor and expert in corporate governance at the University of Delaware, also praised the president for reaching out to business leaders. He said he disagreed with Mr. Kalanick’s decision to resign.

“When the president calls, you should go to see him, regardless of your political persuasion, out of respect for the office,” Mr. Elson said. “As a chief executive with a duty to your shareholders, it’s your obligation to do so, like him or not.”

Mr. Schwarzman’s office made a similar point when I inquired this week. “Steve has advised presidents from both parties in the past and feels a duty to help any administration that calls on him if he’s able to do so for the good of the country,” Christine Anderson, a spokeswoman for Mr. Schwarzman, said.

Still, everyone I spoke to agreed that there were lines they wouldn’t cross. “You don’t have to agree” with the president, Mr. Elson said. “If he asks you to take a political position, you can say no. And if he asks you to endorse something where you have a deep philosophical objection, you shouldn’t do it.”