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Trump Ends C.E.O. Advisory Councils as Main Group Acts to Disband After Trump Hedges His Condemnation of Hate, C.E.O.s Organize a Mass Defection
(35 minutes later)
President Trump’s main council of top corporate leaders disbanded on Wednesday after the president’s controversial remarks in which he equated white nationalist hate groups with the protesters opposing them. On Monday, Indra Nooyi, the chief executive of Pepsi, picked up the phone and began calling other prominent corporate chieftains who like her had agreed to advise President Trump.
Soon after, the president announced on Twitter that he would end his executive councils, rather than put “pressure” on executives. A rebellion was brewing.
The quick sequence began late Wednesday morning when Stephen A. Schwarzman, the chief executive of the Blackstone Group and one of Mr. Trump’s closest confidants in the business community, organized a conference call for members of the president’s Strategic and Policy Forum. Along with other business leaders, Ms. Nooyi had watched with bafflement over the weekend as Mr. Trump blamed “many sides” for an outburst of white supremacist violence in Charlottesville, Va.
On the call, the chief executives of some of the largest companies in the country debated how to proceed. Ms. Nooyi quickly reached Mary T. Barra, the head of General Motors, and Virginia M. Rometty, the chief of IBM, who were both similarly outraged with the president’s response. Together, they agreed that it was time to step down from the Strategic and Policy Forum, an elite group formed late last year to advise the president on economic issues.
After a discussion among a dozen prominent C.E.O.s, the decision was made to abandon the group altogether, said people with knowledge of details of the call. As these calls were occurring, the president’s other main business advisory group, the Manufacturing Jobs Initiative, had begun to disintegrate. Early Monday, the chief executive of Merck stepped down from that group, followed by the chiefs of Intel and Under Armour, and representatives from a labor group and a nonprofit business alliance.
The council included Laurence D. Fink of BlackRock, Ginni Rometty of IBM, Rich Lesser of the Boston Consulting Group and Dr. Toby Cosgrove of the Cleveland Clinic, among others. Some chief executives were still on the fence on Tuesday, torn between resigning from the prestigious presidential policy advisory panel and making a statement by stepping down.
“Intolerance, racism and violence have absolutely no place in this country and are an affront to core American values,” said a statement released by the council. “We believe the debate over forum participation has become a distraction from our well-intentioned and sincere desire to aid vital policy discussions on how to improve the lives of everyday Americans. As such, the president and we are disbanding the forum.” But after the president delivered a series of stunning remarks in the gilded lobby of Trump Tower Tuesday afternoon, when he again equated far-right hate groups with the groups protesting them, many chief executives had enough.
Before the president’s announcement, executives from his manufacturing council were expected to have a similar call Wednesday afternoon. The manufacturing panel has seen a wave of defections since Monday, as business chiefs who had agreed to advise the president determined that his remarks left them with no choice but to walk away. On Wednesday morning, a dozen of the country’s most influential C.E.O.s joined a conference call, and, after some debate, a consensus emerged: The policy forum would be disbanded, delivering a blow to a president who came into office boasting of his close ties with business leaders.
Two additional chief executives Denise Morrison of Campbell Soup and Inge Thulin of 3M had announced Wednesday morning they would resign from the manufacturing council. With the collapse of the councils, the president has all but lost his most natural constituency — the corporate leaders who stood to benefit from his agenda of lower taxes and lighter regulation.
The defections left Mr. Trump all but isolated from the business leaders whose approval he covets. Before they could make a statement announcing their decision, however, Mr. Trump spoke. He had caught wind of their planned defection and wanted to have the last word. Taking to Twitter, he wrote: “Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both. Thank you all!”
Members of the advisory group had stood with the president in recent months even as he advanced policies they vehemently opposed, including tough immigration policies and withdrawal of the United States from the Paris climate accord. This account is based on interviews with more than a dozen people at the companies represented on the council or advising them.
But the president’s equivocating in the wake of the outburst of white nationalist violence in Charlottesville was too much for the C.E.O.s to bear. Mr. Trump rose to fame as a businessman. A real estate developer and reality television star, he cultivated an image as the consummate boss, dishing out investment advice and popularizing the phrase “You’re fired!” on the television show “The Apprentice.”
“He had put them in a very difficult position,” said Anat R. Admati, a professor of finance and economics at the Stanford Graduate School of Business. “This has ruined his relationships with some of them.” As president, he filled the White House with executives from Wall Street, and installed business and business-friendly leaders in many important government roles. And he convened several business advisory groups stacked with the nation’s top chief executives.
On Monday, after Mr. Trump’s initial response to the violence, Kenneth C. Frazier, chief executive of the drug maker Merck, resigned from the manufacturing council. For much of the day Mr. Frazier was alone in his opposition, but that night, two more C.E.O.s, from Under Armour and Intel, left the same group. But seven months into his presidency, Mr. Trump is faced with an uncomfortable situation: Fewer and fewer business leaders are willing to be associated with a president who continues to advance opinions and policies that are deeply unpopular.
Then on Tuesday, three leaders of labor and nonprofit business groups left the council. And in a rebuke to the president, the chief executive of Walmart made public a letter to employees in which he explicitly criticized Mr. Trump’s leadership. “There is continuing pressure on C.E.O.s from customers, employees, shareholders and board members to take a position against what’s going on and separate themselves from president Trump’s councils,” said Bill George, the former chief executive of the medical device maker Medtronic and a board member of Goldman Sachs. “These executives cannot live with customers thinking they are in cahoots with someone who supports white supremacists or neo-Nazis.”
Presidential advisory councils are largely ceremonial, meant to give the business community a line in with the White House. But in the Trump administration, the councils have become politically charged entities, as the executives in the groups have routinely been asked to defend the president’s unpopular opinions and policies. For the executives, leaving these groups is no small matter. Presidential advisory groups are largely ceremonial but highly prestigious posts for business leaders, giving them an opportunity to weigh in on policy and try to shape a president’s legislative agenda. But after a few much-publicized events for the groups, momentum was lost, and when the week began, no further meetings were planned.
Moreover, the panels have not been seen to be particularly effective. After a few prominent events for the groups early in Mr. Trump’s presidency, there have been few meetings since, and no more are planned. “They had a few meetings with a bunch of fanfare, but it was more symbolic than anything else,” said Anat R. Admati, a professor of finance and economics at the Stanford Graduate School of Business.
“So far they haven’t done much,” Ms. Admati said. “They had a few meetings with a bunch of fanfare, but it was more symbolic than anything else.” Still, executives’ involvement with the groups or their decision to withdraw had become a barometer of their support for the president. The recent mass defections have exposed a fundamental divide between Mr. Trump and mainstream business leaders.
“In American history, we’ve never had business leaders decline national service when requested by the president,” said Jeffrey Sonnenfeld, a professor of organizational behavior at the Yale School of Management. “They’ve now turned their backs on him.”
By Tuesday evening, a consensus had emerged among many of the chief executives on the policy forum. Having stood with the president in recent months even as he advanced positions they vehemently opposed, including tough immigration policies and withdrawing the United States from the Paris climate accord, many executives felt his apparent tolerance for white nationalist violence was a bridge too far.
Ms. Nooyi, who was drawing heavy criticism on social media for her involvement in the panel, was a leading voice in calling for the dissolution of the policy forum. Others, including Rich Lesser, the chief executive of Boston Consulting Group, and Mark Weinberger, the head of the accounting firm Ernst & Young, also signaled they would not remain. By 10 p.m., it was clear that many participants were prepared to resign.
As the group disintegrated, Stephen A. Schwarzman, the chief executive of the Blackstone Group, was kept in the loop. Mr. Schwarzman was one of Mr. Trump’s closest business confidants and the chairman of the policy forum, but he was also outraged by the president’s remarks.
On Tuesday evening, he called Jared Kushner, the president’s son-in-law and a White House adviser, to inform him that the policy forum was falling apart. At the same time, Mr. Schwarzman began drafting a statement about disbanding the group. A White House spokesman declined to comment.
Efforts to schedule a conference call for the chief executives on Tuesday night were unsuccessful, so a call was set for 11:30 a.m. on Wednesday.
On Wednesday morning, Laurence D. Fink, chief executive of BlackRock, the world’s largest asset manager, called Ms. Nooyi, Ms. Rometty, Ms. Barra and Douglas McMillon, the chief executive of Walmart.
Mr. Fink decided to step down after seeing the president’s remarks on Tuesday, and now encouraged other executives to join him. Mr. McMillon, who earlier in the week made public a stinging critique of the president, but had not stepped down from the advisory group, had changed his stance after Mr. Trump’s news conference on Tuesday, deciding to step down.
As the call began, more than a dozen of the nation’s top business leaders dialed in from around the country — Mr. Fink was in Aspen, Colo., while Jamie Dimon, the chief executive of JPMorgan, was home in New York.
Leading the discussion, Mr. Schwarzman, gave each participant time to speak.
Two in the group — Jim McNerney, the former chief executive of Boeing and Jack Welch, the former leader of General Electric — proposed issuing a statement condemning the president, but keeping the group together.
Mr. McNerney and Mr. Welch did not respond to requests for comment.
But most others, including Mr. Fink of BlackRock and Ms. Nooyi of Pepsi, were resolved to step down from the forum whether or not it disbanded.
Mr. Dimon was also furious and wanted off the council, but felt conflicted because of his role as chairman of the Business Roundtable, an industry group.
Ms. Rometty of IBM, who had faced criticism from employees for her role in the group, advocated that the executives “condemn and disband.” That phrase soon drew broad backing.
During the 40-minute phone call, Mr. Schwarzman did not press for continued allegiance to the president. He said that although he had had high hopes for the forum, something had to change in light of the president’s reaction to the violence in Charlottesville. The question, he added, was how to reach a consensus.
As the policy forum was holding its call, other members of the manufacturing council, including Denise Morrison of Campbell Soup and Inge Thulin of 3M, announced they would step down.
By the time the call was over, the group had agreed to disband. After the decision was final, Mr. Schwarzman called Mr. Trump to let him know. The White House asked that he include language that the president had agreed to disband it.
Shortly thereafter, the president claimed on Twitter that he was disbanding the advisory groups.
Companies swiftly disputed that notion. Johnson & Johnson said its chief executive, Alex Gorsky, was leaving the panel before the president made his Twitter post.
After the announcement of the disbanding, many of the chief executives who had initially lent support to Mr. Trump, publicly separated themselves from him, one by one, in stark language.
“There is no room for equivocation here: the evil on display by these perpetrators of hate should be condemned and has no place in a country that draws strength from our diversity and humanity,” Mr. Dimon of JPMorgan wrote.
“In the past week, we have seen and heard of public events and statements that run counter to our values as a country and a company,” Ms. Rometty of IBM said.
And Jeffrey Immelt, the chairman of General Electric, said, “The president’s statements yesterday were deeply troubling.”