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Thursday, August 17, 2017

Trump’s Business Councils Disband After CEOs Defect

Wall Street Journal 
By Emily Glazer, Sarah Krouse and Elena Cherney
August 16, 2017

Business leaders disbanded two CEO councils created by the White House, a move they said was protesting Donald Trump’s failure to sufficiently condemn racism, marking a dramatic break between U.S. companies and a president who has sought close ties with them.​

In the hours that followed Mr. Trump’s combative news conference Tuesday—during which he appeared to apportion blame equally between white supremacist groups and counterprotesters for lethal violence in Charlottesville, Va.—executives on two prominent advisory councils started calling each other to discuss whether to stay on.

On a 45-minute conference call that started around 11:30 a.m. ET Wednesday, members of the President’s Strategic and Policy Forum decided to dissolve the group.

Blackstone Group LP chief Stephen A. Schwarzman, who organized the conference call, called the White House and spoke with Jared Kushner, Mr. Trump’s son-in-law and a presidential adviser, to give him the news, according to a person familiar with the call. Around the same time, the manufacturing council also had a call and decided to disband.

Within minutes of the call to Mr. Kushner, Mr. Trump posted on Twitter that he had dissolved the councils: “Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both. Thank you all!”

A White House spokesman declined to comment.

The unraveling of the business councils marks a dramatic moment in corporate America’s relationship with the presidency.

From its start, the Trump White House had proclaimed an open-door policy for the country’s top business leaders. Many chief executives, while wary of being associated with the president’s more contentious policies, such as on immigration and climate change, have been eager to help Mr. Trump, a fellow businessman, shape his agenda of deregulation and tax overhaul.

J.P. Morgan Chase & Co.’s James Dimon wrote that he disagreed with Mr. Trump’s reaction to recent clashes in Charlottesville, according to an internal memo sent Wednesday afternoon and reviewed by The Wall Street Journal. “Racism, intolerance and violence are always wrong…There is no room for equivocation here,” Mr. Dimon said. “It is a leader’s role, in business or in government, to bring people together, not tear them apart.”

Companies Wednesday stopped short of saying they would refuse to work with the White House in the future, though executives and corporate crisis managers noted that the reputational costs of sticking with the president have risen sharply.

Several CEOs have faced pressure from their own employees or parts of the public for remaining on the council, including International Business Machines Corp.’s Ginni Rometty and PepsiCo ’s Indra Nooyi.

Ms. Rometty and Ms. Nooyi, along with Boston Consulting Group’s Rich Lesser and BlackRock Inc. chief Laurence Fink, were among several leaders who joined Wednesday’s call prepared to resign from the Strategic and Policy Forum, participants said.

Mr. Schwarzman led Wednesday’s call and gave each member an opportunity to speak, people who participated on the call said.

“It became clear very quickly that there was a consensus” to disband the group in total, one participant said. “It was important that it be addressed as a group and not a drip-drip.”

Some panel members said they regretted losing a seat at the table as the White House deliberated on policies that could affect their companies, especially with a president who wasn’t familiar with many of their industries.

But members observed that the Strategic and Policy Forum only met twice in about eight months, with about half of the council members attending both meetings.

Jim McNerney, the former CEO of Boeing, didn’t agree with disbanding the group, according to people on the call, yet agreed to go along with the decision. Attempts to reach Mr. McNerney for comment were unsuccessful.

Toward the end of the conversation, a participant raised the specter of a “tweet storm” in reaction from Mr. Trump, participants said. Earlier in the week, Mr. Trump tweeted angrily after the CEOs of Merck & Co., Intel Corp. and Under Armour Inc. announced they were quitting his manufacturing council.

Business leaders now face the challenge of trying to stay in the president’s ear without a formal advisory position. Two companies whose leaders served on the Strategic and Policy Forum indicated Wednesday they would remain open to advising the president on future policy matters.

Created in the early days of the Trump presidency, the Strategic and Policy Forum and manufacturing-advisory council gathered CEOs for Mr. Trump to consult as he implemented a broad economic plan that included reworking the U.S. tax code and trying to stem the flow of U.S. jobs to other countries.

Individual members of both councils had discussed disbanding the forum for months, especially after the decision to leave the Paris climate accord in June and again in July when Mr. Trump barred transgender individuals from serving in the military, members said.

Yet plenty of executives saw value in remaining on the forums until Tuesday afternoon’s news conference. Johnson & Johnson CEO Alex Gorsky issued a statement early Tuesday that said he would remain on the manufacturing council and advocate for values like diversity and inclusion from the inside.

But President Trump’s news conference made staying untenable for most members. On Wednesday, Mr. Gorsky issued another statement saying he was leaving the council. “The President’s most recent statements equating those who are motivated by race-based hate with those who stand up against hatred is unacceptable and has changed our decision to participate,” Mr. Gorsky said.

Executives have faced tough questions from workers and young recruits over their relationship with the White House. A poll initiated by Boston Consulting Group employees this week on Fishbowl, a social network for professionals, found 83% of more than 100 respondents thought Mr. Lesser, the CEO, should step down from the advisory council.

Around 40 people protested outside the New York offices of J.P. Morgan and then Blackstone on Wednesday, and social-media campaigns heavily criticized corporate chiefs for not quitting the councils.

Color of Change, a nonprofit activist group, spearheaded a campaign with the hashtag #QuitTheCouncil and aimed its posts at executives including Campbell Soup CEO Denise Morrison and PepsiCo ’s Ms. Nooyi. Ms. Morrison withdrew from the manufacturing council Wednesday morning.

—Vanessa Fuhrmans, Jonathan D. Rockoff and Suzanne Vranica contributed to this article.

Corrections & Amplifications

President Donald Trump is seen talking to General Motors Chief Executive Mary Barra during a February meeting of the Strategic and Policy Forum in a previous photo accompanying an earlier version of this article. A caption in an earlier version of this article incorrectly said Mr. Trump was talking to IBM CEO Ginni Rometty. Aug. 16, 2017

Write to Emily Glazer at emily.glazer@wsj.com, Sarah Krouse at sarah.krouse@wsj.com and Elena Cherney at elena.cherney@wsj.com

Appeared in the August 17, 2017, print edition as ‘CEOs Scrap Trump Panels.’

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