David Gelles, Landon Thomas jnr,

Andrew Ross Sorkin and Kate Kelly

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 Donald Trump.

Along with other business leaders, Nooyi had watched with bafflement over the weekend as Trump blamed "many sides" for an outburst of white supremacist violence in Charlottesville, Virginia.

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.

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 labour group and a non-profit business alliance.

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.

The Trump Tower tipping point

But after the president delivered a series of stunning remarks in the gilded lobby of Trump Tower on Tuesday afternoon, when he again equated far-right hate groups with the groups protesting them, many chief executives had enough.

On Wednesday morning, a dozen of the country's most influential CEOs joined a conference call, and, after some debate, a consensus emerged: the policy forum would be disbanded, delivering a major blow to a president who came into office boasting of his close ties with business leaders.

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 proposed agenda of lower taxes and lighter regulation.

Before they could make a statement announcing their decision, however, 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!"

This account is based on interviews with more than a dozen people at the companies represented on the council or advising them.

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 popularising the phrase "You're fired!" on the television show The Apprentice.

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.

Pressure from the market

But seven months into his presidency, 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.

"There is continuing pressure on CEOs 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."

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-publicised events for the groups, momentum was lost, and when the week began, no further meetings were 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.

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 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 organisational behaviour at the Yale School of Management. "They've now turned their backs on him."

Consensus emerges

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.

Nooyi, who was drawing heavy criticism on social media for her continued 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 signalled they would not remain. By 10pm, it was clear that many participants were prepared to resign.SHARE ON TWITTER

As the group unravelled, Stephen A. Schwarzman, the chief executive of the Blackstone Group, was kept in the loop. Schwarzman was one of 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, 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 11.30am on Wednesday.

On Wednesday morning, Laurence D. Fink, chief executive of BlackRock, the world's largest asset manager, called Nooyi, Rometty, Barra and Douglas McMillon, the chief executive of Walmart.

Then the call around began

Fink decided to step down after seeing the president's remarks on Tuesday, and now encouraged other executives to join him. McMillon, who earlier in the week made public a stinging critique of the president, but had not stepped down from the advisory group, changed his stance after Trump's news conference on Tuesday and had decided to step down.

As the call began, more than a dozen of the nation's top business leaders dialled in from around the country – Fink was in Aspen, Colorado, while Jamie Dimon, the chief executive of JPMorgan, was home in New York recovering from surgery.

Leading the discussion, Schwarzman, gave each participant a couple of moments to speak.

Two members of 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.

McNerney and Welch did not respond to requests for comment.

But most others, including Fink of BlackRock and Nooyi of Pepsi, were resolved to step down from the forum whether or not it disbanded.

'Condemn and disband'

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.

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, 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 that they were stepping down from their advisory roles.

By the time the call was over, the group had agreed to disband. After the decision was final, Schwarzman called Trump to let him know the group was disbanding before releasing a statement. The White House asked that he include language that the president had agreed to disband it.

'There is no room for equivocation here'

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 Trump, one by one, publicly separated themselves from him 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," 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," Rometty of IBM said.

And Jeffrey Immelt, the chairman of General Electric, said, "The president's statements yesterday were deeply troubling."

New York Times

http://www.canberratimes.com.au/business/world-business/inside-the-mass-ceo-defection-from-donald-trumps-advisory-boards-20170817-gxygfz.html

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Thursday 17 August 2017

Inside the mass CEO defection from Donald Trump's advisory boards