American CEOs heartburn

Trump gives heartburn to American CEOs

He celebrates Merck CEO in July, only to condemn him three weeks later.

By DAN DIAMOND

It took three weeks for Merck CEO Kenneth Frazier to go from a "business genius" to a "ripoff" drug executive — at least in the eyes of President Donald Trump.

Frazier appeared at the White House on July 20 to celebrate a new jobs initiative, where the president hailed him as a “great, great business leader” and thanked Merck for investing in American jobs. But on Monday, the president blasted Frazier after the executive announced he was leaving a White House advisory council over Trump’s failure to condemn the hate groups that demonstrated in Charlottesville, Va.

"Now that Ken Frazier of Merck Pharma has resigned from President's Manufacturing Council, he will have more time to LOWER RIPOFF DRUG PRICES!" Trump tweeted. "[Merck] Pharma is a leader in higher & higher drug prices while at the same time taking jobs out of the U.S. Bring jobs back & LOWER PRICES!" the president added on Monday night, doubling down on his assault. The president's attack carried particularly ominous implications for Frazier since Trump campaigned against pharmaceutical industry practices, and the White House is expected to soon release its long-promised executive order to rein in drug prices.

Frazier’s decision and his subsequent tongue-lashing on Twitter illustrate the tricky balancing act for America’s CEOs: Avoid Trump and run the risk of being his target — or get close to this White House at your peril.

More than two dozen CEOs and other leaders were invited to serve on Trump’s councils, a somewhat symbolic role that gives business executives a chance to bend the ear of the president and potentially win favorable treatment. A number of those leaders, like General Electric's Jeff Immelt, also served on similar advisory councils for former President Barack Obama.

Late Monday, Intel's CEO, Brian Krzanich, posted in a company blog that he, too, was stepping down from the manufacturing council.

"I have already made clear my abhorrence at the recent hate-spawned violence in Charlottesville," he wrote, "and earlier today I called on all leaders to condemn the white supremacists and their ilk who marched and committed violence. I resigned because I want to make progress, while many in Washington seem more concerned with attacking anyone who disagrees with them."

That announcement followed tweets from Under Armour, which said its chief executive, Kevin Plank, had decided to quit, as well.

"I love our country & company," Plank said in the statement on Twitter. "I am stepping down from the council to focus on inspiring & uniting through power of sport."

Unlike Frazier, Krzanich and Plank, most business leaders have stayed quiet and appear to be remaining on the councils — even if their endorsements are tepid at best.

"GE has no tolerance for hate, bigotry or racism, and we strongly condemn the violent extremism in Charlottesville over the weekend," a company spokesperson said Monday, but added, "With more than 100,000 employees in the United States, it is important for GE to participate in the discussion on how to drive growth and productivity in the U.S., therefore, Jeff Immelt will remain on the Presidential Committee on American Manufacturing."

A spokesperson for Michael Dell, founder and CEO of Dell Technologies, offered a similar justification for his continued involvement. "There’s no change in Dell engaging with the Trump administration and governments around the world to share our perspective on policy issues that affect our company, customers and employees," the spokesperson said.

Spokespersons for more than 10 other council members, including the CEOs of Johnson & Johnson and IBM, did not respond to requests for comment.

While a spokesperson for JPMorgan Chase CEO Jamie Dimon declined to say whether the bank executive would stay on Trump’s council, he shared a statement Dimon co-authored for the Business Roundtable, a group he chairs.

“The CEOs of Business Roundtable will never accept such intolerance and hate” like the bigotry in Charlottesville, the statement read. “We will continue to build our companies around the principles of respect, trust and equal opportunity to all our employees.”

There’s considerable benefit to being in the White House’s good graces. Denise Morrison, CEO of Campbell Soup, serves on one of Trump’s councils, and the president and the White House have repeatedly celebrated the company. Andrew Liveris, the CEO of Dow Chemical who serves on one council, was granted a private meeting with EPA head Scott Pruitt about three weeks before the EPA rolled back an Obama administration ban on a Dow pesticide, although the 30-minute meeting was subsequently canceled in favor of a brief introduction. (Dow also donated about $1 million for Trump's inauguration.)

Advocates say the councils are structured to give executives maximum privacy with the president, with no press in attendance and no formal readout of remarks.

"You have these people meeting in a back room, no idea what they’re talking about, what they’re saying or how they’re influencing the president," said Walter Shaub, who served as the government's ethics czar until last month. "That’s concerning, particularly given [Trump's] conflicts of interest."

But there’s also heightened risk as social protests over White House policies mount. Travis Kalanick, then-CEO of Uber, was pressured into leaving a Trump advisory council in February after the administration pushed its travel ban on immigration from Muslim-majority countries and hundreds of thousands of Uber users reportedly deleted their applications in protest. Some critics of Kalanick, who was ultimately forced out of Uber this summer, pointed to his “coziness” with Trump as one reason that he had to go.

Executives also have gotten less time with the president as the councils sputtered after other prominent CEOs defected — Elon Musk of Tesla and Bob Iger of Disney resigned their council positions across the spring — and scheduling conflicts forced postponements. While Trump had suggested that the councils could convene every two months or quarterly, one council hasn't met since February and another hasn't met since April.

Meanwhile, business leaders that engage with the White House continue to take heat for the president's controversial remarks, and the pressures on those CEOs have been renewed in the wake of the Charlottesville riots. "Ken Frazier resigned because the President of the United States refused to condemn white supremacists," Jon Favreau, the former Obama speechwriter, tweeted Monday, with a link to a list of council members. "What are the rest of you waiting for?"

"The councils can provide a valuable tool for business leaders to raise issues … at the highest levels of the administration," said Michael Steel of Hamilton Place Strategies, which has advised clients on working with the White House. But the CEOs are "also exposed to criticism based on political concerns — and that is a particularly acute concern given the unprecedented divisiveness and unpopularity of President Trump."

Cleveland Clinic CEO Toby Cosgrove, who serves on one of Trump’s advisory councils, has seen both the benefits and frustrations of being in the same circles with the White House. The Ohio surgeon was interviewed by Trump to be the new president's Veterans Affairs secretary — a role that Cosgrove declined. But in recent months, his hospital has faced repeated protests for its decision to hold a fundraiser at Mar-a-Lago, Trump's resort in Florida. On Monday, a clinic spokesperson said it would continue to keep its event at the Trump resort — but clarified they "have not yet signed a contract for it."