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CEO Daily: Thursday, 25th May

Good morning.

I was in Chicago yesterday at the Great Place to Work summit, interviewing leaders from four companies on Fortune‘s 100 Best Companies to Work For list—Cisco Chairman John Chambers, AT&T CEO Randall Stephenson, PwC U.S. Chairman Tim Ryan, and Genentech founder Herb Boyer and current CEO Bill Anderson. It’s easy to see why each company has earned a place on our list (Cisco has been there for all 20 years of the list’s existence; Genentech 19 of 20; and PwC for 13. AT&T is new this year.). All five men clearly put concern for their workers near the center of their thinking, and all agreed that creating a strong culture and attracting top talent is a chief cornerstone of their corporate success.

I was especially moved by the stories both Ryan and Stephenson told about their efforts to address race relations after last year’s shootings and the explosion of the Black Lives Matter movement. Both men made the case that the issue was not peripheral, but central to their jobs. Ryan said creating a healthy culture is core to the challenges most PwC clients face, while Stephenson said he believed using his company’s power to address pressing social issues like race was in his shareholders’ long-term interest. (You can read more about Ryan’s conversion here, and Stephenson here.)

Stephenson took the opportunity to disagree with my observation that the business community has splintered over corporate tax reform. While acknowledging the fierce business battle over the border adjustment tax, which pits retailers against manufacturers, he said big business was largely aligned in favor of a more modest cut in the corporate rate to 25%, and elimination of many corporate loopholes. He said AT&T would likely pay higher taxes in the short term under such a plan, but he and others were willing to do that for the sake of the a saner tax system. “We have to do it,” he said.

At Fortune, we are in the midst of our annual survey of Fortune 500 CEOs, and so far are finding a majority still think corporate tax reform has at least a 50-50 chance of passing. Full findings of the survey will be published in the Fortune 500 issue next month.

Paul Ryan said yesterday Congress plans to have a tax reform bill on the President’s desk by December 23.

More news below.

Alan Murray

Top News

CBO: 23M would lose insurance under GOP law

An estimated 23 million people would lose health coverage by 2026 under Republican legislation aimed at repealing Obamacare, a nonpartisan congressional agency said on Wednesday in the first calculation of the new bill’s potential impact. The report from the Congressional Budget Office also said federal deficits would fall by $119 billion between 2017 and 2026 under the bill, which was approved this month by the Republican-dominated House of Representatives. The bill is called the American Health Care Act and it would fulfill a long-running Republican goal—repealing and replacing much of former President Barack Obama’s 2010 Affordable Care Act, commonly called Obamacare. President Donald Trump and other Republicans have said Obamacare is too costly and creates unwarranted government interference in healthcare decisions. Reuters

Oil producers appear to agree to more cuts

On Thursday, ministers from the Organization of Petroleum Exporting Countries and its allies meet in Vienna to decide whether to prolong their agreement on output cuts. Major producers including Saudi Arabia, Russia and Iraq favor an extension and consensus is reportedly building around an agreement that would run through next March. One delegate even told reporters that the decision was made. This move to extend cuts in oil output comes after the group known as OPEC last year met to curb oversupply that had led to an oil-market rout. The initial accord hasn’t exactly worked as planned: the decision to cut output failed to drain inventories or sustain prices much above $50 a barrel after early gains brought U.S. competitors back to life. Most experts agree that if the output cuts are extended, oil prices will remain between the range of $50 to $60 a barrel. Bloomberg

Facebook reportedly planning scripted shows

Reuters reports that Facebook has signed deals with news and entertainment creators Vox Media, BuzzFeed, ATTN, and others to make shows for its upcoming video service, which will feature long and short-form content with ad breaks, according to several sources familiar with the situation. The social-media giant is reportedly planning two tiers of video entertainment: scripted shows with episodes that would last 20 to 30 minutes (which it would own) and shorter scripted and unscripted shows with episodes between 5 and 10 minutes (which it wouldn’t own). If Facebook were to pursue this attempt formally, it would deliver on Chief Executive Mark Zuckerberg’s remarks to investors earlier this month that the company was looking for so-called “anchor content” that would draw people to the video tab on Facebook’s app. Reuters

Lack of new launches puts Ford CEO in tough spot

Ford’s new CEO James Hackett was appointed to that post earlier this week to steer the second-largest American automaker at a time when resurgent arch-rival General Motors is grabbing market share. The biggest problem Hackett must confront, according to some insiders, is a product drought that shows no signs of easing until 2019, given the auto industry’s long product cycles. There is a void of new vehicles, partly because of a decision by a prior CEO—Alan Mulally—to focus much of Ford’s resources on an expensive 2014 redesign of the F-Series pickup. While that safeguarded America’s best-selling vehicle, it has prevented Ford from developing other hits. And given that it takes as much as four years for a new or redesigned vehicle to get into production, Mulally’s narrow focus is just now being felt. Reuters

Around the Water Cooler

Female CEOs are outperforming male counterparts

The median pay for a female chief executive was $13.1 million last year, versus the $11.4 million earned on average for male CEOs, according to an analysis by executive data firm Equilar and the Associated Press. Both numbers represent an increase of 9% over the year before. But it is important to note that the sample size for women was much, much smaller. Of the 346 executives that were included in the study, just 21 were female. Some of the highest-paid female CEOs last year included IBM’s Ginni Rometty, Yahoo’s Marissa Mayer, PepsiCo’s Indra Nooyi, and GM’s Mary Barra. Fortune

Wall Street isn’t sold on Constellation, Brown-Forman pairing

A media report this week floated speculation that Jack Daniel’s maker Brown-Forman had spurned a takeover approach by Constellation Brands, which makes Corona beer, Robert Mondavi wine, and Svedka vodka. Brown-Forman, which is family controlled, has said it isn’t for sale and Wall Street analysts seem to agree the deal doesn’t look likely to occur due to a limited ability to finance it and the Brown family’s disinterest in selling. The rumor does signal that Constellation Brands may be on the hunt for a blockbuster deal, though few targets are available in the spirits category (many likely targets, like Bacardi and Jose Cuervo, are also family controlled). If Constellation were to instead focus on beer, Sam Adams brewer Boston Beer—or perhaps another top-10 craft brewer—might be a good fit to add to the premium-priced beer portfolio Constellation is creating with the likes of Ballast Point. Fortune

People trust the media they like

While studies have shown that the public’s trust in the media is extremely low—and even falling—a new report indicates that responses to these surveys can vary widely depending on how the questions are phrased. A new study has found that people’s answers changed depending on whether the question was about their perception of the media in general or the media that they used most often—which in most cases consisted of fairly mainstream outlets. When people were asked whether the media, generally, was “very accurate,” only 17% said that they agreed with the statement. But when respondents were asked about the media sources that they rely on most, twice as many—34%—said they believed they were very accurate.  Fortune

Summaries by John Kell; @johnnerkell