CEO Daily: Tuesday, 15th August
President Trump’s unsteady response to this weekend’s events in Charlottesville has caused three CEOs to quit his manufacturing advisory council: Merck CEO Ken Frazier, Intel CEO Brian Krzanich and Under Armour CEO Kevin Plank. Plank’s departure was particularly notable, given his comment earlier this year that the president is a “real asset” for the country. Frazier said he resigned “as a matter of personal conscience.” Krzanich blogged that he wanted “to call attention to the serious harm our divided political climate is causing to critical issues, including the serious need to address the decline of American manufacturing.” You can add that trio to previous conscientious objectors, who include Disney’s Bob Iger, Tesla’s Elon Musk and Uber’s Travis Kalanick.
Frazier’s resignation led the president to tweet in response: “Now that Ken Frazier of Merck Pharma has resigned from the President’s Manufacturing Council, he will have more time to LOWER RIPOFF DRUG PRICES.”
It’s hard to think of a precedent for such a prominent group of CEOs refusing to engage with a president of the United States. In the past, business leaders have welcomed the opportunity to have influence in Washington, and readily responded to White House calls. They smarted at President Obama’s reluctance to engage with them, and initially welcomed Trump’s openness to their counsel.
But as I’ve written in this column before, they now operate in a world where attracting and retaining talent has become the critical business differentiator, where employees increasingly want to work for companies they feel are doing good in the world, and where people are increasingly looking to business leaders for moral, not just business, leadership. That has created tension for many of those engaging with this president (particularly those with highly-educated work forces based on the coasts.)
Fortune contacted other CEOs on the president’s manufacturing council yesterday, to ask how they were responding to the challenge. Campbell Soup said CEO Denise Morrison denounced the “reprehensible scenes of bigotry and hatred on display in Charlottesville” but said she will remain on the council because “it continues to be important for Campbell to have a voice and provide input on matters that will affect our industry.” Jeff Fettig of Whirlpool said his company “believes strongly in an open and inclusive culture that respects people of all races and backgrounds” but will “continue on the Manufacturing Jobs Initiative to represent our industry, our 15,000 U.S. workers, and to provide input and advice on ways to create jobs and strengthen U.S. manufacturing competitiveness.” You can read more CEO responses here.
More news below.
• Target Peps Up Its Food Business
Target announced two more efforts to fix its food business, which at $15 billion a year accounts for 20% of its overall sales. Liz Nordlie will join from General Mills to oversee product design and development, while Mark Kenny will join from Wal-Mart’s deli and bakery division with a mandate to improve Target’s private label brands and prepared foods. The company also said it will buy Grand Junction, a startup that connects retailers and other distributors to a network of more than 700 carriers across North America, to beef up its delivery business. The latter is a direct response to Amazon’s acquisition of Whole Foods and Wal-Mart’s increasing attention to the online and delivery businesses. Target will report its second quarter earnings Wednesday. Fortune
Reports of Chinese buying interest drove Fiat Chrysler shares up 8.5%. The reports tally with Beijing’s desire to turn its car industry into a global player, and a deal would finally realize Sergio Marchionne’s dream of embedding Fiat in a global entity after years of trying. Logic suggests the most likely buyer would be Guangzhou-based GAC, its current joint venture partner in China, whose top management visited FCA’s headquarters in the U.S. last year. With Jeep and Ram still going gangbusters and set to profit from any relaxation of the planned tightening on fuel consumption, the charms of a deal are obvious. But making a global success out of Fiat and Chrysler’s namesake brands will be a stern test of Chinese inventiveness. Autonews
• U.K. Steps Back From the Brexit Cliff Edge
The U.K. government said it wanted a three-year transitional deal with the EU to ensure frictionless trade in goods after it leaves the bloc in 2019. A position paper published Tuesday said it would be necessary to stay within the EU’s customs union during that time, which means staying subject to the EU’s rules. Suppressing a smile, the EU said it still wouldn’t talk about post-Brexit arrangements until the issue of the exit bill was settled. FT, metered access
• A House Divided Against Itself
Benchmark Capital escalated its dispute with former Uber CEO Travis Kalanick, sending a letter to Uber staff explaining why it was suing to remove him from the company board. Its chief argument was that Kalanick was obstructing the search for a new CEO. Robert Siegel, a lecturer in management at Stanford Graduate School of Business, examines the merits of Benchmark’s arguments in a column for Fortune. In other news, Uber is in hot water in the Philippines for defying a suspension by the country’s regulator. Fortune
Around the Water Cooler
• Pandora Taps Lynch as CEO
Music streaming company Pandora named Roger Lynch as chief executive, replacing interim CEO Naveen Chopra who will continue as CFO. Lynch was formerly CEO of Sling TV, Dish Network's online streaming service. Pandora’s co-founder Tim Westergren had stepped down as CEO after digital broadcaster Sirius XM, backed by John Malone’s Liberty Media, pumped $480 million into Pandora in return for three board seats and the right to pick the company’s chairman. Fortune
• Jana Buys the Blue Apron Dip It Helped to Create
Hedge Fund Jana Partners has taken a 2% stake in Blue Apron, the meal kit delivery service that has floundered since its high-profile IPO. Jana is recycling some of the $300 million windfall it got from selling its stake in Whole Foods to Amazon—the same deal that has wrought havoc with the share prices of Blue Apron and other food-related companies in recent weeks. Blue Apron’s shares had lost nearly half their value since listing, but rose over 5% Monday. Fortune
• Danone’s Turn for Some Activist Showboating
It seems inevitable really. Two months ago, Dan Loeb’s Third Point took a stake in Nestle with a view to squeezing better performance out of the staid European giant. Now it’s the turn of Edgar Meister’s Corvex fund and Nestlé’s big French rival, Danone. Bloomberg reported Corvex has built a $400 million stake in the company. The company doesn’t plan a proxy fight yet, Bloomberg said. As with much other transatlantic activism, the scope for success will be circumscribed by the actual chance of unseating incumbent management—a near impossibility in France, given that President Emmanuel Macron is pushing the EU to make it harder for foreign companies to take over firms in strategically important sectors. And what could be more strategically important than low-fat yogurt? Bloomberg
• No Web Platform for Racists
Neo-Nazi website The Daily Stormer had its domain registration revoked twice in 24 hours after publishing a bile-laden rant at Heather Heyer, the protester killed when a white nationalist drove his car into a crowd in Charlottesville. After GoDaddy ejected the site, it tried to register with Google, seemingly unaware that Google’s own appetite for controversy might not be all that great in the wake of last week’s diversity fracas. Email newsletter services provider Sendgrid and SaaS suite provider Zoho also said they have terminated services to The Daily Stormer’s account. Meanwhile, TIKI brand, the maker of the citronella-scented torches that lent the weekend rally an authentically Nazi touch, also rushed to distance itself from the Brownpants’ gathering, saying “we do not support their message or the use of our products in this way.” The sight of white supremacists using a Polynesian-inspired product to make their point generated a chorus of mockery on social media. Fortune
Summaries by Geoffrey Smith email@example.com