Just How Involved in Politics Should CEOs of Public Companies Become?

LtR: Fmr. Ford CEO Mark Fields, President Donald Trump, Starbucks Executive Chairman Howard Schultz

There are billionaire business owners on both sides of the political spectrum who spend tons of money on politics. Charles and David Koch are universally known as funders of right wing causes, and Michael Bloomberg probably spends more on gun control advocacy than anyone else. But these men all own their companies outright.

Recently Ford CEO Mark Fields was replaced in large part due to his involvement in the 2016 political campaign, and his actions afterward. John D. Stoll writes:

A longtime Ford executive, Mr. Fields is seen as having unnecessarily put the iconic car company on President Donald Trump’s radar during last year’s campaign, according to a person familiar with the board’s thinking. As then-candidate Mr. Trump was railing on companies that make products in Mexico and ship them to U.S. stores, Mr. Fields boldly told shareholders about a plan to move production of the Ford Focus from Michigan to San Luis Potosí.

What Mr. Fields didn’t make clear was that the auto maker had specific products in mind to replace the Focus and preserve jobs, the person said. Mr. Trump pounced, painting the 114-year-old auto maker founded by Henry Ford as the poster child for outsourcing and Exhibit A of why the North American Free Trade Agreement was bad for American workers, including the roughly 150,000 factory workers employed by Detroit’s Big 3.

The spotlight came at a bad time for Mr. Fields because he was working to change the perception of Ford by making a slew of announcements about so-called mobility projects (such as ride hailing or car sharing) at a time when the auto maker is primarily dependent on pickups and sport utilities. The timing of Mr. Fields’ Mexico announcement was seen internally as a major gaffe, reinforcing a growing perception internally that his management team struggled to connect with constituents ranging from wealthy investors to everyday Americans, according to the person.

The actions Mr. Fields took in the span between Mr. Trump’s nomination as the Republican candidate for president and Inauguration Day only created more confusion, the person said, and ended up costing the company hundreds of millions of dollars in lost investment due to the cancellation of the San Luis Potosi plant.

Starbucks’ Howard Schultz is another CEO of a publicly traded company that has had political run ins. In response to President Trump’s ban on travel from certain countries, Schultz pledged to hire 10,000 refugees at Starbucks. FoxBusiness reports that the move may have hurt Starbucks’ business.

In January, Starbucks pledged to hire 10,000 refugees over the next five years in 75 countries. The move came in response to President Trump’s initial temporary travel ban executive order.

“We are living in an unprecedented time, one in which we are witness to the conscience of our country, and the promise of the American Dream, being called into question,” Starbucks CEO Howard Schultz said at the time.

According to one brand tracker Opens a New Window., the coffee giant’s consumer perception levels took a sizable hit immediately following the announcement. Starbucks has since refuted the data.

The question is, are shareholders’ best interests served when CEOs get involved in political battles?