Politics Is Risky Business for CEOs

Written on .

The above headline appeared in the Opinion section of the Wall Street Journal. The writer of the article, a former CEO of American Express, advises that executives should not take a company position on public-policy questions that do not directly affect their business. Among other things, the article points out that whatever political statements are made, it will alienate many employees and customers. In discussing executives expressing such opinions on political issues, the Economist magazine reports that: "They enjoy little upside and risk plenty of downside." 

A current example of the danger of public statements on political issues involve the CEOs of Atlanta-based Coca-Cola and Delta Airlines. Those CEOs publicly announced their disapproval of the Georgia legislation, involving themselves in a process that led to announced boycotts by persons of all political persuasions. The left announced a boycott because the two companies were headquartered in Georgia, and the right, including former President Trump, announced a boycott because of the claim that the announcements were false and further resulted in great harm to the State of Georgia, including a movement of certain economic activities out of the state. Consider more neutral comments made by officials of the Augusta National, which held the Masters Golf Tournament in Georgia in April.  Those statements generally said that Augusta National supports the right to vote but does not wish to have political issues involved in the sport of golf. Such more neutral statements are less likely to offend anyone.  

Note that Congress long ago banned companies from making direct political contributions to federal candidates and political parties, but admittedly executives are allowed to take a stand on broad public policy issues that do not identify any particular candidate or advocate for or against any particular legislation or government rule. 

This is part of our May 2021 Newsletter.

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