Wall Street Wrap Up: May 6, 2022
Bill George joins Andre Laborde on Wall Street Wrap-Up to discuss his outlook on the economy, the effect of COVID-19 on the workplace, and employees’ new focus on purpose and fulfillment in their work.
Category: Leadership
Yahoo! Finance: Disney vs. DeSantis: ‘Florida Needs Disney World,’ Harvard Professor Says
Watch Video: https://finance.yahoo.com/video/disney-vs-desantis-florida-needs-210115935.html
Video Transcript:
Harvard Business School Senior Fellow Bill George examines the financial outcomes of Florida Governor Ron DeSantis revoking Disney’s special tax status and Disney’s values.
Video Transcript
DAVE BRIGGS: It’s almost pay per view worthy, Disney versus DeSantis. It is the battle dividing Florida along party lines. But across the country, CEOs in all industries are eyeing the daily developments here, wondering how it might impact their company, how they should navigate these choppy political waters. Bill George is the former chairman and CEO of Medtronic, now a professor at the Harvard Business School. He joins us now. Good to see you, Bill.
BILL GEORGE: Thank you.
DAVE BRIGGS: Let’s go back, if we can, to the start of this mess. Disney CEO Bob Chapek wanted to stay out of the controversy over Disney’s so-called Don’t Say Gay legislation, but the combination of angry employees and former CEO Bob Iger coming out against the law. He really had no choice. He offered this relatively mild statement. How do you think he handled it?
BILL GEORGE: Well, he should have thought about all these things first, I believe. I don’t think he did his homework. We’re in a different world today. He was acting like he was back in the 1990s. In this world of 2022, you have all kinds of stakeholders who expect you to take a position, especially your employees. Employees have found their voice. And particularly, in this post-COVID world, they want to be respected, whether it’s a Minneapolis CEO when George Floyd was murdered or people on the LGBTQ+ side that want to be respected and heard from. They want their CEOs to speak on their behalf.
And when they don’t do that, as Bob Chapek didn’t, they get very upset and it leads to the kind of uproar we’ve had. And then they get to the worst case, which is a political crossfire with the politicians. And that’s the last thing any company wants to get into. And Disney is right in the thick of it, and it’s struggling to get out of this mess, as you called it.
DAVE BRIGGS: Even after the statement, he had the employee walkout. So what could Bob have done to keep them his employees happy and somehow stay out of the crosshairs of the governor?
BILL GEORGE: He should have gone back months before, talked to his board, talked to his leadership team. What do we stand for? Disney has always been very pro-family, but also very gay-friendly, if you will. And they should have made those points very clearly. And when this legislation started in Florida, they should have had a position ready to go. And they didn’t have to lead with their chin, but they should have had a position that was true to their mission and values of what Disney is that accepts everyone for who they are.
DAVE BRIGGS: So, as I mentioned, CEOs across the country are shaking a bit in their boots. What are you hearing from them, and what’s your advice?
BILL GEORGE: Well, they’re very concerned. They don’t want to get caught into this crossfire either. But they are all going back now, I think, in really thinking about, what do I stand for? What issues should I get involved in? And when shouldn’t I get involved in? And how do I avoid getting in the crosshairs of some politicians. They may get caught anyway, but if they’re true to their mission and values, this is a question of, should I get out of Russia because of the Ukraine war?
These things are coming up every way right now, and CEOs today need to know how to lead through a crisis because we go from one crisis to the next. We go to from COVID to George Floyd to Russia and Ukraine. And there’s probably another one just around the corner. So they need to be prepared to deal with these and have a position that’s true to their company.
For instance, Johnson & Johnson has taken a very clear position that we’re there to help people. And so if that means we’re going to stay in Russia, we have lifesaving drugs, we don’t want to get out. Hey, I respect that position. It goes to their credo. That’s what each CEO should do, to go true back to their mission and values.
DAVE BRIGGS: A fascinating poll came out last week showing the majority of the country is against the government punishing business over their political beliefs. But the fascinating part within this is Democrats were far more supportive of business than were Republicans. What do you make of that political dynamic we have today?
BILL GEORGE: I’m smiling because when I was a boy growing up, the Republicans were seen as the party of big business. And Democrats are seen as the party of the working class, the blue collar workers. And things seem to have flipped. And we’re much more into cultural wars. Businesses are not interested in that. They’re interested in helping their customers make a difference in their lives, whether Disney is bringing fun to people or organizations in the apparel business, bringing joy to them, or Medtronic providing good healthcare to help save lives. That’s what they want to do. But they need to represent all their employees and all their stakeholders. And I think that’s what they’ve lost sight of here.
DAVE BRIGGS: What’s fascinating is, I read this statement, and I want you to guess what party it comes from. A senator– it’s very simple. We need to see a majority of American corporations as American. They don’t act in the best interests of the country. They act in the best interest of shareholders, period. Was that a Republican or a Democrat?
BILL GEORGE: I have no idea. I probably would have normally would have guessed a Democrat today, maybe a Republican. But I’ll tell you this. It’s not just the shareholders today. It’s not just the world it was in the ’80s and ’90s, the shareholder primacy. It’s the world of stakeholders. They have to operate in the best interests of their customers. They have to operate in the best interests of their employees. And they need to find an alignment with those interests with their shareholders’ interests.
DAVE BRIGGS: That statement continued. We are, as policymakers, we need to be acting in the best interest of the country, not big business. It sounded like Elizabeth Warren, it was Marco Rubio. Stunning when I got to the finish of it. How do you think this plays out for Disney? Their special exemption wouldn’t actually go into effect until June 2023. Can they wait out the governor?
BILL GEORGE: Yes, they may have to. There’s this billion dollar question about who’s paying off the bonds, which legally have to be paid off. And if that’s not clear, I’m not sure Orange County has the money to do that, the Orlando County. And so they are going to have a continued battle. But understand the governor has different objectives than Disney. And so Disney can’t meet all of his needs because he is working a whole political angle here.
And that’s why I say, they don’t want to get caught up in that, but they have to run a great Disney World, I can tell you that, that welcomes everyone to their premises. And that’s the most important thing for them. And they have to make sure this doesn’t turn against them. And they probably have some legal recourse on this whole latest legislation that had to do with pulling back that special district. And there are many unintended consequences, frankly, that have not been thought through there that it will give Disney more ammunition.
A good example is Ed Bastian at Delta a few years ago, the Georgia legislature, withdrew a $41 billion– a million dollar tax break that they got on a fuel savings. They’ve been giving it for 30, 40 years. And he stood up, and he said Disney’s values are not for sale. A year later, the legislature restored that and retroactively.
So in the end, Disney didn’t really throw out– Delta didn’t really get hurt by that. So I’m optimistic that Florida needs Disney World. I can tell you that. It’s a huge revenue producer. I was just in Orlando, actually, for a soccer game, not for Disney World. But I can tell you, it’s created everything around there. They need that. And all the merchants, all the hotel owners, and all the restaurants desperately need Disney World. They– Florida can’t do without Disney World. So it’s a question, who needs who more?
DAVE BRIGGS: 70,000 plus jobs as well. Bill George–
BILL GEORGE: Exactly.
DAVE BRIGGS: –Harvard professor, former chairman, and CEO of Medtronic, it is tricky times to be a CEO. Thank you, Bill.
WSJ: Disney’s Clash With Florida Has CEOs on Alert
In private meetings and coaching sessions over the past few weeks, top business leaders have been asking a version of the same question: How can we avoid becoming the next Walt Disney Co.?
The fallout from the recent political spat between Disney and Florida Gov. Ron DeSantis has alarmed leaders across the corporate sphere, according to executives and their advisers, and heightened the challenges for chief executive officers navigating charged topics.
At many companies, vocal employees have in recent years pushed bosses to take public stands on social and political issues. Florida’s pushback against Disney has raised the stakes.
“The No. 1 concern CEOs have is, ‘When should I speak out on public issues?’ ” said Bill George, former chairman and CEO of Medtronic PLC and now a senior fellow at Harvard Business School. “As one CEO said to me, ‘I want to speak out on social issues, but I don’t want to get involved in politics.’ Which I said under my breath, ‘That’s not possible.’ ”
Some executives might be relieved. The old idea that CEOs should focus on shareholder returns and stay out of politics lingers in some corporate suites, even in a politicized age of public social-media discussions and more-activist workforces.
Certainly the consequences of weighing in appear to be changing. Lawmakers for years have expressed displeasure when companies take public stands on issues such as voting access, through critical tweets, public remarks and, in some cases, calls for public boycotts. Disney’s experience shows a willingness to go further, corporate advisers say, by challenging arrangements that have helped a company to operate.
Ron Williams, former CEO of Aetna, says, ‘It’s not enough to know what you want to do. You have to be artful in how you do it.’
Gov. DeSantis, a Republican, in April signed into law a bill that would terminate a special tax district that has allowed Disney to self-govern the land that houses its Orlando-area theme parks, hotels and resorts for more than a half-century. Questions remain about the law’s impact on Disney and surrounding communities. Gov. DeSantis cited Disney’s opposition to Florida’s Parental Rights in Education bill, which was signed into law in March and which critics call the “Don’t Say Gay” bill. He called Disney a “woke” corporation.
David Berger, a partner who specializes in corporate governance at law firm Wilson Sonsini Goodrich & Rosati, said politicians seem increasingly comfortable taking on business when it is advantageous for them. “It used to be that Republicans especially—but both parties—liked big business,” he said. “And now what you’re seeing is both parties like to use big business as political footballs one way or the other.”
Some executives say they have learned to monitor issues that could consume public attention and increase pressure for some response. Some use employee affinity groups to help flag potentially troublesome issues.
“You make it a safe forum where people feel comfortable talking about concerns or whatever, and out of that, there’s really a kind of responsibility on our part to pick up on things that really do demand some attention,” said Nancy Langer, CEO of Transact Campus Inc., a financial- technology company based near Phoenix. “I look at that as a feedback loop for us.”
Some of the topics of employee pressure involve Republican-backed measures, such as the new abortion law in Texas and new voting laws. Democrats have pushed executives to weigh in, and Republicans have pushed them to keep out. Climate and diversity issues also are hot buttons, as is the Jan. 6, 2021, riot at the U.S. Capitol.
Democrats also have criticized companies. President Biden, facing heat on inflation, has accused meat and oil companies of price gouging.
But Disney’s recent experience in Florida has captured the attention of C-suite executives at companies big and small, given the impact on its operations, many say.
“I think probably anybody sitting in a leadership role follows it to some degree,” said Julie Schertell, chief executive of Alpharetta, Ga.-based manufacturing company Neenah Inc., which has around 2,500 employees.
Ms. Schertell said the Disney drama reminds her as a CEO that she must look at situations from every angle. “Because I want folks to assume positive intent, like ‘Here’s what we’re trying to do, and if it feels like a misstep, let’s talk about that. And of course, correct on it,’ ” she said.
Staying silent has its own risks. Disney initially declined to take a public stance against the Florida bill, which bans classroom instruction on sexual orientation and gender identity through third grade. Disney CEO Bob Chapek told employees he didn’t want the company to become a “political football.” That sparked an outcry from some employees, and Disney reversed course and spoke out against the bill.
Washington veterans advise that building relationships with political leaders in advance, particularly in off-cycle election years, can be helpful during times of crisis. Ron Williams, the former chairman and chief executive of Aetna who sits on the boards of Boeing Co., Johnson & Johnson and American Express Co., said he counsels CEOs to find advisers who know how to navigate the political terrain.
“Companies often deal in substance, and politicians often deal with foils,” he said. “And so, you know, companies can inadvertently become a foil for different political issues. It’s not enough to know what you want to do. You have to be artful in how you do it.”
Most current CEOs rose by gaining customers or boosting profit margins, not navigating hot-button social issues, and so aren’t trained on how to respond, Harvard’s Mr. George said. They must prepare quickly.
“It is an even more challenging job,” Mr. Williams said. “Running the business turns out to be table stakes.”
Hiring Insights Podcast: Hiring Executives and Authentic Leadership: From a CEO and Board Perspective
Join Mosah Fernandez Goodman as he hosts Bill George, a corporate superstar who helmed Medtronics and served on the Boards of Goldman Sachs, ExxonMobil, and Target Corporation. Bill discusses insights into the executive search and hiring process and the evolution of qualities needed for a leader over the past century; from working with your hands, the Steve Jobs era of needing the smartest candidate, to now wanting leaders for their hearts. With years of Corporate Board experience, Bill guides you through the process of landing your first board role and how to succeed.
CNBC: Time Warner and AT&T deal in jeopardy?
Fred Hassan, Warburg Pincus partner & managing director, and Bill George, Harvard Business School professor, weigh in on if President-elect Donald Trump will redefine the government’s relationship with business and the Time Warner-AT&T deal.
CNBC: Mylan CEO’s Testimony was a Huge Blow to the Entire Pharma Industry
University of St. Thomas: The Forum on Workplace Inclusion – Day 3 Keynote
The Forum was thrilled to have Bill George as our closing speaker on Day 3. Former Chairman and CEO of Medtronic, Senior Fellow at the Harvard Business School, and author of Discover Your True North, Bill discusses finding your own True North – the internal compass that sets one on a path toward their fullest potential as a leader. Today’s global business community calls for leaders who will change the world for the better and inspire others around them to do the same.
This content was originally posted to stthomas.edu on 05/19/16.
Minnesota Public Radio: Kerri Miller Friday Roundtable
MPR News host Kerri Miller talks with Bill George, Senior Fellow at the Harvard Business School, and Washington University law professor Adam Rosenzweig about corporate tax inversions and why the issue seems to have taken a timid foothold in this year’s presidential election. With both Democrats and Republicans taking aim at companies who employ tax inversion, Kerri delves into the reasons why, what the concerns are with this sort of corporate maneuvering and what might be done to get at the root causes behind U.S. companies taking their operations overseas.
This post was originally published on Minnesota Public Radio on 3/31/16.
CNBC: Alphabet’s CEO problem
CNBC Contributors Jeffrey Sonnenfeld of the Yale School of Management, and Bill George, former Medtronic chairman & CEO, talk about the leadership challenges facing Alphabet with the various companies in the corporate structure.
This article was originally posted to CNBC.com on 3/29/16.
CNBC: Squawk Alley Grading Yahoo’s Board
Bill George of Harvard Business School, and Jeffrey Sonnenfeld of Yale School of Management, discuss the proxy fight launched at Yahoo by Starboard Value and how the current and proposed boards could do.
This article was originally posted to CNBC.com on 3/24/16.