Should CEOs Speak Out?

The past year has seen plenty of the sorts of controversies that tend to compel those who have a public platform to use it. Merck’s Ken Frazier, Disney’s Bob Iger, Tesla’s Elon Musk, Salesforce’s Marc Benioff and Goldman Sachs’s Lloyd Blankfein are among a growing number of CEOs who have chosen to take their opinions on political and social issues public. In fact, 26 percent of directors participating in a recent Corporate Board Member survey reported that their CEO has taken a stance publicly on political or social headlines.

But it’s what happened to Target that has directors wary. An April 2016 blog post in response to North Carolina’s controversial “bathroom law” pledged to allow customers and employees to use the bathroom that corresponds to the gender they identify with. That prompted the faith-based nonprofit American Family Association to rally a reported 1.2 million supporters to sign a petition vowing not to shop at Target.

Despite the pressure, Target CEO Brian Cornell stuck by the announcement. “We’ve had a long history of embracing diversity and inclusion,” Cornell told CNBC. “Back to the mid-’60s, our company was one of the very first to use African-American models in their advertising. And back then, you know, it wasn’t well received. We had a lot of tough feedback, but sitting here today, we know we made the right decision.”

Right or wrong, Target experienced a dip in both sales and stock price. The company subsequently sought to mollify critics and its own shareholders by investing $20 million in single-stall bathrooms.

No wonder the 459 U.S. public company directors we talked to this September were deeply divided on the issue of CEOs having a political voice. Twenty-six percent of those surveyed oppose their company’s top executive taking a public stand on controversial issues of the day, and 57 percent said CEOs should consult their board before piping up.

“People [do not] invest in companies because they want to hear somebody’s personal, political, social or corporate view,” says Louise Forlenza, chair of the audit committee and a member of both compensation and nom/gov committees at Innodata. “They invest in the company because they believe there’s going to be shareholder quality there. To get up there because a corporate CEO has a pulpit to basically tell the world what they think… that’s not what investors are looking for….Just give me your opinion on how you’re going to make the company grow.”

Many directors we talked to drew a distinction between CEOs airing their personal politics and those who speak out on issues that relate to the company’s operations and are in line with its mission and values. Thirty-six percent of respondents reported that they would encourage a business leader to be vocal in such instances.

As one board member pointed out, however, these are often judgment calls because social and political issues invariably have the potential to impact industries, companies and employees. Matters such as climate change, taxes and minimum wage are all examples of political and social issues that have potentially dramatic business ramifications.

Several directors also said that CEOs are just as entitled to voice their personal opinions as anyone else and simply need to be clear about the fact that those statements refl ect their own views and not that of the company. “It should be carefully done as coming from him or her personally as a private citizen and not representing his company’s position,” says Thomas Hutchison, chair of the compensation committee and member of the audit committee at Hersha Hospitality Trust.

A board member at a small healthcare organization agreed. “Anyone should be able to voice an opinion as a private person, but context is important,” the director said. “Implying an entire company is represented by a single person on a political issue is likely foolish.”

Then there’s the fact that not taking a stance can also represent a risk. Tiki Brand, for example, was prompted to speak out against white supremacists after media broadcasts showed its product being used in a controversial protest in Charlottesville. In many cases, companies with significant numbers of employees passionate about or likely to be affected by a political or social issue also find themselves compelled to step up to the plate on behalf of their constituents. If they don’t, there may be repercussions, said a survey respondent who serves as a committee chair at a small financial company. She believes the need to speak out is best dictated by the market. “Once competitors stand up for something and you don’t, then you can really lose customers.”

That conundrum raises questions about how, exactly, CEOs should navigate the minefield of public statements. Is speaking out on anything beyond their investors’ financial interests courting trouble? Or should it be viewed as a CEO’s duty—or as an opportunity to boost a company’s image or win favor with employees and customers? Here’s what you and your peers had to say.