Donald Trump sent a petulant (and false) tweet this week about the cost of Boeing’s contract to build new presidential airplanes. Boeing’s CEO countered with the facts. But not before the stock took a tumble.
I’ve seen a lot of analysis focused on whether or not Trump still owns his Boeing stock; whether or not he and his cronies might have planned to drive the price down for their own financial interest. All important stuff to consider.
But it seems clear that what prompted Trump’s tweet was an interview in which Boeing’s CEO criticized Trump’s proposed trade policy. The CEO offered his opinion. The president-elect’s tweet incited the markets to punish the exercise of free speech.
Trump’s tweet cost Boeing $1.48 billion in market capitalization—only about 1% of the company’s value. But still, to update the old political quip, “A billion here and a billion there and pretty soon you’re talking about real money.”
This is scary stuff. Trump put Corporate America on notice that he will not tolerate criticism. And those that dare to speak critically will risk their jobs—and the financial health of the people who depend on the companies they lead.
Money is the fastest way to get any company’s attention—and of course Donald Trump knows this. So I expect we’ll see more encounters like this…until we stop seeing them altogether, as executives censor themselves. I cannot tell you how sad I am to write those words.
Boeing’s CEO and the Wrath of Trump
CEOs and the boards of directors of publicly traded companies are legally bound to do everything they can to maintain (or, better yet, increase) the stock price. Shareholders have been known to sue executives who make decisions that lower the stock price. That’s why so many companies these days focus on short-term gains rather than long-term investments: the markets only care about this quarter, not four years from now.
But the president-elect’s public displeasure doesn’t just affect the big institutional stockholders—the kinds of people likely to file suit. It also affects the executives who receive stocks, or options to buy stocks, as part of their compensation plans. And the folks on the factory floor who buy discounted shares through their Employee Stock Purchase Plans (most companies have them). And many millions of people unconnected to the company who may own its shares outright or through mutual funds—many linked to retirement savings.
We will need some extraordinarily brave CEOs to risk the combined financial and legal pain that the tweeted Wrath of Trump can unleash. Is free speech worth years of litigation? And maybe even losing your job? Personally, I’m not willing to put a price tag on the First Amendment; I’d like to believe the nation’s CEOs aren’t, either. But I’m not holding my breath.
After initially countering Trump’s tweet with a fact-filled statement, Boeing’s CEO Dennis Muilenberg figuratively kissed the president-elect’s ring in a phone call. Boeing’s second statement informed us:
“Muilenburg congratulated Mr. Trump on his election win and committed to working with the new administration to control costs as they establish requirements for the new Air Force One to keep the program as affordable as possible and deliver the best value to American taxpayers.”
I understand: most executives aren’t used to dealing with schoolyard bullies. That’s not how civilized society has worked to this point; it’s not how the economy has worked. But sadly, it looks like that’s the direction we’re heading.
Now more than ever we need CEOs with a firm grasp of ethics and free speech. We need corporate leaders who aren’t afraid to speak truth to power. We need executives willing to risk short-term difficulties to preserve our nation and our economy for the long-term.
Will we find them? Stay tuned.