Last Thursday President Trump posted a note on Truth Social:
“The CEO of INTEL is highly CONFLICTED and must resign, immediately. There is no other solution to this problem.”
The background for his action was summarized in the WSJ article below:
Trump Calls on Intel CEO to Resign Over China Ties
Almost immediately I was asked by students and a WSJ reporter for my opinion. My response may surprise you. I believe the President of the US has the right to say whatever he wants. It reminds me of an earlier post where I stated that given the first amendment, people do have the right to say virtually anything. However, the issue isn’t whether you have the right, but is it the right thing to do.
In this situation, look at the facts. Intel is a publicly traded company with thousands of shareholders and employees. Every announcement regarding the company can have an enormous impact on its shareholders and stock price, customers, and thousands of employees.
If the president has an issue and believes the CEO has violated the law and shouldn’t be in his position, I believe it makes sense for him to call the chairman of the board of directors and raise the issue. In a free market, capitalistic system, the board has a fiduciary responsibility to address any and all issues regarding governance and whether the CEO is operating properly. If the CEO is not operating properly, the board should move quickly to remove the CEO.
However, by the president publicly declaring that the CEO should resign without any explanation as to why, it creates tremendous uncertainty for shareholders, customers, and employees.
Chip Cutter and Amrith Ramkumar wrote a second WSJ article that summarized the impact of the President’s action.
Trump Reminds CEOs Who the Ultimate Boss Is
Bill George, the well respected, former CEO of Medtronic and professor at Harvard Business School stated in the WSJ:
“It’s wrong for the president of the United States to be telling a major corporation’s board to fire their chief executive.”
The WSJ also quoted Jeffrey Sonnenfeld, a professor at the Yale School of Management:
“It’s just a frightening process to have the military commander of the U.S. pick and choose who’s to lead private companies.”
My response to the question posed by the WSJ was very similar:
“[President Trump] has the right to say what he wants to say, but there’s a difference between you have the right, and is it the right thing to do in a free market capitalistic system?”
A dilemna, sort of, because there are conflicting issues. No, he shouldn’t interfere in the affairs of a private company. But maybe, if there are serious national security issues that the company has failed to address through willful negligence. Remains to be seen though the company should have addressed them first unless the activities had been purposefully obscured.