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2018 CEO Activism Survey

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Stanford GSB Corporate Governance Research Initiative
Stanford GSB Corporate Governance Research Initiative

By David F. Larcker, Brian Tayan, CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance, October 2018 In summer and fall 2018, the Rock Center for Corporate Governance at Stanford University conducted a nationwide survey of 3,544 individuals — representative by gender, race, age, household income, and state residence — to understand how the American public views CEOs who take public positions on environmental, social, and political issues. “We find that the public is highly divided about CEOs who take vocal positions on social, environmental, or political issues,” says Professor David F. Larcker, Stanford Graduate School of Business. “While some applaud CEOs who speak up, others strongly disapprove. The divergence in opinions is striking. CEOs who take public positions on specific issues might build loyalty with their employees or customers, but these same positions can inadvertently alienate important segments of those populations. The cost of CEO activism might be higher than many CEOs, companies, or boards realize.” “Hot-button issues are hot for a reason,” adds Brian Tayan, researcher at Stanford Graduate School of Business. “Interestingly, people are much more likely to think of products they have stopped using than products they have started using because of a position the CEO took on a public issue. When consumers don’t like what they hear, they react the best way they know how to: by closing their wallets.”

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2018 CEO ACTIVISM SURVEY WWW.GSB.STANFORD.EDU/CGRI
TA B L E O F C O N T E N T S Executive Summary and Key Findings............................ 1 Methodology....................................................................... 4 Review of Findings.............................................................. 5 Demographic Information.............................................. 13 About the Authors............................................................14 Acknowledgments............................................................14 About Stanford Graduate School of Business and the Rock Center for Corporate Governance....................... 15 Contact Information....................................................... 15
2018 CEO ACTIVISM SURVEY 1 EXECUTIVE SUMMARY AND KEY FINDINGS THE PUBLIC TAKES A SURPRISINGLY MIXED VIEW OF CEO ACTIVISM. WHILE SOME INDIVIDUALS REACT POSITIVELY TO CEOs TAKING A POSITION ON SOCIAL, ENVIRONMENTAL, OR POLITICAL ISSUES, THEY ARE LARGELY COUNTERBALANCED BY OTHERS WITH A STRONG NEGATIVE REACTION. PEOPLE ARE MORE LIKELY TO THINK OF PRODUCTS THEY HAVE STOPPED USING THAN PRODUCTS THEY HAVE STARTED USING BECAUSE OF CEO ACTIVISM. “We find that the public is highly divided about CEOs who take vocal positions on social, environmental, or political issues,” says Professor David F. Larcker, Stanford Graduate School of Business. “While some applaud CEOs who speak up, others strongly disapprove. The divergence in opinions is striking. CEOs who take public positions on specific issues might build loyalty with their employees or customers, but these same positions can inadvertently alienate important segments of those populations. The cost of CEO activism might be higher than many CEOs, companies, or boards realize.” “Hot-button issues are hot for a reason,” adds Brian Tayan, researcher at Stanford Graduate School of Business. “Interestingly, people are much more likely to think of products they have stopped using than products they have started using because of a position the CEO took on a public issue. When consumers don’t like what they hear, they react the best way they know how to: by closing their wallets.” In summer and fall 2018, the Rock Center for Corporate Governance at Stanford University conducted a nationwide survey of 3,544 individuals—representative by gender, race, age, household income, and state residence—to understand how the American public views CEOs who take public positions on environmental, social, and political issues.
2018 CEO ACTIVISM SURVEY 2 KEY FINDINGS INCLUDE THE FOLLOWING: THE PUBLIC VIEWPOINT OF CEO ACTIVISM IS HIGHLY MIXED, WITH OPINIONS VARYING BY AGE AND POLITICAL AFFILIATION. While two-thirds (65 percent) of the public believe that the CEOs of large companies should use their position and potential influence to advocate on behalf of social, environmental,orpoliticalissuestheycareaboutpersonally, one-third (35 percent) do not. Opinions starkly differ depending on the political affiliation of the respondent. Nearly three-quarters (72 percent) of respondents who self-identify as Democrats support CEO activism, while just over half (57 percent) of Republicans do. Opinions vary more significantly depending on the age of the respondent. A large majority of Millennials (71 percent) and two-thirds of Generation X (63 percent) support CEO activism. Baby Boomers, by contrast, are more likely to disapprove of CEO activism, with only 46 percent approving and 54 percent disapproving.1 All respondents are more in favor of CEOs taking public positions on social, environmental, or political issues if those issues directly impact their business or employees. Seventy-two percent of the public support CEO activism under these circumstances, with Millennials (76 percent), Gen X (71 percent), and Baby Boomers (60 percent) holding favorable opinions. 1  Millennials are defined as respondents age 38 or younger. Generation X are respondents age 39 to 53. Baby Boomers are respondents age 54 or older. THE PUBLIC IS POSITIVE ON ENVIRONMENTAL ISSUES, NEGATIVE ON POLITICS AND CONTENTIOUS SOCIAL ISSUES. Members of the public are most in favor of CEO activism about environmental issues, such as clean air or water (78 percent), renewable energy (68 percent), sustainability (65 percent), and climate change (65 percent). They are also generally positive about widespread social issues, such as healthcare (69 percent), income inequality (66 percent), poverty (65 percent), and taxes (58 percent). While responses vary by age and political affiliation, generally all groups have net-favorable opinions about CEOs speaking up on these issues.2 The public reaction is somewhat more mixed about issues of diversity and equality. Fifty-four percent of Americans support CEO activism about racial issues, while 29 percent do not; 43 percent support activism about LGBTQ rights, while 32 percent do not; and only 40 percent support activism about gender issues, while 37 percent do not.3 The public viewpoint on whether CEOs should speak out on these issues varies considerably by age and political affiliation, with Democrats and Millennials more likely to favor CEO activism, Republicans and Baby Boomers more likely to oppose it, and Independents and Generation X respondents closely divided. 2  Net-favorable opinions are calculated as the percent of respondents who select “thank you for speaking up” minus the percent of respondents who select “keep your mouth shut.” Respondents who select “no opinion” are excluded. 3  LGBTQ means lesbian, gay, bisexual, transgender, or queer/questioning
2018 CEO ACTIVISM SURVEY 3 Quiteunexpectedly,responsestoCEOactivismaboutgender issues vary only modestly when respondents are segmented by gender, with 42 percent of female respondents having a favorable opinion (36 percent negative opinion) and 37 percent of male respondents having a favorable opinion (39 percent negative). Contentious social issues—such as gun control and abortion—and politics and religion garner the least favorable reactions. Of these issues, CEOs speaking up about gun control is the only one with a net-favorable position (45 percent favorable versus 35 percent unfavorable). Abortion (37 percent versus 39 percent), politics (33 percent versus 43 percent), and religion (31 percent versus 45 percent) all elicit net-unfavorable reactions. Republicans, Independents, Gen X, and Baby Boomers have negative and strongly negative reactions to CEOs taking public stances on these issues. AMERICANS ARE MOST LIKELY TO RECALL PROMINENT CEOs SPEAKING UP ABOUT ISSUES THEY AGREE — AND DISAGREE — WITH. Americans are aware of prominent CEOs who take public positions on social, environmental, and political issues. The CEOs and former CEOs of Microsoft, Tesla, Starbucks, Apple, Facebook, Target, and Chick-fil-A are recognized on an unprompted basis for their stances on racial equality, income inequality, privacy, women’s rights, religious rights, and environmental issues. Of note, many of the same CEOs are cited as examples of CEO activism that the public agrees with as well as examples of CEO activism that they disagree with. For example, the CEO of Chick-fil-A is cited favorably for his support of religious rights and negatively for his views of the LGBTQ community. Similarly, the former CEO of Starbucks is cited both favorably and unfavorably for his stances on racial issues. “The fact that the same names pop up both positively and negativelyunderscoresthepolarizingnatureoftheseissues,” observes Professor Larcker. “Prominent CEOs who use their positions to advocate for issues that they personally believe in can have a bifurcated impact on the public. CEO activism really is a double-edged sword.” AMERICANS MAY BE MORE LIKELY TO STOP USING PRODUCTS OR SERVICES BECAUSE OF CEO ACTIVISM THAN START USING THEM. Americans claim that they are more likely to purchase products or services from a company whose CEO speaks out about an issue they agree with (72 percent) and less likely to purchase them if the CEO speaks out about an issue they disagree with (62 percent). However, when asked to identify specific incidents in which they changed their own purchase behavior because of CEO activism, respondents were significantly more likely to remember products they stopped using or use less because ofthepositiontheCEOtookthanproductstheystartedusing or use more. Specifically, 35 percent of the public could think of a product or service they use less, while only 20 percent could think of a product they use more. Respondents claim that disagreement with the CEO over an environmental, social, or political issue caused them to decrease their spending on that company’s products by 50 percent, on average (from $124 per month to $62 per month). A full 69 percent claim that they stopped using the product or service entirely. By contrast, respondents claim that agreement with the CEO over an environmental, social, or political issue caused them to increase their spending by 91 percent, on average (from $80 per month to $152 per month). Only 21 percent claim that they started using the product or service for the first time as a result of the CEO’s stance. “While it is difficult to generalize from self-reported purchase data, Americans clearly express an awareness of the positions that CEOs take and are willing to change their buying habits when they agree or disagree,” says Tayan. “Companies and their boards need to understand the demographics of their employee and customer base and do the calculus to figure out whether their CEOs are doing more harm or good when they speak out on controversial issues.”
2018 CEO ACTIVISM SURVEY 4 Methodology In summer and fall 2018, the Rock Center for Corporate Governance at Stanford University hired Survey Sampling International (SSI) to conduct a nationwide survey of 3,544 individuals—representative by gender, race, age, household income, and state residence—to understand how the American public views CEOs who take public positions on environmental, social, and political issues. Stanford University is solely responsible for the contents of this survey.
2018 CEO ACTIVISM SURVEY 5 Review of Findings 1. In general, should the CEOs of large companies use their position and potential influence to advocate on behalf of social, environmental, or political issues that they care about personally? n Yes n No Full Sample 65% 35% Political Affiliation 72% 28% Democrat 57% 43% Republican 65% 35% Independent Age* 71% 29% Millennials 63% 37% Gen X 46% 54% Baby Boomers * Millennials are respondents age 38 or younger. Gen X are respondents age 39 to 53. Baby Boomers are respondents age 54 or older. 2. How strongly do you hold this opinion? 25% 5. Very Strongly 34% 4. 34% 3. 4% 2. 3% 1. Not strongly at all Average 3.8
2018 CEO ACTIVISM SURVEY 6 3. Should the CEOs of large companies use their position to advocate on behalf of social, environmental, or political issues if those issues directly impact their business or employees? n Yes n No Full Sample 72% 28% Political Affiliation 78% 22% Democrat 67% 33% Republican 71% 29% Independent Age 76% 24% Millennials 71% 29% Gen X 60% 40% Baby Boomers 4. How strongly do you hold this opinion? 31% 5. Very Strongly 35% 4. 28% 3. 4% 2. 2% 1. Not strongly at all Average 3.9
2018 CEO ACTIVISM SURVEY 7 5. In general, what is your reaction to CEOs who are publicly vocal about the following issues? (Sorted by favorability) 78% 69% 68% 66% 65% 65% 65% 59% 58% 55% 54% 49% 45% 43% 42% 40% 37% 33% 31% Thank you for speaking upFull Sample Keep your mouth shut No opinion Clean air or water Healthcare Renewable energy Income inequality Sustainability Climate change Poverty Land conservation Taxes Foreign trade Racial issues* Immigration Gun control LGBTQ rights** War Gender issues*** Abortion rights Politics Religion 12% 16% 19% 16% 22% 20% 17% 24% 21% 28% 17% 22% 20% 25% 25% 23% 24% 24% 23% 10% 15% 13% 18% 14% 16% 18% 17% 20% 16% 29% 29% 35% 32% 33% 37% 39% 43% 45% Thank You for Speaking Up – By Political Affiliation (Sorted by Democrat favorability) Democrat Republican Independ. Clean air or water 87% 67% 80% Climate change 81% 45% 67% Healthcare 79% 59% 70% Income inequality 78% 51% 68% Renewable energy 77% 58% 72% Sustainability 74% 55% 69% Poverty 73% 54% 69% Racial issues 69% 38% 53% Land conservation 67% 50% 62% Taxes 64% 55% 58% Gun control 62% 32% 40% Foreign trade 60% 54% 58% Immigration 59% 40% 47% LGBTQ rights 58% 26% 41% Gender issues 52% 28% 39% War 51% 34% 40% Abortion rights 50% 30% 31% Politics 42% 27% 30% Religion 37% 29% 28% Thank You for Speaking Up – By Age (Sorted by Millennials favorability) Millennials Gen X Boomers Clean air or water 81% 76% 73% Healthcare 69% 73% 67% Renewable energy 69% 68% 65% Climate change 68% 63% 55% Income Inequality 68% 66% 60% Poverty 68% 65% 60% Sustainability 65% 67% 61% Land conservation 60% 60% 55% Taxes 59% 59% 55% Racial issues 58% 51% 47% Foreign trade 53% 58% 61% Immigration 50% 49% 43% Guns control 47% 45% 38% LGBTQ Rights 47% 40% 33% War 44% 41% 34% Gender issues 43% 37% 31% Abortion rights 42% 34% 23% Politics 36% 31% 26% Religion 35% 29% 20% * Responses vary significantly when respondents are segmented by race. White respondents reply 49% “thank you for speaking up.” Nonwhite respondents reply 66% “thank you for speaking up.” ** LGBTQ means lesbian, gay, bisexual, transgender, or queer/questioning *** Reponses vary only modestly when respondents are segmented by gender. Female respondents reply 42% “thank you for speaking up.” Male respondents reply 37% “thank you for speaking up.”
2018 CEO ACTIVISM SURVEY 8 Reaction to CEO Activism (Sorted by net favorability*) Net Favorability (Unfavorability)Full Sample Clean air or water Renewable energy Healthcare Sustainability Climate change Income inequality Poverty Land conservation Foreign trade Taxes Racial issues Immigration LGBTQ rights Gun control War Gender issues Abortion rights Politics Religion 68% 55% 54% 51% 49% 48% 47% 42% 39% 38% 25% 20% 11% 10% 9% 3% -2% -10% -14% Reaction to CEO Activism – By Political Affiliation (Sorted by Democrat net favorability*) Democrat Republican Independent Clean air or water 81% 50% 71% Climate change 74% 16% 53% Healthcare 69% 37% 55% Renewable energy 67% 38% 60% Income inequality 67% 22% 52% Sustainability 65% 34% 57% Poverty 59% 28% 54% Land conservation 55% 25% 47% Racial issues 49% -3% 24% Taxes 45% 30% 38% Foreign trade 45% 33% 45% Gun control 39% -17% 3% Immigration 36% 1% 18% LGBTQ rights 36% -23% 9% War 24% -7% 6% Gender issues 24% -22% 1% Abortion rights 20% -18% -11% Politics 6% -25% -15% Religion -5% -21% -19% Reaction to CEO Activism – By Age (Sorted by Millennials net favorability*) Millennials Gen X Boomers Clean air or water 72% 63% 61% Renewable energy 58% 53% 48% Climate change 57% 44% 30% Healthcare 55% 57% 48% Sustainability 54% 52% 42% Income Inequality 53% 48% 36% Poverty 53% 45% 37% Land conservation 46% 43% 32% Taxes 40% 37% 29% Foreign trade 38% 40% 43% Racial issues 32% 20% 10% Immigration 24% 18% 5% LGBTQ Rights 18% 6% -11% Guns control 15% 9% -6% War 15% 6% -8% Gender issues 9% -2% -16% Abortion rights 7% -7% -31% Politics -3% -14% -32% Religion -4% -21% -41% * Calculated as the percent of respondents who select “thank you for speaking up” minus the percent of respondents who select “keep your mouth shut.” Excludes respondents who select “no opinion.”
2018 CEO ACTIVISM SURVEY 9 6. Can you give an example of a CEO speaking out about a social, environmental, or political issue that you agree with? (Most frequently cited, on an unprompted basis in descending order*) CEO Company Reason cited Bill Gates Microsoft Global poverty Elon Musk Tesla Renewable energy Mark Zuckerberg Facebook Privacy, various social issues Tim Cook Apple Various social issues Jeff Bezos Amazon Various social issues Howard Schultz Starbucks Various social issues Dan Cathy Chick-fil-A Religious rights Larry Page and Sergey Brin Alphabet (Google) Various social issues David Green Hobby Lobby Religious rights Doug McMillon Walmart Environmental issues Warren Buffett Berkshire Hathaway Taxes, income inequality Edward Stack Dick’s Sporting Goods Gun control Brian Cornell Target LGBTQ rights * CEO name is provided for cases where the respondent identified a company name. 7. Can you give an example of a CEO speaking out about a social, environmental, or political issue that you disagree with? (Most frequently cited, on an unprompted basis in descending order*) CEO Company Reason cited Dan Cathy Chick-fil-A LGBTQ rights Mark Zuckerberg Facebook Privacy, various social issues Howard Schultz Starbucks Various social issues John Schnatter Papa John's Racial issues Elon Musk Tesla Various social issues David Green Hobby Lobby Women's rights Tim Cook Apple Various social issues Jeff Bezos Amazon Various social issues Charles Koch Koch Industries Political issues Bill Gates Microsoft Various social issues Brian Cornell Target LGBTQ rights Larry Page and Sergey Brin Alphabet (Google) Privacy, various social issues Doug McMillon Walmart Various social issues * CEO name is provided for cases where the respondent identified a company name.
2018 CEO ACTIVISM SURVEY 10 8. Are you more likely to purchase a product or service from a company whose CEO speaks out about an issue that you personally AGREE with? n Yes n No Full Sample 72% 28% Political Affiliation 82% 18% Democrat 64% 36% Republican 69% 31% Independent Age 76% 24% Millennials 69% 31% Gen X 60% 40% Baby Boomers
2018 CEO ACTIVISM SURVEY 11 9. Are you less likely to purchase a product or service from a company whose CEO speaks out about an issue that you personally DISAGREE with? n Yes n No Full Sample 62% 38% Political Affiliation 69% 31% Democrat 58% 42% Republican 61% 39% Independent Age 62% 38% Millennials 60% 40% Gen X 63% 37% Baby Boomers 10. Can you think of a product or service that you use LESS or have stopped using because of a position that the CEO took on a social, environmental, or political issue? Percent Responding 35% Approximately how much money did you spend on this product or service before and how much did you spend after? $124 per month* Before $62 per month* After * Respondents were given the option to report spending on a daily, weekly, or monthly basis. Responses were calculated on a monthly equivalent basis. Note that these numbers are self-reported and might not reflect actual changes in purchasing behavior. Percent Respondents Percent Decrease Stop Using Entirely 50% 69%
2018 CEO ACTIVISM SURVEY 12 11. Can you think of a product or service that you use MORE or have started to use because of a position that the CEO took on a social, environmental, or political issue? Percent Responding 20% Approximately how much money did you spend on this product or service before and how much did you spend after? $80 per month* Before $152 per month* After * Respondents were given the option to report spending on a daily, weekly, or monthly basis. Responses were calculated on a monthly equivalent basis. Note that these numbers are self-reported and might not reflect actual changes in purchasing behavior. Percent Respondents Did Not Percent Increase Use Product Previously 91% 21%
2018 CEO ACTIVISM SURVEY 13 Demographic Information Gender Male Female 46% 53% Age Average Median 38 34 Region (As defined by the U.S. Census Bureau) 18% 39% 23% 21% Northeast South Midwest West Race 70% 11% 8% 5% White Black or African American Hispanic or Latino Asian or Pacific Islander 1% Native American or Alaskan Native 5% Other or Multiple Political Affiliation 33% 27% 28% 1% Democrat Republican Independent Other 11% None Household Income 17% 14% 12% 8% Less than $20,000 $20,000 but less than $30,000 $30,000 but less than $40,000 $40,000 but less than $50,000 9% $50,000 but less than $60,000 8% $60,000 but less than $75,000 15% $75,000 but less than $100,000 8% $100,000 but less than $125,000 4% $125,000 but less than $150,000 5% $150,000 or more
2018 CEO ACTIVISM SURVEY 14 ABOUT THE AUTHORS DAVID F. LARCKER David F. Larcker is the James Irvin Miller Professor of Accounting at Stanford Graduate School of Business; director of the Corporate Governance Research Initiative; and senior faculty of the Arthur and Toni Rembe Rock Center for Corporate Governance. His research focuses on executive compensation and corporate governance. Professor Larcker presently serves on the Board of Trustees for Wells Fargo Advantage Funds. He is coauthor of the books A Real Look at Real World Corporate Governance and Corporate Governance Matters. Email: dlarcker@stanford.edu Twitter: @stanfordcorpgov Full Bio: http://www.gsb.stanford.edu/faculty-research/faculty/david-f-larcker BRIAN TAYAN Brian Tayan is a member of the Corporate Governance Research Initiative at Stanford Graduate School of Business. He has written broadly on the subject of corporate governance, including boards of directors, succession planning, compensation, financial accounting, and shareholder relations. He is coauthor with David Larcker of the books A Real Look at Real World Corporate Governance and Corporate Governance Matters. Email: btayan@stanford.edu Full Bio: http://www.gsb.stanford.edu/contact/brian-tayan Acknowledgments THE AUTHORS WOULD LIKE TO THANK MICHELLE E. GUTMAN OF THE CORPORATE GOVERNANCE RESEARCH INITIATIVE AT STANFORD GRADUATE SCHOOL OF BUSINESS FOR HER RESEARCH ASSISTANCE ON THIS STUDY.
2018 CEO ACTIVISM SURVEY 15 About Stanford Graduate School of Business and the Rock Center for Corporate Governance CORPORATE GOVERNANCE RESEARCH INITIATIVE The Corporate Governance Research Initiative at Stanford Graduate School of Business focuses on research to advance theintellectualunderstandingofcorporategovernance,both domestically and abroad. By collaborating with academics and practitioners from the public and private sectors, we seek to generate insights into critical issues and bridge the gap between theory and practice. Our research covers a broad range of topics that include executive compensation, board governance, CEO succession, and proxy voting. gsb.stanford.edu/cgri THE ROCK CENTER FOR CORPORATE GOVERNANCE The Arthur and Toni Rembe Rock Center for Corporate Governance is a joint initiative of Stanford Law School and Stanford Graduate School of Business. The center was created to advance the understanding and practice of corporate governance in a cross-disciplinary environment where leading academics, business leaders, policy makers, practitioners, and regulators can meet and work together. rockcenter.stanford.edu Contact Information FOR MORE INFORMATION ON THIS REPORT, PLEASE CONTACT: HEATHER LYNCH HANSEN ASSISTANT DIRECTOR OF COMMUNICATIONS Stanford Graduate School of Business Knight Management Center Stanford University 655 Knight Way Stanford, CA 94305-7298 Phone: +1.650.723.0887 hhansen@stanford.edu Copyright ©2018 Stanford Graduate School of Business and the Rock Center for Corporate Governance

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2018 CEO Activism Survey

  • 1. 2018 CEO ACTIVISM SURVEY WWW.GSB.STANFORD.EDU/CGRI
  • 2. TA B L E O F C O N T E N T S Executive Summary and Key Findings............................ 1 Methodology....................................................................... 4 Review of Findings.............................................................. 5 Demographic Information.............................................. 13 About the Authors............................................................14 Acknowledgments............................................................14 About Stanford Graduate School of Business and the Rock Center for Corporate Governance....................... 15 Contact Information....................................................... 15
  • 3. 2018 CEO ACTIVISM SURVEY 1 EXECUTIVE SUMMARY AND KEY FINDINGS THE PUBLIC TAKES A SURPRISINGLY MIXED VIEW OF CEO ACTIVISM. WHILE SOME INDIVIDUALS REACT POSITIVELY TO CEOs TAKING A POSITION ON SOCIAL, ENVIRONMENTAL, OR POLITICAL ISSUES, THEY ARE LARGELY COUNTERBALANCED BY OTHERS WITH A STRONG NEGATIVE REACTION. PEOPLE ARE MORE LIKELY TO THINK OF PRODUCTS THEY HAVE STOPPED USING THAN PRODUCTS THEY HAVE STARTED USING BECAUSE OF CEO ACTIVISM. “We find that the public is highly divided about CEOs who take vocal positions on social, environmental, or political issues,” says Professor David F. Larcker, Stanford Graduate School of Business. “While some applaud CEOs who speak up, others strongly disapprove. The divergence in opinions is striking. CEOs who take public positions on specific issues might build loyalty with their employees or customers, but these same positions can inadvertently alienate important segments of those populations. The cost of CEO activism might be higher than many CEOs, companies, or boards realize.” “Hot-button issues are hot for a reason,” adds Brian Tayan, researcher at Stanford Graduate School of Business. “Interestingly, people are much more likely to think of products they have stopped using than products they have started using because of a position the CEO took on a public issue. When consumers don’t like what they hear, they react the best way they know how to: by closing their wallets.” In summer and fall 2018, the Rock Center for Corporate Governance at Stanford University conducted a nationwide survey of 3,544 individuals—representative by gender, race, age, household income, and state residence—to understand how the American public views CEOs who take public positions on environmental, social, and political issues.
  • 4. 2018 CEO ACTIVISM SURVEY 2 KEY FINDINGS INCLUDE THE FOLLOWING: THE PUBLIC VIEWPOINT OF CEO ACTIVISM IS HIGHLY MIXED, WITH OPINIONS VARYING BY AGE AND POLITICAL AFFILIATION. While two-thirds (65 percent) of the public believe that the CEOs of large companies should use their position and potential influence to advocate on behalf of social, environmental,orpoliticalissuestheycareaboutpersonally, one-third (35 percent) do not. Opinions starkly differ depending on the political affiliation of the respondent. Nearly three-quarters (72 percent) of respondents who self-identify as Democrats support CEO activism, while just over half (57 percent) of Republicans do. Opinions vary more significantly depending on the age of the respondent. A large majority of Millennials (71 percent) and two-thirds of Generation X (63 percent) support CEO activism. Baby Boomers, by contrast, are more likely to disapprove of CEO activism, with only 46 percent approving and 54 percent disapproving.1 All respondents are more in favor of CEOs taking public positions on social, environmental, or political issues if those issues directly impact their business or employees. Seventy-two percent of the public support CEO activism under these circumstances, with Millennials (76 percent), Gen X (71 percent), and Baby Boomers (60 percent) holding favorable opinions. 1  Millennials are defined as respondents age 38 or younger. Generation X are respondents age 39 to 53. Baby Boomers are respondents age 54 or older. THE PUBLIC IS POSITIVE ON ENVIRONMENTAL ISSUES, NEGATIVE ON POLITICS AND CONTENTIOUS SOCIAL ISSUES. Members of the public are most in favor of CEO activism about environmental issues, such as clean air or water (78 percent), renewable energy (68 percent), sustainability (65 percent), and climate change (65 percent). They are also generally positive about widespread social issues, such as healthcare (69 percent), income inequality (66 percent), poverty (65 percent), and taxes (58 percent). While responses vary by age and political affiliation, generally all groups have net-favorable opinions about CEOs speaking up on these issues.2 The public reaction is somewhat more mixed about issues of diversity and equality. Fifty-four percent of Americans support CEO activism about racial issues, while 29 percent do not; 43 percent support activism about LGBTQ rights, while 32 percent do not; and only 40 percent support activism about gender issues, while 37 percent do not.3 The public viewpoint on whether CEOs should speak out on these issues varies considerably by age and political affiliation, with Democrats and Millennials more likely to favor CEO activism, Republicans and Baby Boomers more likely to oppose it, and Independents and Generation X respondents closely divided. 2  Net-favorable opinions are calculated as the percent of respondents who select “thank you for speaking up” minus the percent of respondents who select “keep your mouth shut.” Respondents who select “no opinion” are excluded. 3  LGBTQ means lesbian, gay, bisexual, transgender, or queer/questioning
  • 5. 2018 CEO ACTIVISM SURVEY 3 Quiteunexpectedly,responsestoCEOactivismaboutgender issues vary only modestly when respondents are segmented by gender, with 42 percent of female respondents having a favorable opinion (36 percent negative opinion) and 37 percent of male respondents having a favorable opinion (39 percent negative). Contentious social issues—such as gun control and abortion—and politics and religion garner the least favorable reactions. Of these issues, CEOs speaking up about gun control is the only one with a net-favorable position (45 percent favorable versus 35 percent unfavorable). Abortion (37 percent versus 39 percent), politics (33 percent versus 43 percent), and religion (31 percent versus 45 percent) all elicit net-unfavorable reactions. Republicans, Independents, Gen X, and Baby Boomers have negative and strongly negative reactions to CEOs taking public stances on these issues. AMERICANS ARE MOST LIKELY TO RECALL PROMINENT CEOs SPEAKING UP ABOUT ISSUES THEY AGREE — AND DISAGREE — WITH. Americans are aware of prominent CEOs who take public positions on social, environmental, and political issues. The CEOs and former CEOs of Microsoft, Tesla, Starbucks, Apple, Facebook, Target, and Chick-fil-A are recognized on an unprompted basis for their stances on racial equality, income inequality, privacy, women’s rights, religious rights, and environmental issues. Of note, many of the same CEOs are cited as examples of CEO activism that the public agrees with as well as examples of CEO activism that they disagree with. For example, the CEO of Chick-fil-A is cited favorably for his support of religious rights and negatively for his views of the LGBTQ community. Similarly, the former CEO of Starbucks is cited both favorably and unfavorably for his stances on racial issues. “The fact that the same names pop up both positively and negativelyunderscoresthepolarizingnatureoftheseissues,” observes Professor Larcker. “Prominent CEOs who use their positions to advocate for issues that they personally believe in can have a bifurcated impact on the public. CEO activism really is a double-edged sword.” AMERICANS MAY BE MORE LIKELY TO STOP USING PRODUCTS OR SERVICES BECAUSE OF CEO ACTIVISM THAN START USING THEM. Americans claim that they are more likely to purchase products or services from a company whose CEO speaks out about an issue they agree with (72 percent) and less likely to purchase them if the CEO speaks out about an issue they disagree with (62 percent). However, when asked to identify specific incidents in which they changed their own purchase behavior because of CEO activism, respondents were significantly more likely to remember products they stopped using or use less because ofthepositiontheCEOtookthanproductstheystartedusing or use more. Specifically, 35 percent of the public could think of a product or service they use less, while only 20 percent could think of a product they use more. Respondents claim that disagreement with the CEO over an environmental, social, or political issue caused them to decrease their spending on that company’s products by 50 percent, on average (from $124 per month to $62 per month). A full 69 percent claim that they stopped using the product or service entirely. By contrast, respondents claim that agreement with the CEO over an environmental, social, or political issue caused them to increase their spending by 91 percent, on average (from $80 per month to $152 per month). Only 21 percent claim that they started using the product or service for the first time as a result of the CEO’s stance. “While it is difficult to generalize from self-reported purchase data, Americans clearly express an awareness of the positions that CEOs take and are willing to change their buying habits when they agree or disagree,” says Tayan. “Companies and their boards need to understand the demographics of their employee and customer base and do the calculus to figure out whether their CEOs are doing more harm or good when they speak out on controversial issues.”
  • 6. 2018 CEO ACTIVISM SURVEY 4 Methodology In summer and fall 2018, the Rock Center for Corporate Governance at Stanford University hired Survey Sampling International (SSI) to conduct a nationwide survey of 3,544 individuals—representative by gender, race, age, household income, and state residence—to understand how the American public views CEOs who take public positions on environmental, social, and political issues. Stanford University is solely responsible for the contents of this survey.
  • 7. 2018 CEO ACTIVISM SURVEY 5 Review of Findings 1. In general, should the CEOs of large companies use their position and potential influence to advocate on behalf of social, environmental, or political issues that they care about personally? n Yes n No Full Sample 65% 35% Political Affiliation 72% 28% Democrat 57% 43% Republican 65% 35% Independent Age* 71% 29% Millennials 63% 37% Gen X 46% 54% Baby Boomers * Millennials are respondents age 38 or younger. Gen X are respondents age 39 to 53. Baby Boomers are respondents age 54 or older. 2. How strongly do you hold this opinion? 25% 5. Very Strongly 34% 4. 34% 3. 4% 2. 3% 1. Not strongly at all Average 3.8
  • 8. 2018 CEO ACTIVISM SURVEY 6 3. Should the CEOs of large companies use their position to advocate on behalf of social, environmental, or political issues if those issues directly impact their business or employees? n Yes n No Full Sample 72% 28% Political Affiliation 78% 22% Democrat 67% 33% Republican 71% 29% Independent Age 76% 24% Millennials 71% 29% Gen X 60% 40% Baby Boomers 4. How strongly do you hold this opinion? 31% 5. Very Strongly 35% 4. 28% 3. 4% 2. 2% 1. Not strongly at all Average 3.9
  • 9. 2018 CEO ACTIVISM SURVEY 7 5. In general, what is your reaction to CEOs who are publicly vocal about the following issues? (Sorted by favorability) 78% 69% 68% 66% 65% 65% 65% 59% 58% 55% 54% 49% 45% 43% 42% 40% 37% 33% 31% Thank you for speaking upFull Sample Keep your mouth shut No opinion Clean air or water Healthcare Renewable energy Income inequality Sustainability Climate change Poverty Land conservation Taxes Foreign trade Racial issues* Immigration Gun control LGBTQ rights** War Gender issues*** Abortion rights Politics Religion 12% 16% 19% 16% 22% 20% 17% 24% 21% 28% 17% 22% 20% 25% 25% 23% 24% 24% 23% 10% 15% 13% 18% 14% 16% 18% 17% 20% 16% 29% 29% 35% 32% 33% 37% 39% 43% 45% Thank You for Speaking Up – By Political Affiliation (Sorted by Democrat favorability) Democrat Republican Independ. Clean air or water 87% 67% 80% Climate change 81% 45% 67% Healthcare 79% 59% 70% Income inequality 78% 51% 68% Renewable energy 77% 58% 72% Sustainability 74% 55% 69% Poverty 73% 54% 69% Racial issues 69% 38% 53% Land conservation 67% 50% 62% Taxes 64% 55% 58% Gun control 62% 32% 40% Foreign trade 60% 54% 58% Immigration 59% 40% 47% LGBTQ rights 58% 26% 41% Gender issues 52% 28% 39% War 51% 34% 40% Abortion rights 50% 30% 31% Politics 42% 27% 30% Religion 37% 29% 28% Thank You for Speaking Up – By Age (Sorted by Millennials favorability) Millennials Gen X Boomers Clean air or water 81% 76% 73% Healthcare 69% 73% 67% Renewable energy 69% 68% 65% Climate change 68% 63% 55% Income Inequality 68% 66% 60% Poverty 68% 65% 60% Sustainability 65% 67% 61% Land conservation 60% 60% 55% Taxes 59% 59% 55% Racial issues 58% 51% 47% Foreign trade 53% 58% 61% Immigration 50% 49% 43% Guns control 47% 45% 38% LGBTQ Rights 47% 40% 33% War 44% 41% 34% Gender issues 43% 37% 31% Abortion rights 42% 34% 23% Politics 36% 31% 26% Religion 35% 29% 20% * Responses vary significantly when respondents are segmented by race. White respondents reply 49% “thank you for speaking up.” Nonwhite respondents reply 66% “thank you for speaking up.” ** LGBTQ means lesbian, gay, bisexual, transgender, or queer/questioning *** Reponses vary only modestly when respondents are segmented by gender. Female respondents reply 42% “thank you for speaking up.” Male respondents reply 37% “thank you for speaking up.”
  • 10. 2018 CEO ACTIVISM SURVEY 8 Reaction to CEO Activism (Sorted by net favorability*) Net Favorability (Unfavorability)Full Sample Clean air or water Renewable energy Healthcare Sustainability Climate change Income inequality Poverty Land conservation Foreign trade Taxes Racial issues Immigration LGBTQ rights Gun control War Gender issues Abortion rights Politics Religion 68% 55% 54% 51% 49% 48% 47% 42% 39% 38% 25% 20% 11% 10% 9% 3% -2% -10% -14% Reaction to CEO Activism – By Political Affiliation (Sorted by Democrat net favorability*) Democrat Republican Independent Clean air or water 81% 50% 71% Climate change 74% 16% 53% Healthcare 69% 37% 55% Renewable energy 67% 38% 60% Income inequality 67% 22% 52% Sustainability 65% 34% 57% Poverty 59% 28% 54% Land conservation 55% 25% 47% Racial issues 49% -3% 24% Taxes 45% 30% 38% Foreign trade 45% 33% 45% Gun control 39% -17% 3% Immigration 36% 1% 18% LGBTQ rights 36% -23% 9% War 24% -7% 6% Gender issues 24% -22% 1% Abortion rights 20% -18% -11% Politics 6% -25% -15% Religion -5% -21% -19% Reaction to CEO Activism – By Age (Sorted by Millennials net favorability*) Millennials Gen X Boomers Clean air or water 72% 63% 61% Renewable energy 58% 53% 48% Climate change 57% 44% 30% Healthcare 55% 57% 48% Sustainability 54% 52% 42% Income Inequality 53% 48% 36% Poverty 53% 45% 37% Land conservation 46% 43% 32% Taxes 40% 37% 29% Foreign trade 38% 40% 43% Racial issues 32% 20% 10% Immigration 24% 18% 5% LGBTQ Rights 18% 6% -11% Guns control 15% 9% -6% War 15% 6% -8% Gender issues 9% -2% -16% Abortion rights 7% -7% -31% Politics -3% -14% -32% Religion -4% -21% -41% * Calculated as the percent of respondents who select “thank you for speaking up” minus the percent of respondents who select “keep your mouth shut.” Excludes respondents who select “no opinion.”
  • 11. 2018 CEO ACTIVISM SURVEY 9 6. Can you give an example of a CEO speaking out about a social, environmental, or political issue that you agree with? (Most frequently cited, on an unprompted basis in descending order*) CEO Company Reason cited Bill Gates Microsoft Global poverty Elon Musk Tesla Renewable energy Mark Zuckerberg Facebook Privacy, various social issues Tim Cook Apple Various social issues Jeff Bezos Amazon Various social issues Howard Schultz Starbucks Various social issues Dan Cathy Chick-fil-A Religious rights Larry Page and Sergey Brin Alphabet (Google) Various social issues David Green Hobby Lobby Religious rights Doug McMillon Walmart Environmental issues Warren Buffett Berkshire Hathaway Taxes, income inequality Edward Stack Dick’s Sporting Goods Gun control Brian Cornell Target LGBTQ rights * CEO name is provided for cases where the respondent identified a company name. 7. Can you give an example of a CEO speaking out about a social, environmental, or political issue that you disagree with? (Most frequently cited, on an unprompted basis in descending order*) CEO Company Reason cited Dan Cathy Chick-fil-A LGBTQ rights Mark Zuckerberg Facebook Privacy, various social issues Howard Schultz Starbucks Various social issues John Schnatter Papa John's Racial issues Elon Musk Tesla Various social issues David Green Hobby Lobby Women's rights Tim Cook Apple Various social issues Jeff Bezos Amazon Various social issues Charles Koch Koch Industries Political issues Bill Gates Microsoft Various social issues Brian Cornell Target LGBTQ rights Larry Page and Sergey Brin Alphabet (Google) Privacy, various social issues Doug McMillon Walmart Various social issues * CEO name is provided for cases where the respondent identified a company name.
  • 12. 2018 CEO ACTIVISM SURVEY 10 8. Are you more likely to purchase a product or service from a company whose CEO speaks out about an issue that you personally AGREE with? n Yes n No Full Sample 72% 28% Political Affiliation 82% 18% Democrat 64% 36% Republican 69% 31% Independent Age 76% 24% Millennials 69% 31% Gen X 60% 40% Baby Boomers
  • 13. 2018 CEO ACTIVISM SURVEY 11 9. Are you less likely to purchase a product or service from a company whose CEO speaks out about an issue that you personally DISAGREE with? n Yes n No Full Sample 62% 38% Political Affiliation 69% 31% Democrat 58% 42% Republican 61% 39% Independent Age 62% 38% Millennials 60% 40% Gen X 63% 37% Baby Boomers 10. Can you think of a product or service that you use LESS or have stopped using because of a position that the CEO took on a social, environmental, or political issue? Percent Responding 35% Approximately how much money did you spend on this product or service before and how much did you spend after? $124 per month* Before $62 per month* After * Respondents were given the option to report spending on a daily, weekly, or monthly basis. Responses were calculated on a monthly equivalent basis. Note that these numbers are self-reported and might not reflect actual changes in purchasing behavior. Percent Respondents Percent Decrease Stop Using Entirely 50% 69%
  • 14. 2018 CEO ACTIVISM SURVEY 12 11. Can you think of a product or service that you use MORE or have started to use because of a position that the CEO took on a social, environmental, or political issue? Percent Responding 20% Approximately how much money did you spend on this product or service before and how much did you spend after? $80 per month* Before $152 per month* After * Respondents were given the option to report spending on a daily, weekly, or monthly basis. Responses were calculated on a monthly equivalent basis. Note that these numbers are self-reported and might not reflect actual changes in purchasing behavior. Percent Respondents Did Not Percent Increase Use Product Previously 91% 21%
  • 15. 2018 CEO ACTIVISM SURVEY 13 Demographic Information Gender Male Female 46% 53% Age Average Median 38 34 Region (As defined by the U.S. Census Bureau) 18% 39% 23% 21% Northeast South Midwest West Race 70% 11% 8% 5% White Black or African American Hispanic or Latino Asian or Pacific Islander 1% Native American or Alaskan Native 5% Other or Multiple Political Affiliation 33% 27% 28% 1% Democrat Republican Independent Other 11% None Household Income 17% 14% 12% 8% Less than $20,000 $20,000 but less than $30,000 $30,000 but less than $40,000 $40,000 but less than $50,000 9% $50,000 but less than $60,000 8% $60,000 but less than $75,000 15% $75,000 but less than $100,000 8% $100,000 but less than $125,000 4% $125,000 but less than $150,000 5% $150,000 or more
  • 16. 2018 CEO ACTIVISM SURVEY 14 ABOUT THE AUTHORS DAVID F. LARCKER David F. Larcker is the James Irvin Miller Professor of Accounting at Stanford Graduate School of Business; director of the Corporate Governance Research Initiative; and senior faculty of the Arthur and Toni Rembe Rock Center for Corporate Governance. His research focuses on executive compensation and corporate governance. Professor Larcker presently serves on the Board of Trustees for Wells Fargo Advantage Funds. He is coauthor of the books A Real Look at Real World Corporate Governance and Corporate Governance Matters. Email: dlarcker@stanford.edu Twitter: @stanfordcorpgov Full Bio: http://www.gsb.stanford.edu/faculty-research/faculty/david-f-larcker BRIAN TAYAN Brian Tayan is a member of the Corporate Governance Research Initiative at Stanford Graduate School of Business. He has written broadly on the subject of corporate governance, including boards of directors, succession planning, compensation, financial accounting, and shareholder relations. He is coauthor with David Larcker of the books A Real Look at Real World Corporate Governance and Corporate Governance Matters. Email: btayan@stanford.edu Full Bio: http://www.gsb.stanford.edu/contact/brian-tayan Acknowledgments THE AUTHORS WOULD LIKE TO THANK MICHELLE E. GUTMAN OF THE CORPORATE GOVERNANCE RESEARCH INITIATIVE AT STANFORD GRADUATE SCHOOL OF BUSINESS FOR HER RESEARCH ASSISTANCE ON THIS STUDY.
  • 17. 2018 CEO ACTIVISM SURVEY 15 About Stanford Graduate School of Business and the Rock Center for Corporate Governance CORPORATE GOVERNANCE RESEARCH INITIATIVE The Corporate Governance Research Initiative at Stanford Graduate School of Business focuses on research to advance theintellectualunderstandingofcorporategovernance,both domestically and abroad. By collaborating with academics and practitioners from the public and private sectors, we seek to generate insights into critical issues and bridge the gap between theory and practice. Our research covers a broad range of topics that include executive compensation, board governance, CEO succession, and proxy voting. gsb.stanford.edu/cgri THE ROCK CENTER FOR CORPORATE GOVERNANCE The Arthur and Toni Rembe Rock Center for Corporate Governance is a joint initiative of Stanford Law School and Stanford Graduate School of Business. The center was created to advance the understanding and practice of corporate governance in a cross-disciplinary environment where leading academics, business leaders, policy makers, practitioners, and regulators can meet and work together. rockcenter.stanford.edu Contact Information FOR MORE INFORMATION ON THIS REPORT, PLEASE CONTACT: HEATHER LYNCH HANSEN ASSISTANT DIRECTOR OF COMMUNICATIONS Stanford Graduate School of Business Knight Management Center Stanford University 655 Knight Way Stanford, CA 94305-7298 Phone: +1.650.723.0887 hhansen@stanford.edu Copyright ©2018 Stanford Graduate School of Business and the Rock Center for Corporate Governance