Maple Leaf Foods boss attack on Trump pits ethics against shareholder value: Don Pittis

So when should a company CEO take a stance?

According to thebusiness principleof shareholder primacy, there is an argument thatSunday's Twitter attack on U.S. President Donald Trump by the CEO of Maple Leaf Foods, Michael McCain, was dead wrong.

A lot of the debate over McCain's outspoken tweets revolves around the detail of what he said andwhere he assigned blame,a subject exhaustivelyaddressed in the hashtag #BoycottMapleLeafFoodstrending on Twitter Monday.

While the Canadian food company boss did not mention Trump by name, reference in his series of tweets to"a narcissist in Washington" seemed like a dead giveaway to most people. According to the Twitter response, even Trump fans recognized the description.

Blame Trump

Essentially the case McCain made in his angry attackwas that by pulling out ofthe multi-country agreementthat had forced Iran to stop its nuclear program, Trump had intentionally reopened a geopolitical wound the world had found a route to heal.

Even more contentious was his implication that the latest U.S. attack on Iran was politically motivated, intendedby the Trump administration to divert attention away from his "political woes," including a growing wave of evidence that Trump had colluded with Russia against the interests of the United States.

Shares decline

But quite apart from the CEO'spolitical analysis of events, the question from the business point of view is whether, as the boss of a company owned by shareholders, he should have spoken out at all. The question was especially relevant as the share price fell on Monday, closing down about oneper cent on the day.

As outlined by the conservative economist Milton Friedman in his 1962book Capitalism and Freedom, the principle of shareholder primacy insiststhat"corporations have no higher purpose than maximizing profits for their shareholders."

According to that point of view, the purpose of a company is not to make the world a better place. At least not on purpose. The job of the capitalist is to do anything legal to make money, and as the representatives of those shareholders, corporate bosses have the same duty.

But with the growing power and influence of global corporations and the powerlessness of governments to step in and solve problems like gross inequality and climate change, the shareholder primacy principle seems to be slipping.

Just last summer a powerful group of 200 corporate stars, including Apple's Tim Cook, Amazon's Jeff Bezos, JPMorgan Chase's Jamie Dimon and Mary Barra of General Motors, announced they were withdrawing from that shareholder-only point of view.

Instead, the influential Business Roundtable announced the responsibility of member companies would also include"generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all."

CEO activismtrend

As the Harvard Business Review has reported in the past, it's a trend that has been growing for about five years. Companies often alignwith the interests of their employees and customers and against government. When companies objected to state laws forcing workers to use washrooms that matched the gender on their birth certificates, North Carolina lost billions in new investmentsays the review.

Harking back to an earlier form of capitalism, sometimes scorned as paternalistic, these corporate leaders have expressed the view that they havea much wider form of accountability to employees, to society, and in the case of climate change, to the entire planet.

As many in the tech world have noted, there is no point in having a wonderful productif the masses of consumers are too poor to buy it. And, while some companies profit from instability, history shows that war, revolution and displaced populations have often been bad for corporations.

In the current example, with this series of tweets,McCainshowed Maple Leaf Foods workers that he was willing to stake his own and the company's reputation in support of one of their fellow employees. Although it appears McCain's comments were motivated by sincere grief and anger, not a cynical plot to increase productivity,it is well documented thatworkers who feelloyaltyto theirbosses help to build stronger businesses.

Certainly McCain is not alone in expressing public alarm about the direction Trump is taking the United States and the world. Bank of Canada governor Stephen Poloz said something similar last week. Many U.S. business leaders, including Bloomberg's Michael Bloomberg and Amazon's Jeff Bezos, have not hurt their respective businesses by opposingthe U.S. president.

Betweenmotivated employees knowing McCain has their backs and the many buyers of Maple Leaf Foods products who are glad the company executive has taken what he saw as a moral stance inan immoral world, it is very possible shareholders will benefit in the longer term.

As the saying goes, the proof of the pudding or in this case the prepared meats will be in the eating.

Follow Don on Twitter @don_pittis