The Mozilla Controversy: Should CEOs Get Political?

Freedom of speech can't be denied ... but CEOs of publicly traded companies also have us shareholders to think about, too

   

If you blinked, you probably missed the tenure of Mozilla CEO Brendan Eich, who took the helm of the software group March 24, then resigned less than two weeks later. The quick ouster was prompted by protests from several company staffers, as well as dating site OKCupid, over the fact that Eich had made a $1,000 donation to support California’s Proposition 8 a few years ago.

NewLetters The Mozilla Controversy: Should CEOs Get Political?For those who don’t remember, Prop 8 was the state’s controversial ballot initiative to banned same-sex marriage.

However, rather than get into the topic of gay marriage, I’m actually more interested in what this case and others say about the politics of senior management of various companies, public and private.

What CEOs Can Do … and What They Should Do

We’ve seen enough examples at this point — publicly, Whole Foods Market (WFM); privately, Barilla and Chick-fil-A — that it raises important questions about free speech and the role of senior management at a company.

Whole Foods Market founder and co-CEO John Mackey came out in support of Prop 8, yet received little backlash. Barilla’s CEO took heat for comments — which some say were taken out of context — on the subject of gay parents and adoption that didn’t sit well with some. Chick-fil-A faced similar controversy.

Free speech is a sacred right of this country, and was one of its founding principles. There’s nothing — short of a corporation’s own rules — that prevents a CEO or anyone else from expressing their views on any topic they deem fit.

However, the CEO of a company (particularly a public one) does have a superseding obligation to shareholders. It’s the price you might have to pay if you want to lead a company.

And as individual donations are part of the public record, it means that if a CEO does want to support a cause financially … well, as far as I’m concerned, he or she had better do it through a political action committee or just remain quiet.

As a shareholder, you should want your CEO to keep a low profile as far as any political issues are concerned. The CEO should be focused on growing the company and improving the stock price.

The only possible exception is if a CEO’s personal values directly influence the corporate culture and/or dictate strategic initiatives that directly affect shareholders.

Did Mozilla Screw Up?

Let’s play out the OKCupid-Mozilla conflict from the shareholder perspective.

OKCupid, an online dating service, announces that since Mozilla’s CEO once donated to support Prop 8 — a state ballot proposition seeking to preserve traditional marriage — that OKCupid website’s could no longer be accessed via Mozilla’s Firefox browser.

This is ludicrous on OKCupid’s end. It served no business purpose. It wasn’t a growth initiative. It wasn’t designed to generate revenue. It was an unnecessary distraction away from OKCupid’s core business. Worse, it opens up OKCupid management to criticism from First Amendment supporters, permits others to criticize them as being bullies, and also turns out to be hypocritical. This is a potential self-inflicted public relations fiasco.

OKCupid is owned by InterActiveCorp (IACI), so if I’m an IACI shareholder, I’m angry.

As for Mozilla … the fact that it’s privately held also permits management to be more active in what it says and does. That’s the advantage of not having a stock to pay attention to. It does have to mind the business, and if it felt Eich was that much of a burden, that’s its right.

But I have no issue with the fact that the CEO had a stance and donated — he has a right to free speech, and he’s not rattling public shareholders.

For what it’s worth, I think several publicly traded companies are way too involved in politics. Google (GOOG) and Facebook (FB) lean left. News Corp (NWSA) leans right. NBC is a major subsidiary of Comcast (CMCSA) and its news division leans left.

Of course, when it comes to things like news, it’s difficult to separate politics, so you have to live with it. As a shareholder of companies like NWSA and CMCSA, at least I know what I’m getting into.

Bottom Line

In general, if you are in the publicly traded spotlight, do your shareholders a favor: Stay quiet and tend to your knitting.

As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned securities. He is president of PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at pdlcapital66@gmail.com and follow his tweets @ichabodscranium.


Article printed from InvestorPlace Media, http://investorplace.com/investorpolitics/mozilla-ceo-brendan-eich-prop-8/.

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