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Salesforce's Marc Benioff Has Kicked Off New Era of Corporate Social Activism

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05/02/2016 | 05:15pm CEST
By Monica Langley 

When North Carolina passed its law in March restricting gay rights, Marc Benioff was ready with his rapid-deployment response.

The Salesforce.com Inc. chief executive blasted out tweets criticizing the law. He called on other CEOs to speak out and dispatched staff to work with state officials and rights groups. Under pressure from many quarters, Gov. Pat McCrory soon sought to pare the law's scope.

It was the kind of show of force that has made Mr. Benioff a master promoter in the movement toward social activism among American chief executives, one that's increasingly influential despite resistance from those in its focus and some disquiet from Salesforce's investors and directors.

"Marc rallies CEOs when business and trade groups are much slower to act, particularly on noneconomic issues," says Dow Chemical Co. chief Andrew Liveris, who weighed in against the North Carolina law and says Mr. Benioff's influence led him to get personally engaged in social activism.

The 51-year-old Mr. Benioff earlier this year helped push Georgia's governor into vetoing that state's bill that would have let faith-based organizations decline services or fire employees over religious beliefs after the U.S. Supreme Court ruling that backed same-sex marriage. Last year, he and other CEOs were instrumental in persuading Indiana's governor to revise a similar law. He is now pressing cohorts to back measures to close the gender pay gap.

Mr. Benioff is among CEOs of companies, including Apple Inc., Bank of America Corp., Walt Disney Co., Intel Corp. and International Business Machines Corp., that have begun pressuring lawmakers on social issues, often with a warning: Change laws or risk losing business.

That is a departure from the past, when U.S. CEOs often avoided weighing in on social issues lest they incur backlash from shareholders, customers and other constituents.

Now, the risk may be in not speaking up. "Our jobs as CEOs now include driving what we think is right," says Bank of America CEO Brian Moynihan. "It's not exactly political activism, but it is action on issues beyond business."

Critics of the new outspokenness include North Carolina Lt. Gov. Dan Forest. "The Salesforce CEO is a corporate bully," says Mr. Forest, who vows to stand with his governor against business backlash. "One or two executives from San Francisco call their buddies, and then we've got leftist groupthink tarnishing North Carolina."

Mr. Benioff says he was once a Republican and now doesn't formally affiliate with either party. While some in his camp are liberal-leaning, others aren't. They have pitted themselves largely against GOP legislators.

Some CEOs have told Mr. Benioff they can't join the cause, with one saying it would put "a target on my back."

At Salesforce's annual shareholder meeting last year, an investor criticized Mr. Benioff's public posture as polarizing and time-consuming. Retired Gen. Colin Powell, a Salesforce director, says he recently advised Mr. Benioff that his advocate persona may subject him and Salesforce to unwanted scrutiny.

"Be careful how far you climb up the tree," he says he told Mr. Benioff, "it will expose your backside."

CEOs have long sought to influence policy broadly through campaign contributions. Mr. Benioff and his wife have made $1.3 million in political contributions over the past decade to Democrats and Republicans, according to the Center for Responsive Politics. They gave to George W. Bush's presidential campaigns and recently held a fundraiser for Hillary Clinton.

Starbucks Corp.'s Howard Schultz has advocated for tougher gun control. Koch Industries' Charles Koch supports free-market causes, deregulation and criminal-justice overhaul.

What sets apart the new activist CEOs is how they use their names and corporate muscle to campaign directly against specific laws governing social issues, often on short notice, sometimes by threatening to withhold business. These days, a principal cause is gay and transgender rights.

The move took off early in Silicon Valley, where there has long been a mix of liberal and libertarian leanings. Millennial employees "don't want to focus just on making great technology," says Susan Wojcicki, CEO of Alphabet Inc.'s YouTube and a Salesforce director, "but also on making the world a better place."

To attract promising young employees in many parts of America and to woo today's customers, the argument goes, companies must project a corporate ethos that goes beyond profit. "The next generation of CEOs must advocate for all stakeholders -- employees, customers, community, the environment, everybody," Mr. Benioff says, "not just for shareholders."

Bully pulpit

Mr. Benioff's corporate bully pulpit is enabled by company results that keep most investors from questioning his extracurricular activities. Salesforce shares have risen roughly ninefold in the past decade.

"Marc may be distracted on Twitter or at charity functions," says UBS Group AG software analyst Brent Thill, "but it comes back as a halo around Salesforce, and he's built a strong team so he's no longer needed for operational details."

A San Francisco native, Mr. Benioff worked at Oracle Corp. In 1999, he co-founded Salesforce, a pioneer in selling subscriptions to software that businesses can run online rather than storing it on their own computers, part of what came to be called cloud computing. His Salesforce stock is valued at about $3 billion.

An imposing 6' 5", he favors bespoke Berluti suits or custom Christian Louboutin "Cloud Walkers" sneakers with his Tommy Bahama floral shirts. At their three San Francisco houses and Hawaiian estate, he and his wife, Lynne, have hosted friends to private concerts by Stevie Wonder, Neil Young and Lenny Kravitz. He housed 30 Buddhist monks from France recently while their spiritual leader, Thich Nhat Hanh, received medical care at Mr. Benioff's expense.

He is a prominent presence in the Bay Area, contributing nearly $300 million to University of California San Francisco, including to the UCSF Benioff Children's Hospitals. He touts his new headquarters, under construction, as the tallest building west of the Mississippi.

Mr. Benioff used this year's World Economic Forum in Davos, Switzerland, as an advocacy venue, holding a gathering in a dome overlooking the Alps featuring musicians Bono and will.i.am. "Marc wanted to fertilize the interest of CEOs in the U.S., where this kind of political involvement is much newer" than in Europe, says Unilever PLC chief Paul Polman, who met with him there and favors having companies focus on social issues such as food security.

Mr. Benioff honed his activist tactics last year when Indiana's legislature passed its "Religious Freedom Restoration Act" permitting businesses to discriminate against gay and transgender people. Salesforce is a large employer in Indiana, where its workers demanded Mr. Benioff act. "Initially, I was very hesitant," he says. "What do I know about this?"

He identified one weapon in Twitter, which he had used mainly to tweet about Salesforce's business. When Indiana Gov. Mike Pence signed the measure, he sent tweets saying Salesforce would reduce investments in the state and offering to relocate Indiana employees.

Another weapon was his client list. Not only did he have CEO friends but he also could reach his 150,000 business customers. He emailed dozens of CEOs and lobbied others over dinner, including Yelp Inc.'s Jeremy Stoppelman, who says Mr. Benioff helped persuade him to come out against the law.

"He creates air cover for the rest of us," Mr. Stoppelman says, "so we feel OK about speaking out."

Eventually, CEOs he contacted -- and others at companies such as Wal-Mart Stores Inc. and Nascar -- came out against antigay discrimination. Mr. Benioff personally phoned Mr. Pence. After widespread national backlash, the governor revised the bill. Mr. Pence declined to comment.

He applied his newfound tactics early this year on Georgia, whose general assembly approved its bill that let organizations discriminate against same-sex couples on religious grounds. Mr. Benioff tweeted suggesting he might cancel his huge marketing conference in Atlanta and dispatched legal and government-relations staff to lobby Gov. Nathan Deal's aides.

And he began the CEO-arm twisting.

He invited chiefs in March to a six-course sushi dinner at his house overlooking San Francisco Bay, interspersing them with tech billionaires and celebrities including magician David Blaine, to urge them to act against the Georgia law. He emailed corporate chiefs asking them to tweet that "There is an economic consequence to discrimination."

He buttonholed Apple CEO Tim Cook at Vanity Fair's Academy Awards party, asking him to discuss the Georgia law, which Apple later criticized publicly. He emailed Disney CEO Robert Iger, who had notified the governor his company was considering not filming in the state, says a Disney spokeswoman.

When Gov. Deal vetoed the bill, Mr. Benioff committed to keeping his conference in Atlanta. A spokeswoman for Gov. Deal, without saying whether Mr. Benioff influenced the decision, says "the governor heard opinions from those on all sides of the issue."

'Economic threats'

Mr. Benioff's rapid-response strategy irked Josh McKoon, the state senator who sponsored the original bill. "Marc Benioff is the ringleader for big-business CEOs," he says, "who use economic threats to exercise more power over public policy than the voters who use the democratic process."

Mr. Benioff then turned his guns on North Carolina's law that limits antidiscrimination protections for lesbians, gays and transgender people and includes provisions requiring everyone to use bathrooms based on birth gender.

(MORE TO FOLLOW) Dow Jones Newswires

05-02-16 1114ET

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