Kroger faces criticism over animal welfare and worker pay from activist investor Carl Icahn

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Diving Brief:

  • Kroger is facing heavy criticism from billionaire activist investor Carl Icahn over its approach to animal welfare and the level of compensation it offers its frontline workers.
  • Icahn said in a tuesday letter to Kroger Chairman and CEO Rodney McMullen that he named two nominees to Kroger’s board of directors who he said would “add appropriate oversight” to corporate governance activities, prompting the grocer to issue a statement defending its practices.
  • Icahn’s effort to reshape Kroger’s board follows McDonald’s announcement last month that he is also unhappy with the way the fast food company sources animal products.

Overview of the dive:

In his letter to McMullen, Icahn closely linked the way Kroger treats its meat suppliers with the discrepancy between what it pays its top executive and its rank and file employees.

icahn said gestation crates used in pig production cause “unnecessary suffering and pain”, adding he was “genuinely surprised that you condone these torture devices and remain stagnant on policies to innovate and improve conditions for farmed animals. You and the Kroger Board have the power to do something against this suffering, but you blatantly ignore it, as you do the injustices that have happened to your workers.”

Icahn specifically lambasted McMullen for Kroger’s decision in May 2020 to end its hero pay program, which offered workers a temporary $2-per-hour pay raise because of the risks they faced while working. during the first weeks of the pandemic, even as the company gave McMullen a salary package worth over $22.3 million This year.

Icahn said Kroger’s directors have “turned a blind eye to human and animal suffering,” adding that the board “created an unnecessary situation, putting your business at risk, by automatically approving policies contrary to the ethics and breaking the promises they made to frontline workers during the pandemic.”

Icahn, who has a net worth of $16 billion, according to Forbes, indirectly owns only 100 Kroger shares through its holding company, Barberry Corp., according to Icahn’s website. “It is not my goal to tell you how to run Kroger operationally or to make money from my small investment and proxy campaign,” Icahn wrote in his letter to McMullen.

Icahn’s nominees for the Kroger board include Alexis Fox, co-founder of Lighter, a meal-planning and tracking technology company, and former Massachusetts state director for the Humane Society of the United States. He is also seeking to add Margarita Paláu-Hernández, founder and CEO of media, business and real estate company Hernández Ventures, to Kroger’s board.

In its statement, Kroger said it was first approached by Icahn about its concerns on Friday during a conversation in which the investor expressed dissatisfaction with suppliers’ use of gestation crates. pork from Kroger. The company said it would review the appointments of Fox and Paláu-Hernández “in accordance with its governance policies and practices.”

The grocer described his efforts to protect animal welfare, noting that although he “is not directly involved in raising or processing animals, we are committed to helping protect the welfare of animals in our supply chain”.

Kroger added that it expects all of its suppliers to have stopped using gestation crates by 2025, and noted that it joined the Global Animal Welfare Coalition in 2021.

“Responsible sourcing throughout our supply chain is integral to how we operate and is of utmost importance to our business,” Kroger said.

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