Activist nominates directors in Kroger Co. proxy fight

Carl Icahn seeks reforms in pay, animal welfare
Kroger Co. asks investors to change their view of the company
Posted at 9:07 PM, May 10, 2022

CINCINNATI — Activist investor Carl Icahn launched a formal proxy fight against the Kroger Co. Monday, citing “glaring injustices” over the company’s stances on animal welfare and employee pay.

The concerns were outlined in a March 29 letter to CEO Rodney McMullen that Icahn published in a proxy statement filed with the U.S. Securities and Exchange Commission.

The proxy statement is a voting document that shareholders use to elect board members. Icahn nominated Alexis C. Fox and Margarita Paláu-Hernández to the Kroger board. He hasn’t said which of Kroger’s nominees he’d like shareholders to vote against.

“At Kroger, amazingly, it will take an average worker 20 years to make what the CEO earns in one week,” Icahn wrote. “In my 40 years of being an activist, I have never seen anything like this.”

Icahn also opposes the use of “gestation crates” in which pork producers confine pigs that are breeding or pregnant.

Kroger released a statement about the pending proxy fight:

“Kroger has an established framework and oversight practices for responsible sourcing in our supply chain and is committed to working collaboratively with suppliers and industry organizations to support animal welfare. Our (environmental, social and governance) commitments also include making significant investments in our associates, including investing to raise the average hourly rate of our associates to $17 and $22 with health and retirement benefits factored in.”

Kroger is the largest Cincinnati-based company since Procter & Gamble Co. to face an activist shareholder. P&G ended that fight in 2017 by inviting Nelson Peltz to join its board, as it undertook a series of reforms that restored the company’s sales growth and profitability.

Icahn’s fight against Kroger is different in many respects than the fight Peltz brought to P&G. For one thing, Icahn owns 100 shares, less than 0.1% of Kroger. Peltz owned 38 million P&G shares at the peak, roughly 1.5% of P&G.

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