Longtime activist investor Carl Icahn has warned of the looming fallout of corporate America on the back of poor management. He called out several companies last week for lacking accountability practices, and on Monday set his sights on America's largest grocer.
What Happened: In a letter to Kroger Co (NYSE:KR) CEO Rodney McMullen, Icahn called out Kroger's animal-welfare practices, as well as the enormous pay gap between McMullen and employees. The activist investor has proposed a solution by nominating two "impressively qualified candidates" for board consideration.
"These individuals have superior knowledge and experience relating to animal welfare and other ESG weaknesses, as well as dealing with rubber stamp boards that permit egregious wage gaps, which are the major cause for poor worker morale," Icahn said.
"Our candidates will take our concerns about deplorable animal suffering and these wage gaps (and other governance problems) at Kroger seriously and add proper oversight."
Icahn noted that his animal-welfare concerns go beyond animal suffering. He highlighted Kroger's unwillingness to create meaningful animal treatment policies and verification methods. He also accuses the board of being "tone-deaf to other growing ESG concerns," which leads him to wages.
McMullen makes $22.4 million per year and supposedly profited personally from rising pandemic margins, yet reneged on a promise to increase worker wages during that time, which was presented as the "Hero Bonus."
"Heroes they are indeed, and while these workers risked their lives to keep America fed and Kroger’s business alive, the board allowed you to give yourself a staggering pay package while inexplicably removing the workers’ meager $2 dollar an hour raise," Icahn said.
Why It Matters: Kroger is the latest victim of Icahn's animal-welfare campaign. He targeted McDonald's Corp (NYSE:MCD) for similar practices last week, giving the iconic fast food chain an F rating for its ESG practices and treatment of pigs.
Related Link: Why Carl Icahn Is Ready For Proxy Fight Over How McDonald's Sources Pork
Icahn maintains that he is not calling out poor management to make money.
"At this point in my career, I view it as my mission to make changes where I can by doing what I do best, in areas that I consider to be glaring injustices," Icahn said.
"Kroger has turned a blind eye to both human and animal suffering. Where has the board been?"
KR Price Action: Kroger has traded between $35.54 and $62.58 over a 52-week period.
The stock was up 0.12% at $56.49 at time of publication.
Photo: Dan Keck from Flickr.
