Kroger pay, pig treatment under fire from investor Carl Icahn

Activist billionaire investor Carl Icahn has taken a small stake in Cincinnati-based supermarket titan Kroger, and complaining about “animal welfare and employee wages,” he seeks to seat two board members at the company’s annual meeting this summer.

Icahn, 86, one of the corporate raiders of the 1980s – among the inspirations for the greedy Gordon Gekko character in Oliver Stone’s movie “Wall Street” – excoriated the nation’s largest grocer over “egregious wage gaps which are the major cause for poor worker morale.”

He told Kroger to improve the treatment of pigs from its suppliers. He wants the grocer to swear off pork from vendors that use “gestation crates” used to confine pregnant sows.

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Icahn’s letter to CEO RodneyMcMullen said the board was “flagrantly side-stepping financial obligations to workers who don’t make a fair wage (while you received $22.4 million in 2020).” He said the board “allowed you to give yourself a staggering pay package while inexplicably removing the workers’ meager $2 an hour raise” during the pandemic as “hero pay.”

The company said in a statement that it has “raised associate wages by more than $1.2 billion over the last four years, increasing the average wage by 25% to $17 an hour.”

‘Unconscionable wage gap’

Icahn’s Kroger board candidates are: Alexis Fox, a former Massachusetts state director for the Humane Society of the United States; and Margarita Paláu-Hernández, the founder and CEO of Hernández Ventures, a business involved in Spanish media, business and real estate ventures.

“The wage gap between the CEO and median worker at Kroger is unconscionable,” Icahn wrote. “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.”

No stranger to proxy battles, Icahn has set the stage for a potential ballot fight with a minimal stake: 100 shares, Kroger officials said.

The Kroger fight doesn’t fit Icahn’s typical playbook of buying a chunk of a struggling company, then demanding massive cost cuts. 

Kroger stock is thriving: up more than 25% this year and more than 50% in the past 12 months.

Fight with McDonald’s

Last month, Icahn launched a similar campaign over McDonald’s pork sourcing. He owns 200 shares of that company and also seeks to seat two board candidates.

Kroger said it doesn’t raise or slaughter pigs itself but had planned to phase out the use of vendors using gestation crates by 2025.

“We are committed to helping protect the welfare of animals in our supply chain,” Kroger said.

Last month, Icahn told The Wall Street Journal he has a soft spot for animals, particularly pigs. He credited his daughter, Michelle Icahn Nevin, a vegetarian and animal-lover, for getting him involved with the Humane Society.

“Animals are one of the things I feel really emotional about,” Icahn told the newspaper.

Contributing: Randy Essex, USA TODAY