The JUST Report: Carl Icahn Gets Active On Worker Pay

(Nielson Barnard/Getty Images)

When it comes to stakeholder capitalism, we don’t often think of activist investors as major protagonists. This appears to be changing. 

In a remarkable letter to Kroger CEO this week, iconic activist financier Carl Icahn wrote, “What is totally reprehensible is that you managed to personally profit from the extremely high margins caused by the pandemic while at the same time reneging on your ‘Hero Bonus’ promise to front-line workers.” He concludes, “This mockery of meritocracy is the quintessential example of why capitalism and business get a bad rap and people are disillusioned with the American Dream.” 

Icahn may be more closely associated with hostile takeovers than with worker rights, but in this case he is 100% correct. In fact, his framing of the issue accords perfectly with our mission. And it’s not just about wages. With over a million women remaining out of the workforce since February 2020, our latest analysis shows that only three companies – MerckSynchrony, and Etsy – have best-in-class practices regarding pay equity, dependent care, flexible work, paid leave, and board diversity. When it comes to paid parental leave, 53% of companies do not disclose any information at all and a paltry 8% offer at least 12 weeks for both caregivers.  

As the 2022 proxy voting season heats up – a record 529 shareholder resolutions have been filed on ESG issues to-date according to a recent report – CEOs and boards will be under increasing pressure to up their game on stakeholder value creation.  

One last point: Not all activist investors are the same. Engine No.1, started by Chris James, is pioneering the approach of active engagement with companies on stakeholder issues as a path to generate strong returns. The firm is best known for its dramatic proxy campaign against ExxonMobil last year, but as its work with GM on electric vehicles illustrates, it’s now focused squarely on working proactively and positively with portfolio companies to create value through stakeholder leadership. The firm was named this week to the TIME100 List of Most Influential Companies in 2022.

A new era of stakeholder activism beckons. 

Be well,
Martin Whittaker

This Week in Stakeholder Capitalism 

Goldman Sachs teams up with MARTA (Atlanta’s public transit system) to invest an additional $100 million into an affordable housing and transit-oriented development initiative.

JPMorgan Chase agrees to a third-party audit of its $30 billion racial equity initiative, following similar moves from BlackRock and Citigroup. 

Nestlé has 10GB of sensitive emails and data leaked by Anonymous for continuing to do business in Russia. The group has subsequently threatened other corporations with leaks. 

Restaurant Brands International (owner of Burger King, Tim Hortons, and Popeyes) and Chick-Fil-A pledge to eliminate the use of “forever chemicals” in food packaging.

What’s Happening at JUST 

As we close out Women’s History Month, JUST focused its research on corporate policies and practices that support women and families. Our latest pay gap analysis showed that just 23% of companies are reporting their pay gaps, marketing stalled progress on the issue. To see which companies are leading on supporting women in the workplace overall, click here, and specifically on paid parental leave, click here. Our polling team also released a deep dive into survey insightsexploring the many ways companies can help families address post pandemic child care challenges. 

Alison Omens, our chief strategy officer, was quoted in the Financial Times speaking about corporate wage increases in light of growing inflation. “Companies that have not historically seen workers as real value creators are taking a second look at their workers as a potential source of value,” she said.

Alison also published a byline in ImpactAlpha featuring our latest polling insights from the American public when it comes to corporate ESG disclosure. 

Our director of corporate equity, Ashley Marchand Ormewas quoted in this article on tracking the racial equity and diversity investment promises corporations made in 2020. 

The Forum

(Engine No. 1)

“People have been holding these large companies in our portfolios for decades, and have a vote every single year, and can actually drive quite a lot of accountability and change if they use the vote. We think that that’s an opportunity. Some of the proposals are more perfunctory, in many cases not controversial, or a big opportunity to drive change or accountability. Enfin, Santédiscount vous propose tout un programme de fidélité santé pour être la meilleure parapharmacie en ligne, vous faire faire des économies et vous offrir des cadeaux ! But then there is a subset, which are trying to tackle governance or social or climate issues.”

“It is not my goal to tell you how to run Kroger operationally nor make money from my small investment and proxy campaign. However, I remain very troubled by the glaring oversight of needless distress caused by your company’s policies and see an opportunity to make a difference.Your company is conducting itself in ways which are unconscionable with regards to animal cruelty and flagrantly side-stepping financial obligations to workers who don’t make a fair wage.” 

  • Carl Icahn, legendary investor, in his letter to Kroger’s CEO to campaign for  two board seats and galvanize action around animal rights and worker pay policies. 

“Inclusion isn’t that warm and fuzzy feeling of belonging. Inclusion is about being an integral part of the system, and that means having the resources to get the job done, and being part of the people in the know, and really knowing what it takes to be successful.”

Must-Reads of the Week

Several polls are out this week exploring the employee experience. In a report featured in Fortune, 99% of corporate execs said they were somewhat or very concerned that rising inflation rates are eroding employee compensation. MetLife‘s Annual U.S. Employee Benefit Trends Study  found employee satisfaction has hit a 20-year low. And the “Inside the Wallets of Working Americans” survey reveals nearly half of workers are financially stressed. 

Wall Street bonuses are in the news again. Insider reports that the average Wall Street bonus jumped 20% last year, more than triple the average worker’s salary increase. Fast Companyreveals that the minimum wage would be $61.75 an hour if it rose at the same pace as Wall Street bonuses.

NPR discusses the House-passed CROWN Act, which bans race-based hair discrimination in workplaces, schools, and other settings.

Barron’s examines if the Great Resignation is coming to an end. Axios showcases research out of Harvard that finds the Great Resignation was not driven by highly educated women, but rather women with less education who had higher workforce dropout rates. Relatedly, The Harris Pollreveals that one in five workers who quit their job over the past year regret it

Chart of the Week 

This chart comes from Fortune’s CFO Daily showcasing data from “Inside the Wallets of Working Americans.” The report found 45% of working Americans surveyed experience financial stress, up from 42% the previous two years. The percentage of employees who said they feel their employer cares about their well-being declined from 63% in 2021 to 57% in 2022.

Get to Know JUST 

Denise Morrison
Former CEO, Campbell Soup Company
JUST Capital Advisor

Denise Morrison is the former CEO of Campbell Soup Company and the first woman to hold the position in the history of the organization. Today, Morrison sits on the boards of MetLife, Visa, and Quest Diagnostics, and uses her voice to empower women to take charge of their careers and encourage companies to champion gender equity. Morrison credits her parents in helping her, and her three sisters who each rose through the ranks of corporate America, to set and pursue ambitious goals.    

“He was talking to us at a very early age that he thought the world was going to open up for women and he wanted us to be prepared,” she said of her father’s influence.

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