Activist group pushes Hormel for better antibiotic reporting in shareholder proposal

A shareholder activist group wants Hormel Foods to issue a report on "the external environmental and public health costs" of antibiotic use in the meat it sources and how those costs could affect the company, investors and the global economy.

"Hormel is aware that overuse of antibiotics puts the global health system at risk," the Shareholder Commons, a Delaware-based nonprofit, wrote in a Securities and Exchange Commission filing this week. "The company must make decisions about how much to invest in fighting AMR," or anti-microbial resistance, which can reduce the effectiveness of certain medicines in animals and humans.

The group wants shareholders to vote for the proposal at Hormel's annual meeting later this month.

The Austin, Minn.-based company's board of directors is recommending a vote against the proposal, saying such a report "would not be beneficial given the company's already robust antibiotic stewardship, continuous improvement and environmental sustainability efforts within our supply chain."

"The study requested by the stockholder proposal would incur unnecessary expense and divert management's attention from what the company is in the best position to control — ensuring stewardship of antibiotics within our supply chain," the board wrote in its proxy statement.

Hormel issued its first Antibiotic Stewardship Report in January 2021, writing that "to protect animal and human health, we must all remain vigilant stewards of antibiotics."

The Shareholder Commons says the report doesn't go far enough in addressing "the costs Hormel externalizes or the risks it creates for the global economy through the use of animals treated with antibiotics."

Hormel is among a growing list of companies seeing environmental and social issues brought to a vote at annual shareholder meetings.

The Shareholder Commons brought a similar antibiotic reporting proposal to McDonald's last year, which earned the support of 11.2% of votes cast.

The group struck a deal with Yum Brands — the parent corporation of KFC, Taco Bell and Pizza Hut — that avoided a vote in exchange for a company report focused on antimicrobial resistance, which was released last year.

As for other issues, the board of Tyson Foods is opposing a sustainable packaging report proposal coming to a vote in February. Coca-Cola, PepsiCo and McDonald's shareholders voted down proposals to report on the public health effects of sugar last year.

General Mills shareholders in 2018 voted down a proposal aimed at accounting for pesticide use in the company's supply chain, though it garnered the support of about a third of the Minnesota company's shareholders.

"Shareholders are clearly communicating to companies that a single focus on the bottom line with an exclusion to other considerations is no longer sufficient," reads a report from proxy advisory firm Glass Lewis. "Instead, investors have signaled to the market that they expect companies to be good corporate citizens, with a view to their environmental and social impacts and a focus on their impacts on stakeholders."

Hormel's annual meeting will be held virtually at 6 p.m. on Jan. 25.