Editor's Plate: Return on Investment

March 9, 2017
Do you create shareholder value or shared value?

Two press releases crossed my virtual desk at the end of February or early March, one of which was widely (and wildly) reported, the other of which probably no news organization will pick up on.

But first the philosophical question: Does a company exist to create jobs, innovate products and improve the world, or at least the communities it operates in? Or to create “shareholder value”?

What a naive question, eh?

The two news announcements: Kraft Heinz Makes a $143 Billion Offer for Unilever; and Nestlé Announces 2020 Commitments in Support of the United Nations Sustainable Development Goals.

Kraft Heinz and Unilever

This one you’ve undoubtedly heard. That was $143 billion, with a B. Then, 48 hours later, after Unilever rebuffed it, the offer was dropped … but not before a lot of jaws dropped at the ability of a 19-month-old company to come up with that kind of money.

I doubt Kraft Heinz’s intentions were to pump cash into Unilever to expand product development and employment around the world. No, the formula would have been disassembly, selling off pieces, then slash and burn.

Before the merger (July 2, 2015), we had Kraft’s sales at $18 billion and Heinz’s at nearly $11 billion – that’s $29 billion combined. In its first company profile after the merger, Kraft Heinz reported $27.4 billion sales pro forma for 2015. In the company’s just-published 2016 annual report, sales are $26.5 billion.

Employment? From the figures I could lay my hands on, there were 42,000 worldwide employees at the end of 2015 and 41,000 at the end of 2016.

But profits are going up as sales and employment go down. And shareholder return: They paid $2.35 in cash dividends per share last year. Who wouldn’t want some of that?


Nestle’s ambitions: “To help 50 million children to lead healthier lives; to improve 30 million livelihoods in communities directly connected to our business activities; and strive for zero environmental impact in our operations. We continue our work to bring societal commitments to life through three impact areas: individuals and families, our communities, and the planet. One example is a global commitment to reduce the sugar we add in our products...”

There are other good citizens out there in the food and beverage world. These are difficult times for marginalized people everywhere and for the health of the planet itself. I hope the do-gooders get the credit and the rising stock price they deserve before they get bought out and the good works stop.

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