Corporate Responsibility

At Kraft Foods, strong Corporate Governance is Essential. For publicly-held companies like Kraft Foods, good governance attributes include:

• Disclosure of the board's processes
• Independence of a majority of the directors
• Respect for shareholder rights
• Compliance with legislation and regulations

Kraft Foods' Board of Directors believes that effective corporate governance principles and practices, together with the company’s Articles of Incorporation, By-laws, Code of Business Conduct and Ethics for Directors and Corporate Governance Guidelines, provide a strong framework to assist them in upholding their fiduciary responsibilities to shareholders and promoting the long-term success of the company.

Kraft has an audit committee to handle all financial aspects and report current information to stakeholders.  A public affairs committee is responsible for discharging the board’s responsibilities relating to public policy issues. The committee oversees Kraft Foods' attention to public policy and social trends affecting Kraft Foods; social accountability; business practices of special interest to policy-makers and the public at large; Kraft Foods’ global communication, media relations and community relations; Kraft Foods' Political Action Committee; the impact of business operations and business practices on communities where Kraft Foods does business; Kraft Foods' corporate citizenship programs and activities, including charitable contributions; and shareholder proposals related to public issues. The finance committee is responsible for considering and making recommendations to the Board on the management of Kraft Foods' financial resources and on major financial strategies and transactions.
The Nominating & Governance Committee is responsible for identifying and nominating individuals as board members, recommending a slate of nominees for election at each annual meeting of shareholders, making recommendations to the board concerning the appropriate size, function, needs and composition of the board and its committees, developing and recommending to the board the corporate governance guidelines and overseeing the evaluation of the board and its committees. The Human Resources and Compensation Committee oversees the company’s executive compensation, including determining the compensation of the Chief Executive Officer, producing an annual Human Resources and Compensation Committee report on executive compensation to be included in the company’s proxy statement in accordance with applicable Securities and Exchange Commission rules and regulations, and reviewing the succession plans for the Chief Executive Officer and other senior executives.

Kraft Crisis Communication

In 2007, Kraft faced a lawsuit from Center for Science in the Public Interest (CSPI) for deceptively marketing their Capri Sun Product as being “All Natural” when in reality it contained ingredients like high-fructose corn syrup. They argued that that the company’s deceptive marketing tricks consumers into thinking the product is healthier than it actually is and it might cause some people to confuse the drink with real fruit juice. They said that although high-fructose corn syrup is no more harmful than other sugars, it is a plainly man-made ingredient.

As part of their crisis communication plan, Kraft was prompt in coming out with a news release on the same day issuing the following statement:

“Kraft Foods has been working for about a year to reformulate its regular Capri Sun beverages and redesign the product’s packaging. The new packaging, which is scheduled to go into production in about two weeks, will say that Capri Sun contains ‘No artificial colors, flavors or preservatives.’ This new product description resonated well with consumers. With this action, the phrase ‘All Natural’ is being removed from the package.”

- Marc Firestone, Executive Vice President, Corporate and Legal Affairs for Kraft Foods Inc.

A few weeks later, Kraft issued another release letting the public know that the crisis had been resolved and CSPI had planned to voluntarily dismiss the lawsuit.

Global Communications

Kraft has global markets in North America, Latin America, Europe and Asia. As a global business, a key importance that they emphasize is exposing employees to the diverse perspectives of the consumers and employees from all the countries that they work with. Different perspectives help them see first-hand how they can better meet consumer needs.

They require diversity and inclusion training for every employee at key career stages to sustain a culture that welcomes and values individual differences. They have 10 diversity-focused employee councils that align their objectives with the company’s business strategies to enhance their impact. Kraft also develops strategic relationships with external organizations to connect with a broad range of consumers and attract diverse talent to bring a wider spectrum of perspectives to the business. They link the diversity goals of each business unit and function to executive compensation to strengthen accountability.

Kraft Foods also works to promote global social responsibility. In partnership with hundreds of nonprofit partners, employee volunteers in 56 countries dedicated time to serve their communities and raise awareness for important social issues.  Events included planting community gardens, building playgrounds, serving nutritious meals to the hungry, helping children in need and assisting at food banks.

I was unable to find specific information about how Kraft does business in the other countries that they operate. I thought that they should perhaps have different websites for each country in their native language. It was difficult to find information about what products are and are not sold in other countries and if in Latin America, for example, they cater to cultural needs as far as making products that people in that country might enjoy. Do they sell Kraft Mac and Cheese in other countries besides the U.S? Also, it would be interesting to know if they change the way they make their products and the ingrediants they put in them based on the country and that food products will be sold in. Also, how does their advertising change to reach different audiences in different countries?

Investor Relations

            Kraft is the second largest food company in the world with annual revenues of more than $49 billion.   They have Global markets in Latin America, Europe, and Asia so they must comply with the rules and regulations of these countries as well. On their website, Kraft has an Online Investor Center section that lets investors know everything there is to know about investing in the company.  I found this section to be very well organized and easy to navigate.  It includes: FAQ’s on topics, such as stock, reporting and dividends, Information on which Analysts cover Kraft Foods, and access to details on how to contact Kraft Foods' transfer agent, Wells Fargo Shareowner Services, and information on Kraft’s Dividend Reinvestment Plan or Direct Stock Purchase program.  There is a section for SEC filings and Annual reports that shows Kraft Food financial documents, including filings with the Securities and Exchange Commission, copies of their annual reports and proxy statements and news releases. There are also updates on all current and past stock information and performance.  The Financial Highlights section provides a summary of Kraft’s most recent financial results including a summary of Selected Financial Data for the last five years.  Their Company fact sheet gives a quick look at the company and provides highlights of their financial performance. There is also a section for Corporate Governance that includes information about the Audit committee, Public Affairs committee, ways to contact the Board of Directors, investor and shareholder contacts and ways to report financial wrongdoing.

            Kraft also provides an Online Investor Kit that provides shareholders with interactive versions of Kraft’s most requested documents including their company fact sheet, annual report and form, and earnings releases. These interactive documents are designed for comfortable reading and easy navigation. It includes 2011 proxy statement announcing the Annual shareholder meeting and describes the proposals to be voted on in the meeting.  The Kraft Shareholder letter details strategies for future growth and current financial state of the company. The 2010 financial fact sheet highlights business performance and the Kraft Foods reasonability report describes community relations in the U.S. as well as internationally to the shareholders.  There is also a section with earning releases. Kraft Foods believes that good governance attributes include: Disclosure of the board's processes, independence of a majority of the directors, respect for shareholder rights and compliance with legislation and regulations. They definitely display these attributes to the public.