Unilever has ceased paying Ben & Jerry’s independent board members, the ice cream maker said, the latest escalation of a dispute over the brand’s attempt to stop selling its products in the occupied Palestinian territories.
The global consumer goods group stopped the compensation that was due to the five independent members of Ben & Jerry’s board last month, said a person briefed on the situation.
The maker of Cookie Dough and Phish Food ice cream, one of Unilever’s most successful brands, retained its own independent board under an unusual agreement following its takeover by Unilever in 2000. The five independent members are not appointed by the parent group and make decisions in specified areas. Two Unilever appointees, including Ben & Jerry’s chief executive, also sit on the board.
Lawyers for Ben & Jerry’s claimed in a statement on Wednesday that the freeze was a “pressure tactic prior to a mediation that took place last week”.
Vermont-based Ben & Jerry’s has been at odds with its parent company since announcing in July 2021 that it would cease selling its products in the West Bank and East Jerusalem, where Israeli settlements are considered illegal by most of the world.
Ben & Jerry’s said at the time that it was “inconsistent with our values for our product to be present within an internationally recognised illegal occupation”.
It had sought to find a new distributor in Israel to end sales in the occupied territories, but Unilever announced in June it had agreed to sell the ice cream maker’s Israeli operation to its existing local licensee, who would continue selling into these areas.
That prompted the ice cream brand to sue its parent company in a case that is continuing after attempts to reach a settlement through mediation failed. Ben & Jerry’s is seeking an injunction to prevent the transfer of its Israeli operation from going ahead.
It argues the agreed sale to licensee American Quality Products violated the terms of its takeover by the UK consumer goods group.
Ben & Jerry’s said its independent board enabled it to “protect and defend” the company’s “brand equity, integrity and product quality”. It has long used this freedom to campaign on issues including the rights of refugees.
Anuradha Mittal, chair of the Ben & Jerry’s board, said: “If Unilever is willing to so blatantly violate the agreement that has governed the parties’ conduct for over two decades, then we believe it won’t stop with this issue.”
Unilever did not respond to questions about pay to members of the Ben & Jerry’s board, but said: “Under the terms of Unilever’s acquisition agreement of Ben & Jerry’s in 2000, Ben & Jerry’s and its independent board were granted rights to take decisions about its social mission, but Unilever reserved primary responsibility for financial and operational decisions and therefore has the right to enter this arrangement with [licensee] Avi Zinger.”
The issue has been one of many headaches for Unilever chief executive Alan Jope, who has been attempting to turn around its financial performance by focusing on brands that are “purpose-led”.
Ben & Jerry’s last year became one of only 13 Unilever brands to top €1bn in annual sales. Jope said as the company released results last week: “There is plenty for Ben & Jerry’s to get their teeth into on their social justice mission without straying into geopolitics.”
The attempt by Ben & Jerry’s to pull out of Israeli settlements prompted a series of US pension funds to divest from Unilever in protest, while Nelson Peltz, the activist investor whose Trian fund now owns a stake in Unilever, lobbied against the move.