McDonald’s shareholders vote on Carl Icahn proxy fight over animal

McDonald’s shareholders meeting on Thursday morning will mark the climax of a proxy fight waged by activist investor Carl Icahn, who is pushing for two seats on the fast-food giant’s board amid a battle over its animal welfare practices.

Tallies of early votes show McDonald’s will likely triumph, the Wall Street Journal reported Tuesday. Shareholders can keep voting until the meeting concludes, but people familiar with the matter told the newspaper those ballots are unlikely to change the result.

Icahn has publicly criticized McDonald’s for failing to meet its original deadline for eliminating gestation crates for pregnant pigs, a practice animal rights activists say is cruel. He has also argued that the company was supposed to ban the use of crates entirely but has since changed the scope of its commitment.

For its part, the Chicago-based company has blamed the Covid-19 pandemic and African swine fever outbreaks for pushing back its original deadline of 2022 set a decade ago. By the end of this year, McDonald’s now expects 85% to 90% of its U.S. pork supply to come from pigs that aren’t kept in gestation crates if they’re confirmed to be pregnant. McDonald’s has also said that entirely eliminating the use of the crates would raise its costs and result in customers paying more.

In his push on the treatment of pigs, Icahn has also taken swipes at McDonald’s broader commitments to tackle environmental, social and corporate governance issues.

“We believe there is a connection between animal welfare issues and inadequate governance, and therefore, other related ESG risks that the Company is not adequately attending to,” he wrote in his letter to fellow McDonald’s shareholders.

Icahn nominated Leslie Samuelrich, a sustainability-focused investor, and Maisie Ganzler, an executive at Bon Appétit Management, to replace existing board members Sheila Penrose and Richard Lenny. In total, McDonald’s has 12 seats on its board.

“Two seats on a large board like McDonald’s is not huge, but I think it’s the message that it would send to others in the industry that they need to do more to make sure their board has representation from experts in this area, rather than just giving someone a title that oversees ESG,” Barclays analyst Jeffrey Bernstein said.

Because of McDonald’s size and the massive volumes of ingredients it uses, changes to the company’s supply chain tend to have a ripple effect throughout the industry. McDonald’s says its McRib sandwiches and the bacon for its burgers and breakfast sandwiches account for about 1% of U.S. pork supply.

Icahn is waging a similar proxy fight at Kroger, the largest U.S. supermarket chain operator in the U.S. Kroger’s annual meeting is scheduled for June 23.