Carl Icahn Toehold Takeover
The proxy fight comes as the activist investor pushes the fast-food chain to require suppliers to change treatment of pigs.
Carl Icahn has launched a proxy fight for two board seats at McDonald’s Corp., as the activist investor pushes the fast-food chain to require its suppliers to change their treatment of pigs.
Icahn has a very small McDonald’s stake and had been in talks with the company alongside the Humane Society of the United States for several weeks, The Wall Street Journal reported earlier this month.
After the Journal reported Sunday that Icahn had nominated two directors, McDonald’s confirmed it in a statement and said the board would evaluate his nominees.
At issue is McDonald’s suppliers’ use of so-called gestation crates, which are small cages used to constrain pregnant pigs.
In 2012, McDonald’s pledged to stop buying pork by 2022 from producers who use the crates. Few knew at the time that Icahn quietly had pushed for the changes behind the scenes.
Carl Icahn has launched a proxy fight for two board seats at McDonald’s Corp., as the activist investor pushes the fast-food chain to require its suppliers to change their treatment of pigs. (Photo by: Adam Jeffery/CNBC/NBCU Photo Bank via Getty Images.
Now, 10 years later, Icahn and the Humane Society are arguing that McDonald’s failed to follow through and changed its interpretation of the pledge. McDonald’s now often has its producers move pigs out of the containers only after confirming they are pregnant, which many wait to do so until the sows are four to six weeks into their 16-week pregnancies.
Icahn had expected the use of the crates to be banned altogether. He first got involved at the behest of his daughter, Michelle Icahn Nevin, who worked at the Humane Society at the time.
McDonald’s has said that more than 60% of its U.S. pork is sourced from “confirmed pregnant sows” not housed in gestation crates, and it expects that figure to be 85% to 90% by the end of this year.
It said industrywide challenges including outbreaks of swine disease and the Covid-19 pandemic delayed producers’ ability to meet the original timeline, which it extended by two years.
It said Sunday it buys about 1% of all U.S. pork that is produced. The pork ends up in items including Bacon McDouble Cheeseburgers, Sausage McMuffins and McRib sandwiches.
McDonald’s said Icahn reported owning roughly 200 McDonald’s shares—or about $50,000 worth. He typically takes stakes worth hundreds of millions of dollars in companies he targets.
While it used to be unheard of for investors with toehold stakes to gain traction, an unlikely victory by an upstart activist investor over Exxon Mobil Corp. last spring bucked that trend. Engine No. 1 won three seats on Exxon’s board after arguing the oil giant should move more quickly toward carbon neutrality.
McDonald’s identified Icahn’s nominees as Leslie Samuelrich, a sustainability-focused investor, and Maisie Ganzler, an executive at Bon Appétit Management Company.
McDonald’s shareholders would vote on the nominees at its annual shareholder meeting this spring, assuming the two sides don’t reach a settlement agreement before then.
McDonald’s in its statement Sunday also noted that Icahn is a majority owner of Viskase Cos., a company which makes among other things casings for sausages. It questioned why Icahn hasn’t publicly called on it to adopt similar commitments to McDonald’s.