But McDonald’s has yet to make good on the promise. The company said Sunday that Icahn had nominated two people for election to its board in an apparent start to a proxy battle with the fast-food giant, a confrontational attempt to collect shareholder proxy votes to replace board members, gaining enough power within the company to change its policies.
In recent years, activist investors have used the tactic to not only seek higher profits, but also align companies with their ethical or political stances. A group of investors led by a hedge fund called Engine No. 1 successfully won a third seat on the board of ExxonMobil in June, pushing the oil giant on its positions regarding climate change.
Icahn nominated Leslie Samuelrich, president of Green Century Capital Management, which “leverages its clout as a shareholder to protect our water, air and land,” and Maisie Ganzler, chief strategy and brand officer at Bon Appétit Management Company, which describes itself as “food service for a sustainable future.”
McDonald’s said Icahn’s “stated focus in making this nomination relates to a narrow issue regarding the Company’s pork commitment,” referring to the gestation stalls. A senior supply chain executive at McDonald’s said in 2012 that the crates were “not a sustainable production system for the future” and that “there are alternatives that we think are better for the welfare of sows.”
In a 2017 “Animal Health & Welfare Update,” McDonald’s said that by the end of 2022, it would source its U.S. pork only from suppliers that do not use the stalls for housing pregnant pigs.
But McDonald’s said Sunday that it now expects that only 85 to 90 percent of its U.S. pork will be sourced from pigs not housed in the crates during pregnancy by the end of the year, citing “industry-wide challenges for farmers and producers,” such as the coronavirus pandemic and disease outbreaks. Its commitment to exclusively use pork in the United States that was sourced from “sows housed in groups during pregnancy” is now expected by the end of 2024, McDonald’s said.
Icahn had raised concerns over the scope of McDonald’s 2012 commitment, telling the Wall Street Journal that the company’s suppliers move pigs out of the crates only after it is confirmed that they are pregnant, at which point the sows could be more than a quarter into their 16-week pregnancies. Icahn had expected McDonald’s to ditch gestation crates entirely, he said.
McDonald’s did not immediately respond to a request for comment late Sunday regarding Icahn’s concerns. The company said in its statement that Icahn had “asked for new commitments,” including a demand that McDonald’s suppliers in the United States move to “crate-free” pork. McDonald’s said that “the current pork supply in the U.S. would make this type of commitment impossible,” and that it “would harm the Company’s shared pursuit of providing high quality products at accessible prices.”
According to the Humane Society of the United States, gestation crates are “so restrictive that the pigs cannot turn around.” Pigs relegated to the stalls “suffer a number of significant welfare problems, including elevated risk of urinary tract infections, weakened bones, overgrown hooves” and other issues, it said in a 2013 report. Gestation crates have been banned in at least 10 states, including California, Colorado and Florida, according to Compassion in World Farming.
Icahn told the Journal that “animals are one of the things I feel really emotional about,” adding that he learned of the crates from a Humane Society executive whom he had hosted for dinner at his penthouse in New York City.
Icahn, who is the subject of a new HBO documentary, is worth more than $23 billion, according to the Bloomberg Billionaires Index. His stake in McDonald’s is small: The company said he held about 200 shares, though he told the Journal that he held 100, which would be equivalent to a roughly $25,000 stake in the $187 billion company.
In its statement Sunday, McDonald’s questioned why Icahn hadn’t used his majority stake in the pork and poultry packaging supplier Viskase to force similar commitments on that company. Representatives for Icahn did not immediately respond to a request for comment regarding the McDonald’s statement or about the number of the company’s shares he currently held.