This article was first published on Insightia’s Activism module on May 16, 2022. For more information about the product, click here.
Proxy voting adviser Institutional Shareholders Services (ISS) has thrown its weight behind McDonald’s in a proxy contest with Carl Icahn, who is seeking two board seats in a push for better treatment of pigs in the fast-food giant’s supply chain.
ISS has recommended for management’s slate, a source familiar with the matter told Insightia’s Activism module. The proxy adviser said that Icahn has “not made a sufficient case, on an issue-specific or broader view of ESG, that the immediate replacement of incumbent directors is necessary at this time,” according to a Monday press release from McDonald’s. The board elections are scheduled for May 26.
Icahn wants to install Leslie Samuelrich, president of climate-conscious investment firm Green Century Capital Management, and Maisie Ganzler, chief strategy officer at restaurant company Bon Appétit Management. The two would replace incumbent McDonald’s directors Sheila Penrose and Richard Lenny.
In its report, ISS reportedly said that investors who prioritize ESG issues may want to “withhold [votes] on these directors” to give a signal to McDonald’s that the board should pay more attention to these matters.
Icahn has slammed McDonald’s for continuing to buy pork from companies that use gestation stalls for pregnant sows despite promises to him 10 years ago that the practice would be ended. The crates are oftentimes so small that pigs are not able to move or lie down, which Icahn sees as inhumane.
The activist also wants McDonald’s to have more plant-based dishes on its menu and set a timeline for growing revenue from alternative protein sources. Icahn owns just 200 shares of McDonald’s stock, which ISS said was a factor in its decision.
“We are hesitant to support a proxy contest predicated on ESG issues in instances where the dissident is economically divorced from the potential impact of its proposals on the company’s financial performance,” said ISS.