Carl Icahn McDonald’s shareholder letter calls Wall Street ESG ‘hypocrisy’

Carl Icahn speaks at Delivering Alpha in New York on September 13, 2016.

David A. Grogan | CNBC

Carl Icahn released his letter to McDonald’s shareholders on Thursday, urging compensation among the company’s top ranks and Wall Street companies for their ESG investment policies.

It’s the latest development in Icahn’s animal welfare battle with the fast food chain over the treatment of pregnant pigs. The billionaire’s corporate striker is pushing to add two board seats with nominees who share his belief that McDonald’s should demand that all of its US suppliers move to “cashless” pork. Icahn also leads a similar battle with Kroger.

Icahn began his letter by challenging asset management firms for what he called “the greatest hypocrisy of our time.” He said large Wall Street firms, banks and lawyers are benefiting from environmental, social and corporate governance investments for profit without supporting “tangible societal progress.”

“The reality is that if the ESG movement is to be more than a marketing concept and fundraising tool, the massive asset managers, who are among McDonald’s largest owners, must back their words up with actions,” he wrote.

McDonald’s top three shareholders are The Vanguard Group, the asset management division of State Street, and BlackRock, according to FactSet.

Icahn also called compensation to McDonald’s management “unscrupulous” and said the board tolerated several forms of injustice.

“Perhaps if company executives used the same efforts to make their suppliers completely pregnancy-free as they do to obtain rich compensation packages, we would not have this election competition,” Icahn wrote.

McDonald’s responded later Thursday to Ichan’s letter, citing what it called “hypocrisy” in his own campaign, saying it “only sources about 1% of U.S. pork production.”

“Despite McDonald’s progress in our commitment to buy from manufacturers who do not use pregnancy boxes for pregnant sows, Mr Icahn has called for new commitments,” the company said in a written response. “What Mr Icahn is demanding of McDonald’s and other companies is completely impossible.”

McDonald’s says its U.S. pork supply will be “box-free” by the end of 2024, marking a two-year delay to a 2022 deadline it set a decade ago. The company has blamed the Covid-19 pandemic and the outbreak of African swine fever for the postponement.

Icahn said in his letter that McDonald’s should have prioritized the issue earlier so it could stick to its original promise.

The burger chain expects that by the end of this year, 85% to 90% of its pork will come from sows that have not been placed in gestation boxes during pregnancy.

McDonald’s said in a law document that it expected to spend about $ 16 million in the proxy fight. Icahn questioned the company’s decision to spend so much money.

“How many pigs would be spared the torture of pregnancy boxes if the $ 16 million was spent on it, instead of on third parties that McDonald’s reserves to ask for your votes ‘to’ re-elect two of the 12 board nominees who have presided over a multi-year failure to meet the company’s stated goal of promoting animal welfare in McDonald’s supply chain? ” he wrote.

McDonald’s shareholders will vote on whether to elect Icahn’s nominees, Leslie Samuelrich and Maisie Ganzler, during the company’s annual meeting on May 26.

The shares of McDonald’s have risen 10% over the last 12 months, giving the company a market value of around $ 190 billion.

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