Carl Icahn criticizes McDonald’s over animal welfare practices in fiery letter

On Apr 21, 2022

“McDonald’s’ Board of Directors … is failing shareholders and stakeholders by presiding over animal welfare violations, supply chain lapses and what I perceive to be a hollow environmental, social and governance (‘ESG’) agenda,” he wrote. “A company’s reluctance to improve policies and verification methods represents a serious risk to a business, its bottom line and the world around us.”

In February, McDonald’s reported that Icahn had nominated two new directors to its board, saying at the time that the move “relates to a narrow issue regarding the company’s pork commitment.” That issue is the use of gestation crates — tiny stalls where pregnant sows are held, their movements severely restricted — in McDonald’s pork supply chain.

Icahn said he holds only 200 shares in the company, McDonald’s noted at the time.

McDonald’s first promised in 2012 to phase out the use of the crates. In February of this year, it said that by the end of 2022, 85% to 90% of its US pork will come from sows that aren’t housed in gestation crates, and that it expects to meet a target of 100% by the end of 2024. The company also pushed back on the proposal from Icahn, saying he has “asked for new commitments,” including exclusively sourcing “crate free” pork.

Carl Icahn wants McDonald's to eliminate gestation crate in its supply chain.

“While the company looks forward to promoting further collaboration across the industry on this issue, the current pork supply in the US would make this type of commitment impossible,” McDonald’s said.

In Thursday’s letter, Icahn said that McDonald’s (MCD) claim about most of is US pork coming from sows not housed in gestation crates was a “cynical fabrication.” In a proxy statement filed with the SEC Thursday, Icahn and his two board nominees, Leslie Samuelrich and Maisie Lucia Ganzler, argued that to reach those numbers, McDonald’s is “simply reducing the amount of time sows spend locked in gestation crates and using misleading language to hide their failed commitment.”

In his letter, Icahn said that some of the reasons McDonald’s gave for not reaching its 2022 goal — like challenges from the pandemic across the industry and a devastating swine fever — are “poor excuses.” He pointed to high executive pay as evidence that the company can reach its goals when it wants to. “You can look but you won’t find similar lapses in the pay doled out to McDonald’s’ directors and officers,” he said.

The letter outlined clear demands, including a commitment to removing the use of gestation crates entirely from McDonald’s supply chain by the end of next year, among other things.

Making the changes demanded by Icahn would increase prices for customers, the company said in a statement responding to the filings.

“McDonald’s today pays a premium to purchase group-housed pork in accordance with our 2012 commitment,” the company said, noting that switching to a system that would meet the standards Icahn outlined Thursday “would significantly increase those costs, placing a burden on all aspects of our business, our supply chain and McDonald’s customers.”

From the company’s perspective, “what Mr. Icahn is demanding … is completely unfeasible,” it said.

McDonald’s added that it “cares about the health and welfare of the…

Carl Icahn criticizes McDonald’s over animal welfare practices in fiery letter

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