Carl Icahn Accused McDonald’s of Animal Cruelty. The Billionaire Could Shake Things Up for MCD Stock.

McDonald’s (NYSE:MCD) is in the spotlight after hedge fund manager Carl Icahn penned an open letter to MCD stock investors. In the letter, Icahn accuses McDonald’s of misleading investors by allowing animal welfare violations. Specifically, Icahn believes that McDonald’s has mistreated sows, or female pigs, by placing them in gestation crates for extended periods of time. A gestation crate is a tiny enclosure used for animals during pregnancy. These enclosures are about seven feet by two feet, and sows are kept in them for the entire duration of their pregnancy.

A McDonald's (MCD) burger box and fries rest on a flat surface.
Source: 8th.creator /

As a result, Icahn has stated that he will wage a proxy fight to correct this violation. To do this, the fund manager has nominated Leslie Samuelrich and Maisie Lucia Ganzler to McDonald’s board.

MCD Stock: Carl Icahn Accuses McDonald’s of Animal Welfare Violations

In 2012, McDonald’s pledged that by 2022 it would “responsibly source pork from suppliers that do not use gestation stalls.” In addition, the company recently claimed that, “By the end of 2022, the Company expects to source 85% to 90% of its U.S. pork volumes from sows not housed in gestation crates during pregnancy.”

However, Icahn states that McDonald’s continues to source sows from suppliers that use gestation crates. He goes on to explain that gestation crates voids sows of a “natural existence,” as they are often forced to go on restrictive diets and are restricted of movement. In addition, pigs are social creatures that feel pain and are capable of creating bonds. All in all, Icahn would like McDonald’s to remove gestation crates from its supply chain by the end of year.

McDonald’s Responds to Icahn

McDonald’s released a written statement in response to Icahn’s claims. The fast-food retailer admitted that it had to push back its non-usage of gestation crates to 2024 due to the Covid-19 pandemic and the African Swine Fever outbreak. The company also stated that it would have to spend about $16 million as part of the proxy fight. In addition, McDonald’s notes that switching to a crate-free system “would significantly increase those costs, placing a burden on all aspects of our business, our supply chain and McDonald’s customers.”

McDonald’s’ shareholders will vote on whether they support the appointment of Icahn’s two nominees on May 26. Shares of the company are down 6% year-to-date.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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