McDonald’s Corp. MCD 2.74% is poised to win a showdown with activist Carl Icahn, who challenged the fast-food chain for treating its suppliers to pregnant sows, people familiar with the matter said .
Early voting results show that McDonald’s is well ahead of Mr. Icahn, who had appointed two directors to the company’s board, people said. Votes will continue to come until the end of the McDonald’s shareholders’ meeting Thursday morning and could still move, though the outcome is unlikely to change, they said.
Mr. Animal Rights Campaign Icahn had seen it as a long-term opportunity from the start, as he was a long way from his typical activist battle. He did not present an obvious financial advantage to McDonald’s shareholders, and had a small stake in McDonald’s, which meant that he had to convince a larger-than-normal shareholder to support his cause.
Mr. Icahn could present the campaign as a partial victory, as it raised awareness of the issue, in which she first became involved 10 years ago at the urging of her daughter and the Humane Society of the United States.
At the heart of the conflict is the use by McDonald’s suppliers of so-called gestation boxes, small cages that are used to restrict pregnant pigs. Suppliers have said the boxes make breeding more efficient, while Mr. Icahn and his candidates say they are inhuman.
In 2012, McDonald’s pledged to stop buying pork in 2022 from producers using the boxes. Little was known that Mr. Icahn had silently pushed for changes behind the scenes.
This year, Mr. Icahn has argued that McDonald’s did not go ahead and changed its interpretation of the promise. Now McDonald’s often gets its producers to take the pigs out of the bins only after confirming that they are pregnant, which many expect to do until the bristles are four to six weeks pregnant at 16 weeks.
Mr. Icahn had hoped that the use of the boxes would be completely banned.
McDonald’s has said that more than 60% of its American pork comes from pigs that are not in gestation boxes once it is confirmed that they are pregnant, and expects this figure to be 85% to 90%. at the end of this year.
The company says that Mr. Icahn is unfeasible because it would significantly increase costs and place a financial burden on customers.
Mr. Icahn sought to appeal to large index funds focused on socially conscious investment, the support of which is crucial in most proxy struggles. He argued that despite being at the forefront of the environmental, social and government investment movement, BlackRock Inc. and others have subjectively selected what principles matter to them and placed too little emphasis on animal welfare.
—Heather Haddon contributed to this article.
Write to Cara Lombardo at cara.lombardo@wsj.com and Dana Cimilluca at dana.cimilluca@wsj.com
Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
It appeared in the May 25, 2022 print edition as “Icahn Set To Lose Proxy Bid at Chain.”