McDonald's shareholders to vote on key proposals
April 14, 2017
by Erica Shaffer
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Franchisees want to elect their own board member; the Benedictine Sisters of Boerne, Texas, and others want the company to change its antibiotics policy.
OAK BROOK, Ill. – Shareholders of McDonald’s common stock will decide the future of franchisee representation on the company’s board of directors and the use of antibiotics by McDonald’s meat suppliers during the company’s annual meeting scheduled for May 24.
One proposal would allow franchisees to elect a “Franchisee Director” to the board, while another proposal would establish timelines for McDonald’s to source beef and pork raised without the non-therapeutic use of medically important antibiotics.
McDonald’s Corp. is urging shareholders to reject both proposals.
Marco Consulting Group Trust I, which owns 5,546 shares of McDonald’s common stock, submitted the Franchisee Director proposal, according to a regulatory filing with the Securities and Exchange Commission (SEC). The plan would create a new series of Franchisee Preferred stock, whose holders are entitled to elect a new Franchisee Director. One share of the franchisee preferred stock would be issued to each franchisee, for each franchised restaurant, according to securities documents.
“Franchisee representation on McDonald’s board could help strengthen the alignment between the company and its franchisees by ensuring that the perspective of franchisees is fairly represented, and would appropriately provide a voice for these critical stakeholders among McDonald’s top policy leadership,” the SEC filing said. “Our proposal uses the Franchisee Preferred to provide an independent selection mechanism for the Franchisee Director that would not require membership in any franchisee association or other organization. Our proposed terms of the Franchisee Preferred are intended to provide no financial benefit, such as dividends or a liquidation preference, to holders.”
But the McDonald’s board opposed having a separate election of a board member “to represent a limited constituency, especially given that the proponent’s scheme would issue shares to individuals with long-term franchising arrangements with the company.” The company called the proposal “extreme and unnecessary.”
“This highly-unusual proposal would give franchisees preferred stock to elect a director who would likely not be independent due to the direct economic relationship that exists between the company and franchisees,” McDonald’s said in the regulatory filing. “The board is against any plan to give one group or constituency the right to elect its own director to represent limited interests, which could be contrary to the long-term, best interests of shareholders.”
Separately, shareholder members of the Interfaith Center on Corporate Responsibility (ICCR), which includes the Benedictine Sisters of Boerne, Texas, urged shareholders to vote in favor of a proposal that would phase out the use of beef and pork sourced from animals given antibiotics important to human medicine.
In the SEC filing, the proposal states that while McDonald’s eliminated from its US supply chain poultry meat from birds given medically important antibiotics, the company has not done the same for its supply chain outside the US, for pork or for beef. “Given growing health concerns, changing consumer preferences and industry trends, shareholders would benefit from more detailed plans that sets McDonald’s on a course to phase-out the non-therapeutic use of medically important antibiotics in meat production,” the filing said.
“McDonald’s has not advanced on their antibiotics policy for two years in spite of investors’ repeated engagements on this issue,” Sr. Susan Mika of the Benedictine Sisters of Boerne and leader of the engagement with McDonald’s said in a statement. “While the company got a lot of public credit for saying that it would eliminate antibiotics from its US chicken supply, it never followed through with beef and pork policies in spite of the fact that these meats account for a huge portion of its sales. The vote behind our antibiotics resolution at last year’s annual meeting was extremely strong and we are hopeful that 2017 will be the year that McDonald’s closes the gap to ensure all its meat offerings are antibiotic-free.”
In its statement of opposition, McDonald’s said the company’s 2015 Global Vision for Antimicrobial Stewardship in Food Animals, which establishes criteria for McDonald’s global supply chain, applies to all food animals served in the company’s restaurants worldwide.
Under McDonald’s Global Vision on Antibiotics:
- Classes of antimicrobials currently approved for use in both human and veterinary medicine for the treatment or prevention of animal disease should only be used in conjunction with a veterinary-developed animal health care program.
- Antimicrobials in food animals that are by the World Health Organization (WHO) definition “critically important” to human medicine, and not presently approved for veterinary use, should never be used on animals within McDonald’s supply chain.
- Medically important antimicrobials for growth promotion in food animals, as defined by WHO, should not be used within McDonald’s supply chain.
- Suppliers should utilize animal production practices that reduce, and where possible, eliminate the need for antimicrobial therapies.
In the regulatory filing, McDonald’s added “…although we are making progress, it is premature to set time-bound targets for updating the Global Vision for Antibiotics. The company continues to work with our suppliers and other stakeholders to determine the appropriate courses of action going forward.”