Shareholders in The Wendy’s Company appear set to vote this spring on a proposal regarding the fast-food firm’s treatment of pigs.
The SEC recently declined a request from Wendy’s that it be given no-action relief for excluding the Humane Society of the United States’ (HSUS) proposal from this year’s proxy statement.
Specifically, the proposal requests that Wendy’s ‘confirm [that] the individual crate confinement of gestating pigs will be eliminated from its North American supply by the end of 2022. If Wendy’s cannot so confirm, shareholders request: 1) its percentage of gestation crate-free pork, and 2) risks Wendy’s may face over the disparity between its gestation-crate assurances and the use of crates beyond 2022.’
In filing the proposal, the HSUS states that ‘despite Wendy’s specific, repeated and unequivocal assurances about ‘eliminating’ gestation stalls ‘entirely’ by 2022, the proponent is confident that in reality Wendy’s is actually just reducing the time it allows gestating pigs to spend locked inside solitary stalls.’
Wendy’s had asked for no-action relief on the grounds that per Rule 14a-8(i)(10) the company has already ‘substantially implemented’ the proposal and that per Rule 14a-8(i)(7) the proposal deals with matters relating to the company’s ‘ordinary business operations.’
Wendy’s states in its filing with the agency: ‘Ensuring the humane treatment of animals has been a core element of Wendy’s quality assurance and supply-chain practices for decades, and many of the requirements that Wendy’s has developed for our suppliers have set the standard for the quick-service restaurant industry. We are guided by our long-standing relationships with progressive industry experts, many of whom serve on the Wendy’s animal welfare council, and our data-based approach to animal welfare.’
The company writes that as part of its animal welfare program, in 2012 it announced a 10-year goal to transition its supply chain for products containing pork away from individual sow-gestation stalls in favor of open pen/group housing for pregnant sows. It adds that it has since issued updates on its gestation-stall policy and has continually affirmed its commitment to meeting the 10-year goal.
Wendy’s states that it made an additional public update in December 2021: reaffirming the company’s commitment to the transition, confirming that the company is on schedule to complete the transition by the end of 2022 and providing details of the company’s overall approach to gestation stalls. This update addresses the HSUS proposal, according to the company.
Wendy’s also argues that the proposal relates to its ordinary business operations because it addresses ‘the company’s assessment and management of the potential consequences and risks of the pork products used in the Wendy’s system and the company’s historic public statements regarding the use of gestation stalls in its pork supply.’
The SEC disagreed, writing that the proposal ‘transcends ordinary business matters’ and that ‘[b]ased on the information you have presented, it appears that the company’s public disclosures do not substantially implement the proposal.’
A Wendy’s spokesperson says in a statement: ‘We regularly engage with shareholders and other stakeholders with an interest in our business.’ The spokesperson points to information on the company’s website regarding its gestation stall policy, adding: ‘More information about this proposal will be included in our proxy which is scheduled to publish in the coming weeks.’ Wendy’s 2021 AGM took place on May 18.
McDonald's faces Icahn over pork
The HSUS proposal is not the only action being taken over pork in fast-food companies’ supply chains this proxy season. Carl Icahn last month nominated two directors to the board of McDonald’s as part of a campaign over the company’s treatment of pigs.
Like the HSUS with Wendy’s, Icahn is pressing McDonald’s over the use of small crates for pregnant sows. Animal rights campaigners have long targeted the use of ‘gestation crates,’ which are typically too small for the animal to turn around in. Icahn is reported to have developed an interest in animal welfare through his daughter’s work with the HSUS.
In a statement released following Icahn’s board nominations, McDonald’s says: ‘Mr Icahn’s stated focus in making this nomination relates to a narrow issue regarding the company’s pork commitment, which [the HSUS] has already introduced through a shareholder proposal. This is an issue on which McDonald’s has been a leader.’
It states that by the end of this year it expects to source 85 percent to 90 percent of its US pork volumes from sows not housed in gestation crates during pregnancy. It adds that the company expects 100 percent of its US pork will come from sows housed in groups during pregnancy by the end of 2024.
‘Despite [the progress made by] McDonald’s, Mr Icahn has instead asked for new commitments, including to require all of [our] US pork suppliers to move to ‘crate free’ pork and set specific timeframes for doing so,’ the company writes.
‘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. Furthermore, it reflects a departure from the veterinary science used for large-scale production throughout the industry and would harm the company’s shared pursuit of providing customers with high-quality products at accessible prices.’
