FOR MOST of his life Carl Icahn was vilified for his abrasive character and his activism as an investor. His mom mentioned he had the spirit of Genghis Khan. Oliver Stone based mostly Gordon Gekko, a fictional predator-in-chief of the junk-bond increase, partly on Mr Icahn. Invoice Ackman, no softie, referred to as him a bully who is just not used to somebody standing as much as him, when the 2 pugilistic financiers fought over Herbalife, a nutritional-supplements enterprise. He's most chief executives’ worst nightmare.
Late in life the 86-year-old Mr Icahn appears to be exhibiting his milder facet. This month HBO, a TV community, launched “The Stressed Billionaire”, a largely sympathetic documentary that tracks his rise from modest beginnings in Queens to one in all Wall Road’s titans. And on February twentieth Mr Icahn launched a proxy combat for 2 board seats of McDonald’s to press the fast-food behemoth to require its suppliers to enhance their remedy of pregnant pigs. “Animals are one of many issues I really feel actually emotional about,” he advised the Wall Road Journal. He reserves especial affection for pigs, that are unusually intelligent.
Mr Icahn’s activist technique sometimes entails shopping for sizeable stakes in beneath valued firms and searching for to shift the administration’s focus to cost-cutting. If managers refuse his calls for, he stirs up a shareholder revolt, launches aggressive campaigns on social media to win over public opinion and pushes his personal line-up of board members. Such strategies have boosted the goal’s share worth typically sufficient to earn a moniker, the “Icahn elevate”, and let Mr Icahn promote out at a juicy revenue.
All this makes his McDonald’s manoeuvre look out of character. He owns solely 200 of the $186bn firm’s shares, value some $50,000. And McDonald’s has heeded his calls for for higher remedy of pigs, which he first made ten years in the past. In 2012 it pledged to cease shopping for pork for its McRib and breakfast sandwiches by 2022 from producers who use cramped crates to constrain sows for all 16 weeks of being pregnant. McDonald’s concedes that it has not fairly fulfilled its pledge, which it blames on delays brought on by the covid-19 pandemic and outbreaks of swine illness. But by the top of 2022 it expects to supply 85-90% of its American pork from sows not housed in gestation crates throughout being pregnant. By the top of 2024 all of its American pork will come from pigs housed in bigger group enclosures when they're with piglet.
Mr Icahn’s marketing campaign can also be uncommon in that McDonald’s is in impolite well being. Most shareholders are proud of the chief government, Chris Kempczinski. The corporate is reporting “a number of the highest margins ever”, notes Sara Senatore of Financial institution of America. Mr Kempczinski, who took over as CEO months earlier than covid-19 unfold around the globe, has loved tailwinds from the pandemic, which elevated McDonald’s on-line orders and enterprise at its drive-throughs. He has additionally jazzed up the model, by teaming up with celebrities resembling BTS, a South Korean boy band, Travis Scott, an American rapper and J. Balvin, a Colombian singer. For a restricted time, star-struck shoppers may order a BTS meal (Rooster McNuggets, a medium packet of chips and a medium Coke) or a Travis Scott one (a medium Sprite, a quarter-pounder with bacon and chips with barbecue sauce).
Seemingly underpowered activists have notched up a number of shock victories towards managements of late. Most notably, a 12 months in the past Engine No.1, an activist hedge fund with a stake of simply 0.02% in ExxonMobil, secured three seats on the oil large’s board for climate-friendly shareholder representatives. That made giant firms suppose once more about dismissing small activist buyers as unserious, particularly on environmental or social points that different shareholders might also see as worthy causes. However the ExxonMobil coup occurred when the corporate was underperforming its rivals like Chevron. McDonald’s, against this, is operating onion rings round its opponents (see chart).
Mr Icahn’s nominees are Leslie Samuelrich, an asset supervisor centered on sustainability, and Maisie Ganzler, an government at Bon Appétit, a restaurant firm. Shareholders will vote on the board’s composition at their annual assembly this spring. The wily Mr Icahn could not get his manner, for as soon as. Even when he does, any Icahn elevate he cashes in on would scarcely pay for one dinner on the higher-end eating places he usually frequents. ■
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