Raphael Stevens

McDonald’s shareholders meeting on Thursday morning will mark the climax of a proxy fight waged by activist investor Carl Icahn.
Icahn has publicly criticized McDonald’s for its delay in eliminating gestation crates for pregnant sows.
Tallies of early votes show that the fast-food giant will likely triumph, the Wall Street Journal reported Tuesday.

Signage outside a McDonald’s Corp. fast food restaurant in Louisville, Kentucky, U.S., on Friday, Oct. 22, 2021.
Luke Sharrett | Bloomberg | Getty Images

McDonald’s shareholders meeting on Thursday morning will mark the climax of a proxy fight waged by activist investor Carl Icahn, who is pushing for two seats on the fast-food giant’s board amid a battle over its animal welfare practices.
Tallies of early votes show McDonald’s will likely triumph, the Wall Street Journal reported Tuesday. Shareholders can keep voting until the meeting concludes, but people familiar with the matter told the newspaper those ballots are unlikely to change the result.

Icahn has publicly criticized McDonald’s for failing to meet its original deadline for eliminating gestation crates for pregnant pigs, a practice animal rights activists say is cruel. He has also argued that the company was supposed to ban the use of crates entirely but has since changed the scope of its commitment.
For its part, the Chicago-based company has blamed the Covid-19 pandemic and African swine fever outbreaks for pushing back its original deadline of 2022 set a decade ago. By the end of this year, McDonald’s now expects 85% to 90% of its U.S. pork supply to come from pigs that aren’t kept in gestation crates if they’re confirmed to be pregnant. McDonald’s has also said that entirely eliminating the use of the crates would raise its costs and result in customers paying more.
In his push on the treatment of pigs, Icahn has also taken swipes at McDonald’s broader commitments to tackle environmental, social and corporate governance issues.
“We believe there is a connection between animal welfare issues and inadequate governance, and therefore, other related ESG risks that the Company is not adequately attending to,” he wrote in his letter to fellow McDonald’s shareholders.
Icahn nominated Leslie Samuelrich, a sustainability-focused investor, and Maisie Ganzler, an executive at Bon Appétit Management, to replace existing board members Sheila Penrose and Richard Lenny. In total, McDonald’s has 12 seats on its board.

“Two seats on a large board like McDonald’s is not huge, but I think it’s the message that it would send to others in the industry that they need to do more to make sure their board has representation from experts in this area, rather than just giving someone a title that oversees ESG,” Barclays analyst Jeffrey Bernstein said.

Because of McDonald’s size and the massive volumes of ingredients it uses, changes to the company’s supply chain tend to have a ripple effect throughout the industry. McDonald’s says its McRib sandwiches and the bacon for its burgers and breakfast sandwiches account for about 1% of U.S. pork supply.
Icahn is waging a similar proxy fight at Kroger, the largest U.S. supermarket chain operator in the U.S. Kroger’s annual meeting is scheduled for June 23.

Securing votes

Icahn only owns about 200 McDonald’s shares, a relatively tiny stake that doesn’t give him much sway in voting.
“Two hundred shares is so far away from having any influence on a company,” said Bruce Kogut, a professor of corporate governance and ethics at Columbia Business School. “My guess is that it’s about publicity, and he now cares about a sustainable environment or ESG targeting, and he’s announcing himself as an activist in that space.”
In lobbying for more votes, Icahn called out large Wall Street firms for “hypocrisy” and said they’re capitalizing on ESG investing for the profits without supporting “tangible societal progress.” McDonald’s top three shareholders are The Vanguard Group, the asset management arm of State Street, and BlackRock, according to FactSet.
Icahn has also fallen short of winning over the top two proxy advisory firms, Institutional Shareholder Services and Glass Lewis, which make recommendations to thousands of funds on how to vote in shareholder meetings.
ISS only offered “cautionary support” to Icahn’s nominees, saying that shareholders should consider whether the current board is focused enough on ESG issues. But the firm noted the proxy fight is notable because Icahn has focused it on issues such as animal welfare, protein diversification and pay gap, rather than looking at operational issues.
“It may well be remembered as the first true ‘ESG contest,'” ISS said.
Glass Lewis, by contrast, advised against voting for the new board members. It said that Icahn’s push to improve animal welfare conditions is a “worthy and noble,” but that it takes a “simplistic” view of the issue. And it noted the efforts don’t give substantive regard to the company’s financials.
The Humane Society of the United States has put forth a shareholder proposal echoing Icahn’s criticisms, asking the company to confirm that it will reach its previous goal of eliminating the confinement of gestating pigs by 2022. If the company can’t reach that target, it’s requesting more disclosure about its pork supply chain. Icahn has teamed up with the organization in the past, and his daughter, Michelle Icahn Nevin, used to work with the group.
Such shareholder proposals are nonbinding but can send a message to corporate boards about public support for company practices. McDonald’s is facing six other shareholder proposals addressing issues including plastics use, antibiotics and lobbying activities.

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The SEC on Wednesday proposed two rule changes that would prevent misleading or deceptive claims by U.S. funds on their environmental, social and corporate governance (ESG) qualifications and increase disclosure requirements for those funds.
The proposals, which are subject to public feedback, come amid mounting concerns that some funds seeking to profit from the rise in ESG investing practices have misled shareholders over what’s in their holdings, a practice known as greenwashing.
The proposals to tackle greenwashing come after the SEC in March debuted broad rules that would require publicly traded companies to disclose how climate change risks affect their business.

Gary Gensler, chairman of the Securities and Exchange Commission, at the SEC headquarters in Washington, on July 22, 2021.
Melissa Lyttle/Bloomberg via Getty Images

The Securities and Exchange Commission on Wednesday proposed two rule changes that would prevent misleading or deceptive claims by U.S. funds on their environmental, social and corporate governance (ESG) qualifications and increase disclosure requirements for those funds.
The proposals, which are subject to public feedback, come amid mounting concerns that some funds seeking to profit from the rise in ESG investing practices have misled shareholders over what’s in their holdings, a practice known as greenwashing.

The measures would provide guidance on how ESG funds must market their names and investment practices. One proposal would update the so-called Names Rule to encompass characteristics related to ESG.
The current Names Rule says that if a fund’s name suggests it’s focused on a particular class of investment, such as government bonds, then at least 80% of its assets must be in that class. The change would extend the rules to “any fund name with terms suggesting that the fund focuses in investments that have (or whose issuers have) particular characteristics.” Therefore, funds with “ESG” in their name would have to clearly define the term and then ensure that 80% of the assets in the fund adhered to that definition.
“A lot has happened in our capital markets in the past two decades. As the fund industry has developed, gaps in the current Names Rule may undermine investor protection,” SEC Chair Gary Gensler said in a statement.
“In particular, some funds have claimed that the rule does not apply to them — even though their name suggests that investments are selected based on specific criteria or characteristics,” Gensler said. “Today’s proposal would modernize the Names Rule for today’s markets.”
Global ESG funds received a record $649 billion in investments in 2021 through Nov. 30, up from $542 billion in 2020 and $285 billion in 2019, according to data from financial services firm Refinitiv Lipper. ESG funds now comprise about 10% of worldwide fund assets.

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The proposals to tackle greenwashing come after the SEC in March debuted broad rules that would require publicly traded companies to disclose how climate change risks affect their business, as well as provide more information on the impact their operations have on the environment and carbon emissions.
“ESG encompasses a wide variety of investments and strategies. I think investors should be able to drill down to see what’s under the hood of these strategies,” Gensler said. “This gets to the heart of the SEC’s mission to protect investors, allowing them to allocate their capital efficiently and meet their needs.”
Andrew Behar, president of the climate activist organization As You Sow, said the new Names Rule will improve — but not stop — misleading labeling for investors.
“The new rule acknowledges the problem but does not fully address it. Investors still need clarity on exactly what ‘sustainable’ and other terms like ‘fossil-free,’ ‘low-carbon,’ and ‘ESG’ mean,” Behar said. “It is critical that a fund’s prospectus reflects its philosophy and intent in alignment with its name and holdings.”
Rachel Curley, democracy advocate at the nonprofit Public Citizen, said in a statement that the SEC’s new rules on fund portfolios would begin to transform the landscape around “green” investments.
“In the current marketplace, retail investors don’t have a clear picture of what it means to invest in a fund whose marketing says it’s ‘sustainable,’ ‘green,’ or ‘ESG,'” Curley said. “The lack of transparency for investors makes it hard to untangle exactly how environmentally-friendly some of these products are.”
The proposals will enter a 60-day public comment period after publication in the Federal Register, during which time companies, investors and other market participants can comment on and suggest changes to the rules.
— CNBC’s Thomas Franck contributed to this report.

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The Biden administration on Wednesday moved to ban the disposal of mining waste in Alaska’s Bristol Bay watershed, potentially halting the controversial Pebble Mine project.
If finalized, the proposal from the Environmental Protection Agency would protect one of the world’s largest salmon fisheries and block a plan to mine in the watershed for copper, gold and other metals.
The Bristol Bay watershed has supported critical wildlife and a $2 billion commercial fishing industry that has long sustained Alaska Native communities and attracted travelers to the region.

Humpaback whale in Bristol Bay, Alaska
Enrique Aguirre Aves | Photodisc | Getty Images

The Biden administration on Wednesday moved to ban the disposal of mining waste in Alaska’s Bristol Bay watershed, potentially halting the controversial Pebble Mine project that’s been disputed for more than a decade.
If finalized, the proposal from the Environmental Protection Agency would protect one of the world’s largest salmon fisheries and block a plan to mine in the southern Alaska watershed for copper, gold and other metals.

The EPA’s action to end a years-long battle between Alaska Natives and the mining industry is part of President Joe Biden’s broader goal to conserve 30% of the country’s land and waters by 2030, as well as restore biodiversity and protect wilderness from climate change.
The Bristol Bay watershed has supported critical wildlife and a $2 billion commercial fishing industry that has long sustained Alaska Native communities and attracted travelers to the region.
EPA officials, citing the Clean Water Act of 1972, found that waste associated with the mining plan could result in “unacceptable adverse effects” on the watershed’s fishery, including the permanent destruction of 8.5 miles of streams that would displace or kill the salmon.

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“The Bristol Bay watershed is a shining example of how our nation’s waters are essential to healthy communities, vibrant ecosystems, and a thriving economy,” EPA Administrator Michael Regan said in a statement.
“EPA is committed to following the science, the law, and a transparent public process to determine what is needed to ensure that this irreplaceable and invaluable resource is protected for current and future generations,” Regan said.

However, the company behind the mine plan, Pebble Limited Partnership, said it’s still working to get a permit and called the EPA’s move a “giant step backwards” for the administration’s climate change goals.
“I find it ironic that the President is using the Defense Production Act to get more renewable energy minerals such as copper into production while others in the administration seek political ways to stop domestic mining projects such as ours,” John Shively, the company’s CEO, said in a statement.
The legal determination would ban any entity from discharging waste associated with mining the Pebble deposit within the mine site footprint. The EPA is accepting public comments on the revised proposal at public hearings in June and by written submissions through July 5.

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Boeing landed its uncrewed Starliner spacecraft in the New Mexico desert on Wednesday, completing a crucial test flight as the company prepares to carry astronauts.
The mission completed one of its most important test objectives, reaching the ISS and docking successfully.
Boeing’s next Starliner mission is expected to be the Crew Flight Test, or CFT, flying the first astronauts onboard the capsule.

Boeing’s Starliner capsule lands in White Sands, New Mexico on May 25, 2022 to complete the OFT-2 mission.

Boeing landed its uncrewed Starliner spacecraft in the New Mexico desert on Wednesday, completing a crucial test flight as the company prepares to carry astronauts.
Starliner landed at the U.S. Army’s White Sands Missile Range, after earlier in the day leaving the International Space Station – concluding the six-day Orbital Flight Test 2, or OFT-2 mission.

The mission completed one of its most important test objectives, reaching the ISS and docking successfully. OFT-2 marks a critical development milestone in Boeing’s development of Starliner, which has run into several obstacles and delays over the past three years.

Boeing’s Starliner spacecraft is seen before docking with the International Space Station on May 20, 2022 during the uncrewed OFT-2 mission.

Boeing has been developing its Starliner spacecraft under NASA’s Commercial Crew program, having won nearly $5 billion in contracts to build the capsule. The company competes under the program against Elon Musk’s SpaceX, which completed development of its Crew Dragon spacecraft and is now on its fourth operational human spaceflight for NASA.
The aerospace giant was once seen as evenly matched with SpaceX in the race to launch NASA astronauts. Yet the delays to Starliner’s development have steadily set Boeing back, both in schedule and finances. Due to the fixed-price nature of its NASA contract, Boeing absorbed the cost of additional work on the capsule and has spent $595 million so far.
Boeing’s next Starliner mission is expected to be the Crew Flight Test, or CFT, flying the first astronauts onboard the capsule. However, the company is examining whether to redesign the Aerojet Rocketdyne-made propulsion valves on Starliner, which malfunctioned during the company’s first attempt to launch the OFT-2 mission in August 2021.

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The NRO on Wednesday announced contracts worth billions of dollars over the next decade to a trio of satellite-imagery companies: Maxar, Planet and BlackSky.
The U.S. intelligence agency touted the contracts as “a historic expansion” of its acquisition strategy,
The NRO award comes under its Electro-Optical Commercial Layer program, which the agency says will support over 500,000 federal users over the next decade.

Maxar collected new satellite imagery of the southern Ukrainian port city of Berdyansk that reveals a Russian Alligator-class landing ship that is burned and partially submerged near one of the ports loading/unloading quays.
Maxar Technologies | Getty Images

The National Reconnaissance Office on Wednesday announced contracts worth billions of dollars over the next decade to a trio of satellite-imagery companies: Maxar, Planet and BlackSky.
Maxar, in a securities filing, said its 10-year EOCL contract is worth up to $3.24 billion, with a five-year base contract of $1.5 billion and optional contracts worth up to $1.74 billion. BlackSky’s contract is valued at up to $1.02 billion over 10 years, the company disclosed in a filing. Planet did not release the value of its NRO award on Wednesday, with a company spokesperson telling CNBC the delay is “because we remain in a quiet period,” as the company plans to report quarterly results on June 14.

NRO touted the contracts as “a historic expansion” of its acquisition strategy, noting the increasing availability of commercial companies’ imagery “increases our resilience and enables an integrated approach” to national security. The NRO is the U.S. agency that manages a wide breadth of satellite-intelligence capabilities, including operating its own classified satellites.
BlackSky stock soared 97% in trading to close at $2.33 a share, while Planet’s rose 14% to close at $5.73 a share, and Maxar’s climbed 18% to close at $28.86 a share.

An image from one of the company’s satellites shows Lower Manhattan in New York City.

The NRO award comes under its Electro-Optical Commercial Layer, or EOCL, program, which the intelligence agency says will support over 500,000 federal users over the next decade.
The EOCL deal has been long-awaited, with Maxar previously serving as the NRO’s sole provider of commercially acquired satellite imagery. While Maxar may be losing a lucrative monopoly, Wall Street analysts do not expect the new competition to hurt the company, given the growth in total addressable market for satellite imagery.

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Kohl’s shares surged Wednesday on hopes that the retailer could still be bought amid a volatile market.
A Reuters report said bidders competing to buy Kohl’s are preparing to make binding offers, albeit lower than the indicative bids.
Earlier this year, Kohl’s rejected an offer of $64 a share from Starboard Value-backed Acacia Research for being too low.

The Kohl’s logo is displayed on the exterior of a Kohl’s store on January 24, 2022 in San Rafael, California.
Justin Sullivan | Getty Images

Kohl’s shares climbed 12% Wednesday, on hopes the retailer could still be bought following recent volatility in the market and a disappointing earnings report.
A Reuters report said bidders competing to buy Kohl’s are preparing to make binding offers, albeit lower than the indicative bids. Kohl’s had said last week that fully financed bids would be due in the coming weeks, and CEO Michelle Gass said she was “pleased” with the interested parties.

Reuters, citing people familiar with the matter, reported Wednesday that bidders plan to lower their offers by at least 10% to 15%.
Reuters said bidders include private equity firm Sycamore Partners, brand holding firm Franchise Group and a duo of Simon Property Group and Brookfield Asset Management. However, a person familiar with the matter told CNBC that Simon Property Group, the biggest U.S. mall owner, is not planning to make a bid for Kohl’s.
Representatives from Kohl’s and Sycamore declined to comment. Representatives for Franchise Group and Simon weren’t immediately available.
Retail stocks have taken a beating in recent days amid broader market volatility as quarterly reports from a number of retailers including Walmart, Abercrombie & Fitch and Kohl’s have revealed changing consumer behaviors amid inflation at a 40-year high and ballooning inventory levels.
Earlier this year, Kohl’s rejected an offer of $64 a share from Starboard Value-backed Acacia Research for being too low. Reuters reported Wednesday some bidders had indicated they were willing to pay at least $70 a share.

But investors have since lost some confidence that any deal would go through, given the state of the economy and the difficulty to secure financing in the current environment. Kohl’s shares opened Wednesday at $36.81, having fallen about 40% this month alone.
Kohl’s last week cut its full-year profit outlook, with Gass saying fiscal 2022 started off below her expectations. The company said it doesn’t anticipate headwinds from inflation pressures to abate in the near term.
The retailer also announced it was losing its chief merchandising officer and chief marketing officer. Searches for their successors are underway.
The turmoil for Kohl’s comes as the retailer faces amplified pressure from activist hedge fund Macellum Advisors to sell the business and shake up its board. Earlier this month, Kohl’s managed to fend off Macellum’s proposal for a new slate of directors.
Macellum has argued that Gass’s efforts to expand sales and win new customers haven’t been enough relative to its competition.
This isn’t the first time Macellum has put pressure on Kohl’s. The two struck a deal in April 2021 to add two directors from a slate pushed by a group of activists, including Macellum. Kohl’s also appointed one independent director, with the activists’ backing.
Gass, who assumed the CEO role at Kohl’s in May 2018, has tried a number of strategies to lure customers into stores, including signing a partnership with Amazon and adding Sephora beauty shops to hundreds of Kohl’s locations. 
On Wednesday morning, the company announced it will open 100 small format shops in the next few years in markets that Kohl’s doesn’t currently serve. It also said it plans to ramp up investments in all of its stores in the coming years, though it didn’t say how much money it plans to commit to these efforts.

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