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Jun 07, 2023

Lobbying proposal attracts strong support at McDonald’s AGM

Resolution one of many focused on companies’ political activities

Shareholders narrowly missed approving a proposal on McDonald’s lobbying activities at the company’s recent AGM amid a continued focus on US companies’ political involvement.

The proposal, filed by the SOC Investment Group, asked for an annual report disclosing:

  • The McDonald’s policy and procedures governing direct and indirect lobbying and grassroots lobbying communications
  • Payments made by the company used for direct or indirect lobbying or for grassroots lobbying communications, in each case reporting the amount of the payment and the recipient
  • A description of management’s decision-making process and the board’s oversight for making such payments described above.


According to an SEC filing, the proposal received 50.3 percent of the votes cast at the May 25 AGM. But the SOC Investment Group states in a LinkedIn post that McDonald’s counts abstentions as votes against resolutions, meaning that its proposal received 49.75 percent support and was not approved.

Tejal Patel, executive director at the SOC Investment Group, writes in a related post: ‘Receiving a majority of shareholder votes cast in favor of our lobbying proposal will [in effect] have the same impact on board responsiveness policies as if the proposal [had been] approved, so these are still strong results. But counting ‘abstentions’ as ‘against’ [votes] has always seemed counterintuitive and a bit misleading to me.’

A request for comment from McDonald’s on the vote and the method of counting abstentions as against proposals was not returned immediately.
 


FOCUS ON POLITICS
McDonald’s is not the only company facing scrutiny of its lobbying activities. According to an As You Sow report, political influence accounted for 17 percent of all resolutions filed up to late March of this year. Thirty of those were on lobbying, 28 on elections and 35 on other issues that largely concern mismatches between corporate policies and recipients’ viewpoints.

In its supporting statement on the proposal, the SOC Investment Group writes that ‘McDonald’s does not currently report on the full extent of its lobbying efforts… State-level lobbying disclosures are uneven, incomplete or absent… [And] McDonald’s does not disclose donations to third-party groups that spend millions on lobbying and often undisclosed grassroots activity.’

The group, which works with union pension funds, continues: ‘While McDonald’s discloses a list of trade association memberships, it does not disclose indirect lobbying expenditures through groups like the International Franchise Association, Business Roundtable or the National Restaurant Association, all of which McDonald’s is a member [of].’

The proponent describes a ‘grassroots lobbying communication’ as a communication directed to the general public that refers to specific legislation or regulation, reflects a view on that legislation or regulation and encourages recipients of the communication to take action. ‘Indirect lobbying’ refers to lobbying engaged in by a trade association or other group of which the company is a member.

McDonald’s board had urged shareholders to vote against the resolution. ‘We agree that transparency and accountability are important, and we are committed to the highest ethical standards when engaging in lobbying activities. These activities are supported by robust board oversight and are already publicly disclosed,’ it writes.

‘As a result, our board believes the requested annual report would be duplicative and, therefore, unnecessary and an inefficient use of resources that would not provide meaningful value to shareholders.’