It is a PR play but the Humane Society's move for Tyson Foods board consideration with Carl Icahn's help should get some media attention to animal confinement practices.
HSUS President Wayne Pacelle Announces Candidacy for Board Seat at Tyson Foods, Renowned Investor Carl Icahn To Advise
HSUS CEO Would Serve As Voice for Humane-Minded Customers, Partners and Investors; Urges Company to Eliminate Use of Gestation Crates
(October 2, 2012) — Wayne Pacelle, president and CEO of The Humane Society of the United States, announced that he has filed paperwork as a candidate for election to the board of directors of Tyson Foods. Pacelle will urge the company to commit to a definite time frame to phase out the confinement of sows in gestation crates—tiny cages so small that the breeding pigs cannot even turn around for essentially their entire lives. Renowned investor Carl Icahn has agreed to serve as an advisor in Pacelle’s efforts to join the board.
“It’s certainly unusual for a lifelong animal advocate to run for the board of the second-biggest meat company in the world,” said Pacelle, who has been CEO of The HSUS for more than eight years. “Nonetheless, it is imperative that a voice on Tyson’s board speak for the company’s many customers, partners, and investors who are demanding the end of gestation crates and more humane treatment of animals.”
Pacelle decided to run for Tyson’s board to encourage management there to take certain critical steps to improve the treatment of animals in its supply chain, and not fall behind its major competitors. The HSUS’s primary focus has been for the company to join the scores of other companies who have committed to end the use of gestation crates, including the nation’s top pig producer and Tyson’s main competitor in this space, Smithfield Foods, which set a 2017 timeframe to complete its transition to group housing systems for its company-owned facilities. Hormel Foods also announced the same policy, and Cargill has been at least 50 percent gestation crate-free for five years now.
Mr. Icahn stated: “When Wayne Pacelle reached out to me as a long-time supporter of The Humane Society to advise HSUS on the possibility of seeking a board position at Tyson, I told Wayne that given the existence of A/B (low vote/high vote) stock at Tyson, it would be extremely difficult to elect him as a director through a proxy fight. However, I firmly believe that the position of HSUS regarding gestation crates is the right one. Eliminating those crates will both prevent cruelty to animals, and will improve Tyson’s business prospects by putting the company on an equal competitive footing with the bulk of the industry that is already rejecting gestation crates. Further, in my experience, corporate governance and transparency at companies with A/B stock is often poor and those companies in particular benefit from the sunshine of shareholder examinations as permitted under Section 220 of Delaware’s corporate laws, which may be useful in this situation and which HSUS intends to seek.”
Mr. Icahn further commented: “A fresh voice on the Tyson board would be good for the company, and I am hopeful that enough shareholders will be receptive to the campaign to put Wayne Pacelle on the board so that either he will be elected, or that Tyson will reach the right conclusion and put him on the board without the cost and inconvenience of a proxy fight.”
More than 30 leading food companies—including giants such as McDonald’s, Burger King, Wendy’s, Sysco, ARAMARK, Sodexo, Costco, Kroger, Safeway, ConAgra Foods, Oscar Mayer, Hillshire Brands—have announced plans to eliminate gestation crates from their pork supplies. These are the biggest customers of pork in the United States, and they are signaling to Tyson and other major producers that they want to see definite progress on animal welfare, or they’ll take their business to other suppliers. The companies that have pledged to transition away from gestation crates so far in 2012 have approximately 95,000 restaurants, supermarkets, cafeterias, and other food retail establishments that they own or serve.
“Animals are at the center of the business model for Tyson Foods, yet it’s lagging badly on animal care and there is a widening gulf between its managers’ views and those of its customers and investors,” added Pacelle. “If the company does not treat this issue in a serious manner, it’s going to lose market share, damage its brand, and become an outlier in the industry.”
The move away from gestation crates by leading food companies signals a reversal in a three-decade-old trend in the pork industry, which has left most breeding pigs confined day and night in gestation crates during their four-month pregnancy. The animals are subsequently transferred into another crate to give birth, re-impregnated, and put back into a gestation crate. This happens pregnancy after pregnancy for their entire lives, adding up to years of virtual immobilization.
The HSUS has, for the last two years, owned a modest amount of stock in Tyson Foods and regularly urged the company to revamp its policies.
· Nine U.S. states have banned the practice and others have bills pending that would outlaw gestation crates.
· Renowned animal welfare scientist and advisor to the pork industry Temple Grandin, Ph.D., is clear on this issue: “Confining an animal for most of its life in a box in which it is not able to turn around does not provide a decent life.” Grandin further states, “We’ve got to treat animals right, and the gestation stalls have got to go.”
· An Iowa State University economic study concluded that breeding pigs in groups, rather than individual crates, can save pork producers up to 11 percent on costs.