McDonald's Corp shareholders on Thursday approved a proposal that would make it easier to nominate directors to the board of the fast-food chain, which is in turnaround mode after losing customers and sales to competition and after internal missteps.
Investor support for such new director nomination rules, referred to as "proxy access," is growing.
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The California Public Employees' Retirement System (Calpers) and the New York City Pension Funds had urged shareholders to vote for proxy access at McDonald's, and influential proxy advisory firms Institutional Investor Services and Glass Lewis & Co recommended that their clients support it.
Vanguard Group and BlackRock Inc, major investors that hold significant stakes in McDonald's, have publicly backed proxy access.
McDonald's opposed the proposal, which was filed by the UAW Retiree Medical Benefits Trust.
"We believe that making McDonald's leadership at the board level more accountable to shareholders ensures that the board is the strongest it can be to usher in a new chapter of prosperity for the benefit of the company, its employees, and shareholders," said the trust's chief corporate governance officer, Meredith Miller.
New York City Comptroller Scott Stringer called proxy access at McDonald's "the perfect antidote for a board whose turnaround plan prioritizes share buybacks over long-term value creation."
He and three other officials who are fiduciaries to public pension funds with a total of $860 billion in assets are challenging McDonald's and other companies on buybacks.
The proxy access thresholds approved at McDonald's would allow groups of shareholders holding at least 3 percent of company stock for at least three years to be able to list director candidates on company proxy materials. That would give longer-term shareholders with limited resources more power to hold directors accountable, Miller said.
McDonald's had called the proposal "unnecessary and potentially harmful to the company at this time."
McDonald's said it had robust corporate governance practices that allow shareholders to voice their views with the board and vote on critical matters.
The vote on the proposal came shortly after activist hedge fund investors such as Jana Partners LLC and Corvex Management LP disclosed new stakes in McDonald's.
Experts said activists were unlikely to benefit from the proposal because they tend to be short-term investors. (Reporting by Lisa Baertlein in Los Angeles; Editing by Ken Wills and Lisa Von Ahn)