Shareholder activism can be a good thing for a company and its shareholders. Voting down ridiculous option packages or voicing shareholder anger over company practices tells the company's board and management to shape up and run things better. However, when activism is used to promote a political agenda, I get suspicious.
At Applebee's
Correct me if I'm wrong, but Applebee's doesn't kill chickens -- it serves them. It would seem more sensible to try to change the companies that actually do the killing, such as Tyson Foods
Speaking of which, PETA also submitted similar proposals to chicken supplier Pilgrim's Pride
Furthermore, PETA doesn't seem to be truly serious about its activism. A group holding only 142 shares -- about $3,200 worth -- in Applebee's, a company with more than 74 million shares outstanding, won't be taken seriously. PETA owns similarly low numbers of shares in the other companies mentioned as well. PETA has several wealthy members, including its many prominent celebrity endorsers. If it really wants to make a difference, it should get those members to contribute enough money to let the organization buy many thousands of shares of the companies it wants to influence.
Alternatively, PETA could offer to help defray the costs incurred by companies in such studies. It would be better for PETA to back its convictions with financial support when advocating a cause than to expect the other owners of the company to use company resources to fund those studies.
Using shareholder proposals to try to change a company is certainly better than using vandalism, death threats, and blackmail, as some animal rights activists have used in the past. Earlier this month, drugmaker GlaxoSmithKline
PETA is realizing that the civilized way to get companies to change behavior is through shareholder activism. At the moment, though, it does not appear to be serious about such efforts. In my opinion, Applebee's shareholders were entirely correct to vote down PETA's proposal.
Further Foolish food talk:
- See Applebee's first-quarter earnings.
- Is McDonalds underdone?
- Yum! Brands grows
- Chipotle is high on growth.
- This Ark is still floating.
GlaxoSmithKline is a Motley Fool Income Investor recommendation. For Mathew Emmert's full list of dividend-rich, top-performing stocks, try a free 30-day guest pass.
Fool contributor Jim Mueller loves teriyaki chicken, though he's glad he doesn't have to do the killing. He doesn't own shares in any company mentioned, scrupulously following the Fool's disclosure policy.