THE WENDY'S COMPANY CASE STUDY: THE PROBLEM OF POWERLESS SHAREHOLDERS

In 2020, Pope Francis in Address of His Holiness Pope Francis to The Committee of Experts From The European Council, observed that "in the effort to amass wealth", investors all too often show "little concern for where it comes from . . . and the mechanisms of exploitation that may be behind it. Thus, situations can occur where, in touching money, we get blood on our hands, the blood of our brothers and sisters." Unfortunately, even if investors did want to change the ethical direction of their corporation (I use the term their, because the investors own the corporation), they often face insurmountable legal obstacles. I will use a case study about The Wendy's Company to illustrate those obstacles. The ongoing struggle of Wendy's shareholders to convince the company to join the Fair Food Program (FFP) provides an excellent case study to examine the effectiveness (or lack of effectiveness) of shareholder attempts to prevent exploitation of workers in the supply chain. The FFP changes the way that fast-food companies purchase produce. FFP Partners pay a premium to farm workers and use market pressure to ensure that farm workers have a safe work environment. However, Wendy's (the seventh biggest fast-food chain in the United States) has resisted repeated calls by shareholders to join the FFP. In response Shareholders: (1) commenced a lawsuit in 2016, and (2) submitted a proposal for shareholder vote at the annual meeting in 2017 requiring Wendy's to join the FFP. Both failed. A watered-down shareholder proposal did pass is 2021, but it simply required a written report be provided to shareholders addressing whether "Wendy’s Quality Assurance audits and third-party reviews effectively protect workers in its food supply chain from human rights violations." My discussion will proceed as follows: First, I will provide background. Second, I will detail the outcomes of each action taken by shareholders at Wendy's as they tried (and continue to try) to convince management to join the FPP. Thereafter, I will present discussion questions that I hope will add to my own, and the participants, understanding of the issues, and possible solutions. (It is my hope that in the last five to ten minutes of my presentation, we can explore ideas regarding how those legal obstacles can be relaxed to (1) allow shareholders greater moral input, (2) without sacrificing legitimate exercises of director discretion.)