Strive, representing its clients who are McDonald’s shareholders, expressed concerns over the fast-food giant’s pursuit of value-destroying and potentially illegal diversity policies, particularly in light of the recent U.S. Supreme Court decision in Students for Fair Admissions v. Harvard.
In a letter addressed to McDonald's CEO and Chairman of the Board, Strive highlights the following key issues:
- The substantial legal and business risks associated with McDonald's adoption of race- and gender-based targets for its board of directors, management, and employee ranks, and corresponding mandates for suppliers and vendors.
- The need for McDonald’s to revisit these policies to avoid the potential lawsuits, investigations, and regulatory actions that are likely to follow the Supreme Court's ruling that declared all racial discrimination, including affirmative action, illegal under the Fourteenth Amendment's Equal Protection Clause and the Civil Rights Act.
- McDonald's possible breach of fiduciary duty through its embrace of its stakeholder capitalism.
Strive underscored that McDonald's diversity policies not only pose legal risks but financial risks as well. Studies show that promoting and hiring based on race and sex, rather than merit, fails to improve financial performance. Consequently, McDonald’s policies are likely already costing shareholders and jeopardizing the company’s long-term value, even setting the legal risks aside.
Given the seriousness of these concerns, Strive urged McDonald's to prioritize its shareholders’ financial interests alone by rescinding its diversity targets for employees and suppliers, unequivocally denouncing all forms of discrimination, and committing to merit-based decision-making that provides an equal opportunity to every applicant, employee and supplier, regardless of race or sex.
"Prior to the Fair Admissions decision, many workplace DEI (Diversity, Equity, and Inclusion) programs were legally dubious,” stated Justin Danhof, Strive Head of Corporate Governance. “The ruling now confirms that those programs run afoul of the Constitution as well as discrete state and federal laws. McDonald's internal hiring quotas and diversity proscriptions for suppliers exemplifies how the fast-food giant impermissibly divides people by race in precisely the way that the Supreme Court just struck down. To comply with the law and safeguard shareholders from costly litigation, McDonald’s should swiftly eliminate these programs.”
Read the full letter here.
About Strive Asset Management
Strive is an Ohio-based asset management firm whose mission is to maximize shareholder value by leading companies to focus on excellence. Strive competes directly with the world’s largest asset managers by offering funds that advance excellence in boardrooms across corporate America. The company was co-founded by Vivek Ramaswamy and Anson Frericks in 2022. Learn more at www.strive.com.
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