Free

Chickening out on humane eggs at Bob Evans…

We’re out of the thick of proxy season, but a few are still trickling in, and with them, occasionally, a shareholder proposal that catches out attention. We’re usually interested when an ordinarily low-profile group — nuns at McDonald’s, for example — makes a serious proposal that shakes a company up a little.

This time, it’s the Humane Society of the United States, which describes itself as the country’s largest animal-protection group, asking other shareholders at Bob Evans Farms (BOBE) to encourage the company to buy 5% of its eggs from farms that let chickens roam. The argument, in Bob Evans’ proxy, centers on cruelty (cage floors smaller than a sheet of paper) and food safety (studies suggesting caged birds are more likely to contaminate eggs with salmonella).

Now, the Humane Society is a pretty well-established and middle-of-the-road kind of group. This isn’t PETA, which once famously asked the town of Fishkill, New York, to change its name, presumably out of sensitivity to fish (when “kill” is simply Dutch for “stream”). And the 5% cage-free-egg threshold doesn’t seem to be monumental. As the Humane Society writes in its proposal:

“Bob Evans competitors including Denny’s, IHOP, Cracker Barrel, Golden Corral, Burger King, Wendy’s, Subway, Arby’s, Sonic, Quiznos, Carl’s Jr., Whataburger and Hardee’s have all begun using cage-free eggs.”

We suspect that Denny’s, IHOP and Cracker Barrell use a lot of eggs, so it shouldn’t be too tough for Bob Evans to give it a try. (Remember, the Humane Society proposal is just to encourage the company to do this as opposed to some sort of quota.)

But corporate managers generally don’t like outsiders meddling even in small corners of their operations. So perhaps it wasn’t so surprising to see Bob Evans come out swinging against the Human Society proposal, and cite other studies supporting its point. Still, the vehemence of the response did make us take note. For one thing, the proxy devotes more than 860 words to protesting the proposal, compared to the not quite 400 words used by the Human Society to propose it.

Plus, Bob Evans ties itself up in knots — and loses command of basic punctuation in the process — by trying to cast the Humane Society proposal as somehow sinister. Here’s one example:

“We are genuinely concerned that the proponent’s ‘agenda’ gets in the way of an objective consideration of the other issues related to its’ issue; those of safe and affordable food, the environmental impact, and worker welfare.”

For the record, the Humane Society’s “agenda” explicitly includes closing puppy mills, ending dog-fighting, opposing the hunting of captive wildlife, and, yes, protecting farm animals, including laying hens. Nor do they seem to be wild-eyed anti-corporatists — just this month, the Humane Society hashed out an agreement with an egg-producers’ group to push for federal regulations improving hen housing.

Bob Evans also makes much of a study it is supporting of different hen housing types, under the auspices of a group calling itself the Coalition for Sustainable Egg Supply. But we suspect investors could be waiting quite a while before they see any results from that study.

For one thing, the Coalition’s membership list looks pretty heavy on food-industry types to us. There are a few Farm Belt universities, as well as the longstanding American Humane Association, which is separate from the Humane Society (and has at times been criticized as too cozy with the film industry, where it oversees animal welfare). But mostly, there are egg marketing boards, egg-farmers’ groups and restaurant chains. And the whole thing seems to be a project of the Center for Food Integrity, which describes itself as dominated by the food industry: “farmers and ranchers, universities, food processors, restaurants, retailers and food companies.”

Meantime, the Coalition for Sustainable Egg Supply website says its research project “is currently in the study design phase”, and invites visitors to check back regularly for updates. Yet as far as we can tell, there haven’t been any updates at all. The site still carries a 2010 copyright notice (suggesting few changes since then), and the group links to a January 2010 Bob Evans press release announcing its membership in the organization; at that point the study seems to already have been in the planning stages, which means it’s been on the drawing board for something like 18 months. Presumably, it will take years to finally start it, finish it and publish the results.

As for the other research cited by Bob Evans (small cages good, roaming chickens bad) and the Humane Society (small cages bad, roaming chickens good), we’ll leave it to others to sort out their merits. The company makes much of the poor success proposals like this one have had in the past. It’ll be interesting to see how this one fares at the Bob Evans annual meeting on August 23.

As an addendum, we’ll note that Bob Evans is something of a frequent flier here on footnoted — rarely a good thing. And when we checked in on its plans for its Mimi’s CafâŸs unit for footnotedPro, we were less than impressed (subscription required). The stock fell 12% in the three months after we wrote that report, and while it’s recovered those losses, it still trails the Dow.

Who knows — maybe a chicken-friendly egg policy could help attract some new customers.

Image source: Humane Society of the United States website