ISS recommends McDonald's shareholders back management directors in fight with Icahn

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BOSTON, May 16 (Reuters) - Proxy advisory firm Institutional Shareholders Services on Monday recommended McDonald's Corp (MCD.N) shareholders vote for the company's directors in a boardroom fight with billionaire investor Carl Icahn over animal rights.

Icahn, who traditionally takes on underperforming companies with large financial bets, has nominated two director candidates to the fast-food restaurant's board to hold the company accountable for pledges it made a decade ago on how it would source its pork.

ISS, whose recommendations often guide investors, wrote on Monday that Icahn has "not made a sufficient case, on an issue-specific or broader view of ESG, that the immediate replacement of incumbent directors is necessary at this time."

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The report did note that investors who prioritize environmental, governance and social issues may want to "withhold (votes) on these directors" to signal to the company that more attention needs to be paid to these matters at the board level.

Icahn is appealing to investors to elect Leslie Samuelrich and Maisie Ganzler and replace incumbent McDonald's directors Sheila Penrose and Richard Lenny.

ISS acknowledged that Icahn has added "megawatts" to the spotlight already shining on environmental, governance and social issues as he detailed publicly the company's pledge to stop buying pork from suppliers that confine pigs in small crates during their pregnancy by the end of this year.

Icahn has called the use of gestation crates "inhumane."

Shareholders will cast their votes for McDonald's directors on May 26.

Icahn's campaign is raising critical questions for investors, ISS wrote, and asked whether companies are sufficiently focused on ESG issues.

A representative for Icahn was not immediately available for comment.

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Reporting by Svea Herbst-Bayliss; Editing by Mark Porter

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