The shareholder meeting began with a “business overview” presentation from Todd Penegor, President and CEO, which painted a rosy picture of Wendy’s capturing more and more “share of stomach,” resulting in an increased stock price, cash flow, and ultimately dividends for shareholders over the past few years. Mr. Penegor went on to present the “Wendy’s Way,” through which Wendy’s creates not only profits, but also “creates joy and opportunity through food, family, and community.” He was followed by Chief Communications Officer Liliana Esposito, who offered shareholders the anticipated “Corporate Social Responsibility” update.
Ms. Esposito’s presentation began with a quick, system-wide review of progress under Wendy’s expanded Supplier Code of Conduct. And remarkably, if not surprisingly, she was able to report that Wendy’s had “once again achieved 100% affirmation” from all suppliers that are covered by the code that they are “aware of and adhering to the obligations that we have put forward for them.” [Ed note: The CIW will take a closer look at this astounding assertion and what it tells us about Wendy’s vision of social responsibility in next week's analysis.]
In light of this spectacular success, she then directed a complaint at the Fair Food allies in the room, several of whom she mentioned recognizing, saying “I’ll tell you that it’s not pleasant for us to see our brand criticized on a regular basis.”
Ms. Esposito’s principal complaint with the Campaign for Fair Food, however, was that, at its heart, the campaign is a “commercial dispute” and that Wendy’s objects in principle to two things: first, engaging in a “labor relationship with the employees of our suppliers,” and second, to “paying fees to” the CIW. She added before concluding her remarks, “we don’t believe that joining the Fair Food Program is the only way to act responsibly.”
After thanking Mr. Penegor and Ms. Esposito “for those very clear messages,” Board Chairman Nelson Peltz asked that the lights be turned on for the General Questions portion of the meeting. And thus the stage was set for a truly remarkable show, as 11 of the 27 farmworkers and allies in the room approached the microphone one after another to deliver a series of razor-sharp statements that would, thread by thread, unravel the cheerful tapestry of well-intentioned, successful social responsibility efforts that Wendy’s executives had labored so painstakingly to weave.
The first to the floor was the former PC(USA) moderator Rick Ufford-Chase:
“Good morning, Mr. Chairman and the Board of Directors… I was the Moderator, our church’s highest elected office, when Taco Bell became the first major corporate buyer to work with farmworkers and growers to transform human rights abuses in U.S. agriculture through the Fair Food Program. I’m here today to urge Wendy’s to do the same…
… This is the only effective way to ensure that the scourge of slavery and abuse in the food system is eliminated. Instead of joining this proven program, Wendy’s has moved its purchasing of tomatoes to Mexico… I did human rights work on the U.S. / Mexico border for 20 years, and here’s what I know: Escaping to Mexico to source your tomatoes does not relieve your moral quandary; it deepens it. The Los Angeles Times documented one farm where 200 workers, including children, were in forced labor. This is a farm where Wendy’s sources its tomatoes… Your refusal to join the Fair Food Program places you on the wrong side of history. So long as you choose to remain there, the faith community intends to work tirelessly with our ecumenical and interfaith partners to assure that this boycott will be effective. This movement has staying power within our churches.
And for the record, until two years ago Wendy’s had been my own restaurant of choice for more than forty years, and I’ve got two children of my own who I adopted from the foster care system. I share a lot of your core values. I’d like very much to come back.”
Unsurprisingly, Mr. Penegor answered the question by referencing Wendy’s supplier Code of Conduct as the solution to any alleged past abuses in the fast-food restaurant’s supply chain. He moved on to the next questioner after reassuring the shareholders that he was “comfortable and confident” that Wendy’s is supporting decent working conditions. Mr. Ufford-Chase was followed by Lucas Benitez, one of the co-founders of the CIW:
“I have been a farmworker since I was 17 years old. I have seen, up close, the two worlds – the one which we are coming from, and the one we’re in today thanks to the power of the corporations that are working together with us. Among them are Wendy’s principal competitors, including McDonald’s, Burger King, and Taco Bell. Thanks to this market power, we are now eliminating abuses that have been endemic in the U.S. agriculture industry. Forced labor, modern-day slavery, the sexual harassment that has been the bread of every day for the millions of farmworker women who labor in the fields.
The only thing we’re doing now is extending the invitation to Wendy’s to be part of this new day – to truly be a company that upholds American values. Nevertheless, to this day, Wendy’s has refused to be part of these efforts and, ignoring the demands of its consumers, has shifted its purchases to Mexico, where the exploitation is extreme and unspeakable. For those reasons, I direct my question to Mr. Penegor: with the incredible opportunity to join the Fair Food Program and demonstrate to your consumers true dedication to social responsibility, why do you continue to turn your backs to farmworkers, to your longtime suppliers in the transformed Florida tomato industry, and to all the consumers demanding fairly harvested produce?”
Board Chairman Nelson Peltz, instead of responding to a question directly from the farmworker community of Immokalee, or even bothering to reference the Code of Conduct, simply replied with “Thank you.” After a stiff moment of silence, AFF's Patricia Cipollitti came in after Lucas, and directly refuted the false claim from Liliana Esposito that the CIW receives “fees” from participating buyers. Patricia pointed out that – as stated countless times publicly by Judge Laura Safer Espinoza of the Fair Food Standards Council, among others – the “penny per pound” Fair Food premium never even passes through the CIW, but rather is paid to growers through regular purchasing channels and is then distributed to workers through regular payroll channels, all in a process carefully and painstakingly monitored by the Fair Food Standards Council.
Next up was Ohio State Professor, Dr. Pranav Jani:
“I’ve been very surprised and astounded that Wendy’s hasn’t gone along with the Fair Food Program like many of its competitors have…
…I want to point out two ways in which [the Wendy’s code] is inferior and I hope you then will answer my question. The first is that the Code of Conduct purports to be against the abuse of farmworkers but only the FFP involves a mandatory code. This is like saying you’re against abuses, but not actually enforcing it. And actions speak louder than words…
… The second way in which it is inferior to the Fair Food Program is that the FFP involves the direct participation of workers in actually creating the code; it includes worker-to-worker education; workers can participate in health and safety committees on every farm; they have access to a 24-hour worker hotline to report abuse. Wendy’s code is notably silent on worker participation in determining how the code of conduct is actually to work… So this is my question to the CSR Board committee: could you explain to shareholders how the mere expectations in your corporate supplier code of conduct, without any enforcement mechanism, are sufficient to adequately protect workers’ rights?”
Professor Jani’s questions, which went straight to the heart of Wendy’s hypocrisy in equating their Code of Conduct with the worker-driven Fair Food Program, elicited the most substantive response yet from both Mr. Penegor and Ms. Esposito. Wendy’s executives reiterated that they were extremely “proud” of their Code of Conduct, arguing forcefully that their “expectations” for suppliers had been effectively communicated, that their third party auditors monitor the entirety of the Wendy’s hand-harvested vegetable supply chain for any violations (“not just tomatoes”), and that Wendy’s would cut off any suppliers found to be in violation of their Code. Mr. Penegor added, “that’s the enforcement tool.”
Ms. Esposito asserted that Wendy’s had begun to implement the Code of Conduct in the operations of existing suppliers to ensure that the “strong contracts” already in place would serve as the enforcement mechanism, given Wendy’s failure to be satisfied with human rights, food safety, quality, or other ethical standards could lead even to contract termination. She added, “up to three years ago, we purchased our winter tomatoes from Florida, and we purchased from suppliers that were members of the Fair Food Program. And this campaign against us was raging at that time, too.” She concluded, then, that working with suppliers abiding by FFP standards was not what was wrong; “What was wrong, was not paying into this.”
Yet, in spite of delivering what Wendy’s surely hoped would be a final word on the matter, that was not the end of the conversation. Professor Jani, who continued to press executives on how they could possibly ensure their code without worker participation, was followed by OSU student faster Henry Peller; Sister Mary Ellen Gondeck, SSJ, from the Congregation of St. Joseph and the Interfaith Center on Corporate Responsibility; Edie Rassell, the Minister for Economic Justice of the United Church of Christ; Rabbi Daniel Kirzane of T’ruah (who was told by Wendy’s Board Chairman Nelson Peltz that his “life was full of rabbis” already and so he would not meet with T’ruah!); Wendy Ake, Columbus ally and director at the UC Berkeley Haas Institute for a Fair and Inclusive Society, who warned Wendy’s of the shortsightedness of failing to meet what is now an industry standard in social responsibility, given consumer trends; Rev. Lynda Smith of the First Unitarian Universalist congregation of Columbus, who addressed CEO Todd Penegor in saying that she would “pray that your blindness be removed from you”; and finally, University of Michigan student Kim Daley, who made a final push with executives to explain the lack of transparency built into Wendy’s Code of Conduct, only to be met with the executives’ continued refusal to identify the who, what, where, when, and how of the “third-party audits.”
Increasingly agitated, and clearly concerned about losing control of the annual meeting’s agenda, Nelson Peltz adjourned the meeting.
And outside, the protest continues: