McDonald’s Corp. shares held steady Thursday as Wall Street shrugged off the management shake up resulting from the abrupt resignation of No. 2 executive Mike Roberts.
While caught off-guard by Roberts’ unexplained departure after assisting in McDonald’s resurgence of the past three years, industry experts said the reshuffling does not appear to indicate problems or a change in strategy for the world’s largest restaurant company.
Roberts’ aspirations to be chief executive are widely thought to be behind the move, with more than one analyst suggesting it showed the 55-year-old president and chief operating officer was not in line for CEO Jim Skinner’s job after all.
“The only inference that we could make is that (Chief Financial Officer) Matt Paull is likely the top candidate down the road for the CEO position,” said Andrew Barish of Banc of America Securities, which does investment banking for McDonald’s, in a note to investors. “We do not believe Jim Skinner will retire any time soon. However, the long-term succession plan appears to be taking shape.”
Another analyst, David Palmer of UBS Securities, said the shuffle indicates that Ralph Alvarez is likely being groomed to someday succeed Skinner and become the eighth CEO in McDonald’s history. The 51-year-old Alvarez, who had been president of McDonald’s USA, was named to succeed Roberts, a 29-year veteran of the company.
The Oak Brook, Ill.-based company remained mum Thursday on the circumstances surrounding the shakeup.
“Mike Roberts made a personal decision to leave,” spokesman Walt Riker said. “We respect that decision. That’s all there is to that.”
The company said in a regulatory filing Thursday that Roberts resigned effective Tuesday from not only the president and chief operating officer jobs but the board of directors. The company is not replacing him on the board, which now has 13 members.
Alvarez’s job as head of McDonald’s USA will be filled by Don Thompson, 43, currently executive vice president and chief operations officer of the U.S. business.
Jan Fields was named executive vice president and chief operations officer of McDonald’s USA, where she will oversee restaurant operations for the company’s 13,700 U.S. eateries, and Jim Johannesen was promoted to succeed her as president of the Central division.
'Deep regret'
Roberts, who did not respond to a phone message, said in an internal farewell note that he made the decision to resign, which he called one of the most difficult of his life, with “deep regret.” But he said it was “right for me, my family, my career and the company at this time.”
Dennis Milton, an analyst for Standard and Poor’s, said Roberts will be missed, but his sudden departure is not worrisome in a company as deep in management talent as McDonald’s.
“It’s not as if there’s some cloud hanging over the company and that’s the reason why he left,” he said. “The company is performing very well, so management changes of this type would have less of a significant impact on the outlook for the company.”
Merrill Lynch analyst Rachael Rothman and John Ivankoe of JP Morgan both wrote that the management shift doesn’t indicate any change in the company’s business strategy.
After overseeing the revitalization of McDonald’s U.S. business, Roberts was promoted to the president’s job in November 2004 when Skinner was named to replace the cancer-stricken Charlie Bell as chief executive. Bell died eight weeks later.
McDonald’s has continued to increase sales solidly since then, although growth has recently tapered off slightly as the company came up against tougher comparisons with its impressive recent results.
If he now aspires to a CEO job at another fast-food chain, Roberts will likely have to wait. Palmer noted that once he formally severs all ties as a McDonald’s employee, an expected noncompete agreement would prohibit him from working at a McDonald’s competitor for two years.
While McDonald’s was praised for its smooth CEO transitions following the unexpected losses of chief executives — Jim Cantalupo, who died of a heart attack in 2004, and Bell — Palmer said the company needs to more effectively retain top talent. Roberts is the second top executive to depart in two years after apparently having CEO aspirations thwarted.
Chief restaurant operations officer Claire Babrowski left in December 2004 and is now mentioned as a possible CEO candidate at Wendy’s International Inc. after she completes a stint as president and chief operating officer at RadioShack Corp. next week.
“While departures of top talent are concerning, we believe the current team will remain largely intact, with less risk of departure by execs with higher aspirations,” Palmer wrote. “While past succession planning has worked, we wonder if it has at times made it too clear who the ’next person’ was inside McDonald’s.”