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Congratulations Don Thompson and we wish the best to Mr. Skinner.  COO Don Thompson will take over effective July 1.

Since I have been covering McDonald’s, there have been five different CEOs and none has stepped down as decorated as Jim Skinner is.  The timing of his decision is surprising but, given how long he has been at the company – 41 years – him stepping down is not an undue cause for concern. 

Mike Quinlan (CEO from March 1987 – July 1998): The Quinlan era was very different.  The MCD of today is not the public company it was in the 1990’s.  Mr. Quinlan did not have a relationship with “Wall Street”, in fact he shunned analysts.  His primary achievement was the dramatic overseas growth of McDonald’s.  The stock was up more than 400% during his tenure.

Jack Greenberg (CEO from July 1998 – January 2003): Unfortunately Mr. Greenberg held the top spot during a tumultuous period for the company.  Excessive growth, particularly in the USA, was a problem for McDonald’s.  It was Mr. Greenberg’s idea to launch salads in the Spring of 2003 which lead to the first positive month of same-store sales after 13 painful months.  What he could not shake off was seven quarters of earnings disappointments.   The stock was down roughly 60% during his tenure

Jim Cantalupo (CEO from January 2003 – April 2004): Mr. Cantalupo gets credited with bringing about the “Plan to Win” strategy in 2003, but passed away just as the company was turning the corner.  The stock has gained 60% during his tenure, what ended up being the beginning of a long upward trend for the stock.

Charlie Bell (CEO from April 2004 – November 2004): It was during this period in McDonald’s’ history that it became the role model company for always having a succession plan in place.  Mr. Bell passed away mere months after taking the reins at MCD.

Jim Skinner (CEO November 2004 – June 2012): When Mr. Skinner took the helm at MCD I joked to myself that it was his job not to mess things up.  With the stock up more than 200% during his tenure, he certainly did his job!

The question that comes to mind most is, “why now?”  Is it just a coincidence that the company just announced its first earnings disappointment of the Skinner era?  Does he see something investors do not?  The economic turmoil in Europe, among other factors, poses a significant challenge to McDonald’s going forward.

Of course, it is difficult to know why Skinner is stepping down now but after 41 years with the company he deserves some time off.  It will be difficult for Mr. Thompson to achieve the same results that Jim Skinner did but, as a veteran of 22 years, he is also a very capable executive.

To those of us that live and breathe MCD every day, Mr. Skinner retiring is not a surprise, as it could have happened any time in the past year, but the timing was somewhat surprising.  Mr. Thompson is not a surprising choice to take over but we are left wondering if there is any reason for the change taking place in July.

Howard Penney

Managing Director

Rory Green

Analyst