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[LOS ANGELES] Union pension fund adviser CtW Investment Group on Friday demanded in a letter to key McDonald's directors that the struggling fast-food chain follow up its recent chief executive officer replacement with a turnover of its board.
The demand from CtW comes two weeks after McDonald's announced that chief brand officer Steve Easterbrook would replace Don Thompson in the top job on March 1 and as unions have been seeking to organize fast-food workers and raise wages. The union pension funds that CtW advises hold a small percentage of McDonald's outstanding shares that are worth US$268 million.
CtW executive director Dieter Waizenegger, in a letter addressed to board chairman Andrew McKenna and governance committee chairman Miles White, said the replacement of Mr Thompson fell short of what is required to fix the world's biggest restaurant chain by revenue. "Returning McDonald's Corp to a path of long-term, profitable growth requires that Mr Steven Easterbrook's appointment as CEO is followed by a robust refreshment of the board's membership and leadership," Mr Waizenegger wrote in the letter, which was obtained by Reuters.
McDonald's did not immediately respond to requests for comment.
McDonald's, which recently reported one of its worst years in decades, has suffered eight straight months of worldwide same-restaurant sales declines. It is editing bloated menus, experimenting with technology and revamping its advertising to appeal to diners, who increasingly are demanding fresher, healthier food.
McDonald's board, which consists of many long-term and Chicago-area directors, has failed to evolve with the global company's changing circumstances, Waizenegger said. "We believe it is critical for McDonald's to have strong, independent board leadership. Fresh eyes are essential," said Mr Waizenegger. He took particular aim at Mr McKenna, an octogenarian who has been McDonald's non-executive chairman since April 2004 and a director since 1991.
While Mr Waizenegger conceded that the recent addition of Google executive Margo Georgiadis to the McDonald's board was a positive, he called on the company to announce plans that include a board succession strategy "that will, by the time of the annual shareholder meeting, have prompted both board arrivals and departures." CtW, which advises funds holding nearly 3 million McDonald's shares, unsuccessfully lobbied investors at last year's annual meeting to vote against the pay package for CEO Thompson.
Some unions have helped organize fast-food workers in a nationwide campaign that seeks to roughly double their hourly wage to US$15. Protesters involved with that campaign have targeted McDonald's and other large companies.
Stock in McDonald's, which has lagged key rivals and major indices, closed at US$95.65 on Friday, down almost 8 per cent from its 52-week high of US$103.78.