OAK BROOK Ill. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
McDonald’s, which has faced the sudden loss of leadership before, has long been lauded for its deep bench of experienced executives and leadership development practices—characteristics that the Securities and Exchange Commission is encouraging among more companies. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
In late October, the agency issued a bulletin detailing a change in policy that requires companies to show proof of leadership depth and succession planning whenever investors request it. Prior to October, the SEC had viewed succession planning as workforce management related to ordinary day-to-day business matters and not needing transparency. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
“One of the board’s key functions is to provide for succession planning so that the company is not adversely affected due to a vacancy in leadership,” SEC officials said in the bulletin. “Recent events have underscored the importance of this board function to the governance of the corporation. We now recognize that CEO succession planning raises a significant policy issue regarding the governance of the corporation that transcends the day-to-day business matter of managing the workforce.” —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
Bruce Sherman, principal at Chicago-based Integral Advisors LLC, notes the significance of the bulletin. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
“That’s a big change,” he said. “Many boards right now are scrambling to get their houses in order. Now, because of issues around corporate governance, with companies like Bank of America and General Motors seeming like they got blindsided, [the SEC] feels that shareholders and the public have more of a right to know, so now they’re backing the shareholders.” —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
The importance of succession planning is not lost on operators. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
At Burlington, Vt.-based Bruegger’s Enterprises Inc., parent to the 292-unit Bruegger’s bakery-cafe chain, each department head has someone who reports to them capable of doing the department head’s job, said James Greco, chief executive, during a roundtable discussion held during the Multi-Unit Foodservice Operators conference in early October. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
“If they got hit by a bus tomorrow, we’ve pushed them to bring on board someone below them who could do their job,” Greco said. “And there is someone below me who could do my job, but I’m not saying that that person is, you know, a CEO in waiting.” —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
The depth of a company’s succession planning has a lot to do with size, said Phil Friedman, chairman and chief executive of McAlister’s Deli, a 300-unit fast-casual chain based in Ridgeland, Miss. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
“In the last year and-a-half, we’ve worked really hard to build up our executive team,” Friedman said. “So I’m much stronger in terms of succession than I was 18 months ago. But it’s still for our size, we’re probably doing pretty good. For my years at Marriott or other organizations, we’re way behind.” —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
Observers noted that McDonald’s is also way ahead when it comes to seamlessly addressing executive departures. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
Alvarez, 55, recently announced he would leave McDonald’s and retire from its board of directors at the end of the year because of health reasons. Many had speculated that he was next in line to become chief executive of Oak Brook, Ill.-based McDonald’s. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
“After more than 30 years in the restaurant industry, the past 15 with this great brand, I’ve decided to retire,” he said. “Seven orthopedic surgeries and years of chronic pain, culminating in two total knee replacements in the past six months, have made me realize it’s time to move on.” —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
Chief executive Jim Skinner acknowledged that, while Alvarez’s decision to retire was a difficult one, it ultimately was best for him and his family. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
“On behalf of the entire McDonald’s system, I want to commend Ralph for his many contributions to our business,” Skinner said. “McDonald’s has benefited greatly from Ralph’s leadership and commitment to operational excellence.” —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
The company, which operates or franchises more than 32,000 restaurants worldwide, has bounced back from unexpected transitions before. It named Skinner chief executive in 2004 after Charlie Bell stepped down from the post upon announcing he had cancer. Bell, who died in 2005, had succeeded Jim Cantalupo earlier in 2004, after Cantalupo died of a heart attack. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
Because the company has carried on before with vacancies in the executive suite and takes leadership development so seriously, analysts contend that McDonald’s could resume operations with minimal complications. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
“The surprising news that Ralph Alvarez will retire at year-end because of orthopedic-health issues…is a negative development, but one that CEO Jim Skinner and a strong overall management team can handle,” Joseph Buckley, a securities analyst with Bank of America Merrill Lynch, said in a research note. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
Buckley noted that Alvarez had been in obvious pain the last time the two spoke at an investor conference. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
Sherman of Integral Advisors said questions of succession during executive shake-ups could negatively affect a company’s share price, debt ratings or other measures of shareholder value. However, because of McDonald’s lineup of experience operators and long-term planning, “they probably won’t feel too much of an impact,” he said. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
Sherman is one of several industry watchers to point to McDonald’s roster of experienced operators. Because developing people has been such a large focus for McDonald’s, he said, the company likely wouldn’t need to hire an outsider, who might not embrace the corporate culture and could command a higher salary. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
“McDonald’s promotes from within, and that’s a sign that they don’t have to go outside,” he said. “They have enough capable internal people.” —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
David Tarantino, an analyst with Robert W. Baird, agreed that Alvarez’s logical successor likely already works for McDonald’s as one of the regional presidents now reporting directly to Skinner. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
“While we do not like to see the departure of a key executive,” he wrote in a research note, “we believe the strength of McDonald’s global leadership team will allow the company to continue executing its ‘Plan to Win’ effectively. Further, McDonald’s four regional presidents, who average more than 20 years of experience with the company, appear to be capable leaders that could serve as a pipeline of candidates for the president/COO role, should McDonald’s decide to fill Alvarez’s position in the near future.” —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
Those executives, their regions and their experience include: Don Thompson, United States, 19 years; Denis Hennequin, Europe, 25 years; Tim Fenton, Asia/Pacific, Middle East and Africa, 36 years; and Jose Armario, Canada and Latin America, 13 years. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
A spokesman said McDonald’s has functioned over the past few years with a COO and without, so there’s no hurry to name Alvarez’s successor. He added that Skinner has no plans to retire soon and has a working relationship with all the regional presidents. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
McDonald’s share price closed at $61.59 at the end of the week Alvarez announced his retirement, close to its 52-week high of $64.75. —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.
“There’s an opportunity for a lot of companies to get their act together, that’s the moral of the story,” said Sherman of Integral Advisors. “If McDonald’s were not as prepared—many other companies’ stock price would have taken a hit, but McDonald’s probably won’t miss a beat.”— [email protected] —The Nov. 30 announcement that McDonald’s Corp. president and chief operating officer Ralph Alvarez would retire may have surprised industry watchers and the analyst community, but most observers agreed that if any restaurant company can withstand an unexpected executive shake-up, it’s the world’s largest hamburger chain.