McDonald’s CEO gets grilled at first annual meeting
LOS ANGELES/BOSTON – McDonald’s Corp (MCD.N) shareholders defied executives at its annual meeting on Thursday, approving a proposal to make it easier to nominate directors to the board of the fast-food chain and taking its new CEO to task over wages, advertising and its food.
McDonald’s Chief Executive Steve Easterbrook, who took the helm on March 1, is fighting on numerous fronts as he works to turn around the company, which saw profit and revenue fall in 2014 after service times slowed and nimbler rivals picked off customers with menus that appeal to growing appetites for fresher, less-processed food.
Despite opposition from McDonald’s, 61 percent of voting shareholders said yes to a proposal that would make it easier for long-term investors to list director candidates on company proxy materials.
The UAW Retiree Medical Benefits Trust brought the proxy access proposal before investors because “McDonald’s board needs to be more accountable for these performance lapses,” the Trust’s Corporate Governance Director Cambria Allen said at the meeting, which was closed to media but accessible via webcast.
Thousands of protesters swarmed McDonald’s headquarters for two days of rallies that are part of a multi-year, union-supported campaign for better wages and working conditions at the world’s biggest restaurant chain.
The day before the meeting, New York City Comptroller Scott Stringer and three other officials who are fiduciaries to large public pension funds challenged McDonald’s and other companies, saying they might be jeopardizing their own futures by returning excessive amounts of cash to investors via the buybacks.
Earlier this month, Easterbrook said McDonald’s turnaround plan would include returning up to $9 billion to investors through dividends and share repurchases.
Stringer called proxy access at McDonald’s “the perfect antidote for a board whose turnaround plan prioritises share buybacks over long-term value creation.”
During Thursday’s meeting, activists asked the company to make its actions match its public message.
Chicago Teachers Union Vice President Jesse Sharkey called on McDonald’s to “stop pretending to support values for the public good while simultaneously undermining those policies with its political contributions.”
The union introduced a shareholder proposal requesting an annual “congruency analysis” of company values and political contributions. It did not pass.
While Easterbrook recently announced plans to raise pay for some 90,000 workers in company-run restaurants, Sharkey said the company “simultaneously undermines efforts to raise the minimum wage across the country with large support through the National Restaurant Association (NRA),” a deep-pocketed industry group that lobbies against such increases as well as food policy changes.
“McDonald’s is exposing its share owners and business to significant reputational risks by continuing to say one thing and do another,” Sharkey said.
Easterbrook told meeting attendees he was proud of the move the company made regarding crew wages in the restaurants it operates. He said the pay of some 660,000 other McDonald’s restaurant workers was up to the franchisees who employ them. He did not address the NRA contributions.
Others shareholders, including three nuns, appealed to Easterbrook to take concrete steps toward serving healthier food, moving to sustainable palm oil and cutting important human antibiotics from the production of all of the meats it serves.
Casey Hinds of Seattle criticized McDonald’s prior CEO Don Thompson for saying at last year’s annual meeting that McDonald’s was not marketing to schools – despite company fundraising programs such as “McTeacher’s Night.” She warned that continuing the disconnect was hurting the company’s reputation with key customers.
“It’s the kind of disrespect that results in a loss of brand trust and why moms and Millennials are leaving the corporation behind,” said Hinds, a former Air Force pilot who is part of Corporate Accountability International’s Moms Not Lovin’ It network.
“In every market where we do business, we are a responsible advertiser,” said Easterbrook, who added that McDonald’s and its franchisees are committed to giving back to the communities where they do business.
Easterbrook, who has vowed to transform the iconic chain into a “modern, progressive burger company,” also dismissed calls to retire company mascot Ronald McDonald. “Ronald is here to stay,” he said. – Reuters