A group that advises a small portion of McDonald’s shareholders says the company’s board needs a makeover as much as the menu.
CtW Investment Group, which works with a number of union pension funds, laid out its demands in a letter sent Friday to the board. The letter comes about two weeks after McDonald’s, based in the Chicago suburb of Oak Brook, Ill., named Steve Easterbrook to replace Don Thompson as CEO as the company struggles.
“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,” CtW Executive Director Dieter Waizenegger wrote in the letter, a copy of which was reviewed by the Chicago Tribune.
The letter, addressed to Chairman Andrew McKenna and board member Miles White, chairman of the board’s governance committee, was sent to the full board, CtW said.
On Jan. 28, the same day Easterbrook’s appointment was announced, McDonald’s also added Google executive Margo Georgiadis to its board. Easterbrook is set to join the board when he becomes CEO in March.
Waizenegger said recruiting Georgiadis was “a positive step,” but asked that the company do more to refresh its board. He wants to see McDonald’s come up with and publicly disclose plans to change the board’s leadership, including having a board succession plan. He also said CtW believes it is the right time to “transition board leadership.”
The board, with many long-tenured directors “overwhelmingly drawn from local Chicago-networks,” needs to “critically review its performance and culpability,” Waizenegger wrote.
CtW would like to see the board use a broader approach when it comes to finding new members.
According to CtW, 10 members of the board have “significant ties” to the Chicago business community, either now or in their work history. Even Georgiadis, the newest member of the board, has ties to the Chicago area. Before she joined Google’s Chicago office, her work included time at Chicago-based Groupon, Discover Financial Services and McKinsey and Co.’s Chicago office.
McKenna, 85, has been the Chairman of McDonald’s since 2004 and has been on the board since 1991.
In a statement Friday evening, McDonald’s praised its board of directors.
“We respect and take seriously the views of all of our shareholders,” the statement said. “The Board of Directors recently added a highly qualified new Director, appointed a new Chair of the Governance Committee and has made several senior management changes.”
This is not the first time CtW has spoken out about issues at McDonald’s.
In 2014, it asked McDonald’s shareholders to vote against an advisory vote to approve executive compensation. The proposal was approved, but more than 36 million votes were cast against it.
CtW has voiced concerns about other boards, as well.
For example, last year, it told shareholders at McDonald’s rival Wendy’s to withhold support for one of the Ohio chain’s board members, David Schwab II. While Schwab was re-elected, nearly four times as many votes were withheld from him as they were from any other board member. CtW also spoke out about the makeup of the board at Walgreen, now Waglreens Boots Alliance.
CtW said it works with a number of union pension funds that together hold 2 million shares in McDonald’s. The shares represent about 0.2 percent of McDonald’s roughly 973.2 million outstanding shares.