McDonald's CEO Skinner Takes On Critics At Final Shareholder Meeting

NRN.com|May 24, 2012 3:19 pm EST

In his final shareholder meeting as chief executive of McDonald's Corp., Jim Skinner once again defended the company against activist-shareholder criticism while steering the focus toward progress the brand has made across several lines of business.

Skinner, who will retire at the end of June, presented the state of McDonald's business with his successor, Don Thompson, who pointed out that the chain plans to open as many as 1,300 restaurants worldwide this year. He also reiterated that further growth in the McDonald's system would come from optimizing the menu, modernizing the customer experience and broadening accessibility to the brand.

Among the changes customers could expect in the United States would be a test of decaf and skim-milk options in the McCafé beverage line, as well as more fruits and grains across the menu, Thompson said. He added that the chain's efforts to optimize the menu and broaden accessibility through value engineering would continue to work in tandem.

"We are ensuring that we have something on the menu for everyone at every price point," Thompson said. "We know value is top of mind, so we're emphasizing branded affordability at every price tier."

Despite efforts to focus on progress, the McDonald's executives faced critical questions from some shareholders, including several from watchdog groups that have carried on a dialogue with the brand for several years.

Defending Ronald McDonald

Corporate Accountability International, which presented a shareholder proposal calling on McDonald's to conduct a public study of its food's impact on public health — the measure garnered only 6.4 percent of the vote in favor from shareholders — questioned the company's marketing practices, especially toward children. As part of its Value the Meal campaign, Corporate Accountability has asked McDonald's repeatedly to end marketing to children, as well as to close its restaurants located within hospitals.

Several shareholders from Corporate Accountability pressed Skinner and Thompson on those counts during the shareholder meeting. Skinner replied by pointing out that McDonald's was the first restaurant company to sign on to the Better Business Bureau's 2006 effort, the Children's Food and Beverage Advertising Initiative.

"We advertise responsibly, and we're proud of the changes we have made to our menu. And we've done more than anybody in terms of providing consumer choice," Skinner said.

He added that McDonald's locations in hospitals comprise only 26 restaurants out of more than 14,000 outlets in the United States. "And we were invited to those hospitals," he noted.

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Thompson defended McDonald's marketing practices toward children and parents, including the use of Ronald McDonald as a brand ambassador, primarily for encouraging active lifestyles in children and as the namesake to the Ronald McDonald House Charities. The Ronald McDonald House facilities host 8,000 families worldwide every day as their children undergo medical treatment, Skinner said.

"I have two children, and I love them dearly, and I would never do anything to hurt them or any other children," Thompson said. "Do me and this company the honor of not associating us with doing something damaging to children. ... We understand your concern, but please understand the good we have done."

Progress in humane practices

In a departure from activist shareholders' usual tone toward McDonald's at its annual meeting, one longtime critic acknowledged the company's effort to work toward a solution his organization has sought.

Though he had questioned the company on previous occasions about its supply chain practices, Paul Shapiro, a senior director with the Humane Society of the United States, stood up to commend McDonald's for its February announcement calling for its pork suppliers to phase out the use of gestation stalls.

"McDonald's is taking the issue seriously," Shapiro said, "and the Humane Society is pleased to see this progress. We look forward to working together toward even more progress in this realm."

However, other shareholders said McDonald's and other restaurant companies still had much work to do in ensuring humane treatment of animals meant to supply customers' meals.

Another questioner pressed the company to source more of its chicken from suppliers who used the controlled-atmosphere stunning, or CAS, method of slaughtering poultry. Skinner responded that McDonald's buys as much as 30 percent of its poultry in Europe from such suppliers, but the practice has not taken root in the poultry industry in the United States, meaning McDonald's has no immediate plans to modify its domestic supply chain.

"We are very proud of our work around the health of animals in our supply chain," Skinner said. "There is no consensus around CAS in the United States. Some of our suppliers use both methods, but right now there are no major facilities for CAS in the United States. ... We'll let our suppliers be the guide on this."

Oak Brook, Ill.-based McDonald's Corp. operates or franchises more than 33,500 restaurants in 119 countries.

Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN