Managers undergo a shake-up

Friday, August 25, 2006 A resignation has created speculation about who will be the next McDonald's CEO. CHICAGO (AP) — A shake-up of top management at McDonald's Corp.'s prompted surprise but little concern on Wall Street on Thursday after the abrupt resignation of No. 2 executive Mike Roberts. While caught off guard by Roberts' unexplained departure after assisting in McDonald's resurgence of the past three years, industry experts said the reshuffling does not appear to indicate problems or a change in strategy for the world's largest restaurant company. McDonald's stock rose 12 cents to $35.71 a share in afternoon trading on the New York Stock Exchange, a day after the management overhaul was announced Wednesday evening. Roberts' aspirations to be chief executive are widely thought to be behind the move, with more than one analyst suggesting it showed the 55-year-old president and chief operating officer wasn't next in line for CEO Jim Skinner's job after all. One possibility "The only inference that we could make is that [Chief Financial Officer] Matt Paull is likely the top candidate down the road for the CEO position," said Andrew Barish of Banc of America Securities, which does investment banking for McDonald's, in a note to investors. "We do not believe Jim Skinner will retire any time soon; however the long-term succession plan appears to be taking shape." Another analyst, David Palmer of UBS Securities, said the shuffle indicates that Ralph Alvarez is likely being groomed to someday succeed Skinner and become the eighth CEO in McDonald's history. The 51-year-old Alvarez, who had been president of McDonald's USA, was named to succeed Roberts, a 29-year veteran of the company. The Oak Brook, Ill.-based company remained mum Thursday on the circumstances surrounding the shake up. "Mike Roberts made a personal decision to leave," spokesman Walt Riker said. "We respect that decision. That's all there is to that." The company said in a regulatory filing Thursday that Roberts resigned effective Tuesday from not only the president and chief operating officer jobs but the board of directors. It is not replacing him on the board, which now consists of 13 members. Alvarez's job as head of McDonald's USA will be filled by Don Thompson, 43, currently executive vice president and chief operations officer of the U.S. business. Other changes In additional changes announced Thursday by Alvarez, Jan Fields was named executive vice president and chief operations officer of McDonald's USA, where she will oversee restaurant operations for the company's 13,700 U.S. eateries, and Jim Johannesen was promoted to succeed her as president of the Central division. Roberts, who did not respond to a phone message, said in an internal farewell note that he made the decision to resign, which he called one of the most difficult of his life, with "deep regret." But he said it was "right for me, my family, my career and the company at this time." Dennis Milton, an analyst for Standard and Poor's, said Roberts will be missed but his sudden departure is not as worrisome in a company as deep in management talent as McDonald's. "It's not as if there's some cloud hanging over the company and that's the reason why he left," he said. "The company is performing very well, so management changes of this type would have less of a significant impact on the outlook for the company." Merrill Lynch analyst Rachael Rothman and John Ivankoe of JP Morgan both wrote that the management shift doesn't indicate any change in the company's business strategy.