010519 McDonald's Revamps Senior Management

Chicago - McDonald's Corp. said it revamped its senior management structure, expanding the role of two top-level managers and promoting other company insiders to bolster its geographic regions.

The changes come a day after the Oak Brook, IL-based company said that Vice Chairman and President Jim Cantalupo, who has headed the company's overseas operations since 1987, will retire next year.

McDonald's international business has faced continued pressure in recent months, and is tied to its second consecutive quarterly earnings decline in the first quarter.

Rather than replace Cantalupo with one top-level manager, McDonald's said it is expanding the responsibilities of two senior regional executives, Jim Skinner, head of McDonald's European business, and Alan Feldman, who now runs the United States operations.

“I think what we're trying to do is coalesce the responsibility for the day- to-day worldwide restaurant operations between two senior executives -- Jim Skinner and Alan Feldman,” McDonald's Chairman and Chief Executive Jack Greenberg said. “Between them, they have the big geographies reporting to them and it's a clear straight line of accountability that goes directly to me.”

SKINNER, FELDMAN TO EXPAND ROLES

Skinner was promoted to the new post of President and Chief Operating Officer, McDonald's, Europe/Asia/Pacific, with responsibility for some 12,350 restaurants. Charles Bell, who heads the company's Asia/Pacific business, will succeed him as head of Europe. Claire Babrowski, who heads McDonald's restaurant systems, will take over Asia/Pacific, the company said.

Feldman was promoted from president of McDonald's U.S.A. to the new job of president and chief operating officer for McDonald's, the Americas, with control over Canada, the U.S., Latin America and the Caribbean. Michael Roberts, one of five U.S. division heads with responsibility for the company's western U.S. business, will succeed Feldman to take over the U.S.

“I think Feldman and Skinner are more than capable of handling Cantalupos' work,” said J.P. Morgan analyst John Ivankoe. “At the end of the day, though, it's not really the people, it's the strategy. It's far to early to say what changes they're going to make there.”

Analysts said they are most interested in seeing McDonald's plans for Europe, where the negative effects of a strong U.S. dollar and outbreaks of the animal diseases mad cow and foot-and-mouth have turned consumers away from beef and hampered hamburger sales.

“I don't think the problem is over by any means,” Greenberg said, noting, however, that business in both France and Germany has improved. “But I am feeling much better and am actually gratified by consumers' confidence in our brand.”

Greenberg also said that Cantalupo will take an active role in the management transition, helping to guide McDonald's executives in their new roles. Cantalupo's planned departure follows that of Chief Financial Officer Mike Conley, who announced his retirement earlier this year.

MORE EMPHASIS ON GROWING BRANDS

The company is also giving more priority to the executives in charge of business expansion and non-McDonald's brands, which are expected to grow, Greenberg said.

For example, Jeff Kindler, currently chairman and chief executive of the company's Boston Market unit, was named president of new brands, overseeing the Aroma Cafe, Boston Market, Chipotle Mexican Grill, Donatos Pizza, and Pret A Manger chains.

“Jeff Kindler's going to be the line of sight for all of our new brands,” Greenberg said.

Responding to inquiries about why McDonald's did not bring in new blood as part of the management restructuring, he stressed that both Kindler and Feldman bring an outside perspective to the business.

Kindler, who also serves as general counsel for McDonald's, came to the company five years ago from General Electric Co., where he served as a litigator, while Feldman left his post as a former senior vice president at Pizza Hut in 1994, he said.

McDonald's said that it named Gloria Santona, vice president and general counsel for McDonald's U.S.A., to succeed Kindler as general counsel for the corporation.

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