Shareholders of McDonald’s Corp. met Thursday at the company’s Oak Brook, Ill., headquarters and rejected activist stakeholders’ calls for annual reports on executive compensation and the company's impact on nutrition and human rights.
The company’s leadership, including chief executive Don Thompson, chief financial officer Pete Bensen and chief operating officer Tim Fenton, detailed several key points from McDonald’s stated projections for system growth and the company’s ongoing Plan to Win. However, as is often the case with McDonald’s annual shareholder meeting, the brand’s executives spent much of the meeting defending the chain’s marketing practices and supply chain policies from the criticisms of certain shareholders.
McDonald’s shareholders approved by a wide margin the company’s proposals of electing all its candidates to the board of directors, as well as the board’s compensation plan and the nomination of Ernst & Young as McDonald’s independent auditor for 2013.
Four shareholder proposals were roundly rejected, including a call for McDonald’s to report annually the ratio between the total compensation for the chief executive and the lowest-paid full-time crew member, proposed by The Marco Consulting Group Trust. A measure proposing that McDonald’s executives hold on to at least 25 percent of company shares they receive as equity compensation until retirement age also failed.
In addition, more than 70 percent of shareholders voted against a proposal requiring an annual report of McDonald’s Corp.’s impact on human rights around the world. The proposal to require an annual report on the brand’s nutrition policies and the impact they have on public health, namely obesity, garnered only 6.3 percent of shareholders voting in favor.
In a statement following the meeting, the last proposal’s sponsor, Corporate Accountability International, called the vote “an impressive showing, considering the board’s opposition.”
“The vote comes as mounting public pressure, local food policies and sagging sales conspire to dampen McDonald’s prospects if it doesn’t change course in responding to today’s epidemic of diet-related disease — an epidemic advocates of the resolution say is being driven in large part by the burger giant,” Corporate Accountability wrote.
During the meeting, Thompson responded that the reality of McDonald’s adding more fruit and vegetables to its menu, complying with voluntary guidelines for marketing to children and supporting Ronald McDonald House Charities did not match the pressure group’s depiction of the company as an irresponsible corporate citizen.
“As we talked about last year, we provide high-quality food and always have,” he said. “It’s real beef, tomatoes, eggs and dairy, and we do it in a way that’s also affordable. I’ll make the same comment I made last year: Of our 1.8 million employees, many of them are parents. If any of us believed we were hurting our own children, we wouldn’t work at McDonald’s.”
Concerns from communities of color
Another comment during a question and answer session revealed a relatively new criticism that McDonald’s marketing targets communities of color with its messages about unhealthful food. Tanya Fields, executive director of The Black Project, charged that the chain’s marketing is more pervasive in communities like her predominantly black neighborhood in Bronx, N.Y., and that McDonald’s partnerships with black athletes like Gabby Douglas and LeBron James target children like hers and undermine her ability to influence her children’s eating choices.
Thompson responded that the criticism “hit close to home” for him as a black man and parent.
“We do not, have not and will not try to target people of color with some kind of subversive [marketing],” he said. “The epidemic of obesity — relative to these neighborhoods, like the one I grew up in — doesn’t come from McDonald’s. It’s not about McDonald’s alone, and we can be part of the solution, and we’ll continue to do that.
“We do take that responsibility seriously,” he added, “but we’re not the brand that you describe. I hope you grow to understand that, as I have the past 23 years [with McDonald’s].”
When questioning turned toward business opportunities for growth, the brand’s leaders reiterated that McDonald’s would open between 1,500 and 1,600 restaurants this year, with the majority of them coming in emerging markets like China.
Fenton, who before rising to chief operating officer was the president of the Asia/Pacific, Middle East and Africa division, said China would have 2,000 McDonald’s restaurants by this time next year and would be the second-fastest country to hit that benchmark after the United States.
“What’s the next China?” he said. “We’re looking at the BRIC countries, Southeast Asia, Eastern Europe and Saudi Arabia. We’ll open in Vietnam in the fourth quarter or the first quarter of next year. There’s still a lot of growth in established markets as well.”
McDonald’s operates or franchises more than 34,000 locations around the world, including more than 14,000 in the United States.