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At McDonald's, the end of an era

March 22, 2012: 12:01 PM ET

A Wall Street analyst reflects on his decades-long coverage of McDonald's, and the men who have sat at the helm of the fast food chain.

By Howard Penney, Hedgeye

Jim Skinner

Jim Skinner

McDonald's announced that CEO Jim Skinner will retire in June and the company's president and Don Thompson will take the helm effective July 1. Since I have been covering McDonald's, there have been five different CEOs and none has stepped down as decorated as Jim Skinner. The timing of his decision is surprising but, given how long he has been at the company – 41 years – him stepping down is not an undue cause for concern.

Mike Quinlan (CEO from March 1987 – July 1998): The Quinlan era was very different. The McDonald's (MCD) of today is not the public company it was in the 1990s. Quinlan did not have a relationship with Wall Street -- in fact he shunned analysts. His primary achievement was the dramatic overseas growth of McDonald's. The stock was up more than 400% during his tenure.

Jack Greenberg (CEO from July 1998 – January 2003): Unfortunately Greenberg held the top spot during a tumultuous period for the company. Excessive growth, particularly in the U.S., was a problem for McDonald's. It was Greenberg's idea to launch salads in the spring of 2003 which lead to the first positive month of same-store sales after 13 painful months. What he could not shake off was seven quarters of earnings disappointments. The stock was down roughly 60% during his tenure.

Jim Cantalupo (CEO from January 2003 – April 2004): Cantalupo gets credited with bringing about the "Plan to Win" strategy in 2003, but passed away just as the company was turning the corner. The stock has gained 60% during his short tenure, a period that ended up being the beginning of a long upward trend for the stock.

Charlie Bell (CEO from April 2004 – November 2004): It was during this period in McDonald's' history that it became the role model company for always having a succession plan in place. Bell passed away mere months after taking the reins at MCD.

Jim Skinner (CEO November 2004 – June 2012): When Skinner took the helm at McDonald's I joked to myself that it was his job not to mess things up. With the stock up more than 200% during his tenure, he certainly did his job!

The question that comes to mind most is, "why now?" Is it just a coincidence that the company recently announced its first earnings disappointment of the Skinner era? Does he see something investors do not? The economic turmoil in Europe, among other factors, poses a significant challenge to McDonald's going forward.

Of course, it is difficult to know why Skinner is stepping down now but after 41 years with the company he deserves some time off. It will be difficult for Thompson to achieve the same results that Jim Skinner did but, as a veteran of 22 years, he is also a very capable executive.

To those of us that live and breathe McDonald's every day, Skinner's retirement itself is not a surprise, but the timing was somewhat surprising. Thompson was widely-expected  to take over but we are left wondering if there is any reason for the change taking place in July.

With Rory Green. Follow Howard Penney on Twitter @hedgeyeHWP.

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Hedgeye, a real-time investment research firm founded in 2008 by former Carlyle-Blue Wave portfolio manager Keith McCullough, operates as a virtual hedge fund. Staffed by research analysts from across Wall Street, Hedgeye offers fundamental, macro and sector analysis, present picks in a transparent way to its clients. It has built a stable of subscribers, which includes hedge funds and mutual funds, and recently launched a retail investor product.

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