| LOS ANGELES, March 17
LOS ANGELES, March 17 McDonald's Corp
investors will vote soon on whether to give the franchisees who
operate most of the fast-food chain's restaurants the
opportunity to elect a board member, the proponent of a
shareholder proposal said on Friday.
The proposal, which faces long odds of success, is believed
to be the first of its kind and has attracted great interest in
the franchise community, which includes not only restaurants but
also hotels and convenience stores among other businesses.
Roughly 85 percent of the company's restaurants are operated
by franchisees, who pay rent and royalties to McDonald's.
McDonald's long-term goal is to raise that to 95 percent.
"We think franchisees should be in the room when the
company's most important decisions about operating and strategy
are being made," said Maureen O'Brien, director of corporate
governance at Segal Marco Advisors, which provides advice to
pension plans and oversees a trust owning more than 5,000
O'Brien said the proposal was being made on behalf of
investors, not franchisees.
McDonald's, which petitioned regulators to omit the proposal
from the ballot at its upcoming shareholder meeting, did not
But the company, which has been in turnaround mode for two
years, recently said that franchisee cash flow growth is at or
near all-time highs in many markets around the world.
Franchisees recently have tangled with McDonald's over
everything from restaurant renovations to the popular but
margin-squeezing Dollar Menu.
O'Brien said the U.S. Securities and Exchange Commission
rejected McDonald's request, meaning the proposal will appear on
the McDonald's proxy due in the coming weeks.
Under the proposal, McDonald's would create a new class of
stock that does not have monetary value but would allow
franchisees to elect one director, O'Brien said.
The proposal is a long shot, but it could mark a big change
in the board dynamic at McDonald's and other heavily franchised
U.S. restaurant chains if adopted, restaurant analysts and
"If you put a franchisee on the board, it could potentially
have a major impact on the direction of the company. It's a
really significant role," said Bob Goldin, partner and
co-founder of food industry strategy firm Pentallect Inc.
"If this happens, it won't just be McDonald's," Goldin
added, noting that McDonald's is a bellwether for business.
McDonald's has not yet set a date for its annual shareholder
meeting. The event was held on May 26 last year.
(Additional reporting by Ross Kerber in Boston; Editing by Tom