Nell Minow, a co-founder of governance advisory firm GMI Ratings, who has been dubbed the “the queen of good corporate governance”, said McDonald’s should immediately move to shake up its “dinosaur” board.
“This board has been a serial offender in overpaying its top executives and inadequate strategic planning,” she said. “The McDonald’s board is long overdue for an overhaul. The first step should be sitting down with the company’s largest shareholders and, yes, its employees, to figure out what they need to do to find directors who are more in touch with today’s trends and challenges.
“This sort of thing was prevalent in the 1960s; it was not surprising through the 90s. But there has been a lot of house clearing post-Enron, the financial crisis, and the dotcom crash era. Not, it seems, at McDonald’s,” she said. “It raises very big red flags.”
Minow said the 17 year-tenure of the governance committee was particularly worrying, as it makes it less likely that outsiders will be appointed. “Generally speaking, 12 years is considered the maximum tenure. Any more than and you begin to think of them [the ‘non-executive directors] as insiders rather than outsiders.”
Minow, who takes such a strong stance on good corporate governance that she once advised shareholders to vote against her father, former Federal Communications Commission (FCC) chairman Newton Minow, said that if McDonald’s were performing well the poor governance could perhaps be overlooked, but not with a company rapidly losing sales and customers.
She said the company must also bring the board’s average age “down at least a couple of decades”.