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McDonald’s Stock Doubled in 4 Years Under Fired ‘Lovin’ it’ CEO

Last Updated September 23, 2020 1:15 PM
Mark Emem
Last Updated September 23, 2020 1:15 PM
  • McDonald’s stock is up 10% this year after hitting an all-time high in August.
  • Steve Easterbrook’s exit will not lead to a change of strategy according to the incoming CEO.
  • The fast-food chain prohibits even consensual relationships between executives and their juniors.

Outgoing McDonald’s (NYSE: MCD) CEO Steve Easterbrook may have paid the ultimate price for an office romance, but he has already won the hearts of investors.

During his four year stint at the fast-food chain, McDonald’s stock has nearly doubled in price. Easterbrook was appointed on March 1st, 2015. Then, the stock had opened the month at $98.92. Currently, McDonald’s stock is at $193.94, an increase of 96.6% in a period of a little over 55 months.

McDonald’s stock price chart | Source: TradingView

Easterbrook, who is exiting the company for engaging in a ‘consensual relationship with an employee’ against McDonald’s fraternization policy, also presided at a time when the company’s stock reached its all-time highs. In August the stock hit $221.93. This was an increase of about 125% from the stock’s opening price in March 2015.

Having closed 2018 at $177.57, the stock of the fast-food chain is now nearly 10% up since the year started.

Easterbrook wrote in an email to employees:

As for my departure, I engaged in a recent consensual relationship with an employee, which violated McDonald’s policy. This was a mistake.

McDonald’s sales ballooned under Steve Easterbrook

The stock growth under Easterbrook came as McDonald’s revamped menus and capital investments boosted sales. For instance, in 2016 the fast food chain introduced all-day breakfast across the United States. Under Easterbrook, McDonald’s also switched to using fresh beef patties in its quarter-pound burgers in a bid to compete with rivals such as Wendy’s. In June the fast-food chain reported that sales of the fresh-beef quarter pounder had increased by 30% since the rollout .

Under his leadership, McDonald’s has also increased investments in technological upgrades to enhance service delivery.

In a letter announcing his departure , Easterbrook noted that under his leadership the fast-food chain had ‘achieved 17 consecutive quarters of growth’.

Not lovin’ it

Not everything has been smooth at McDonald’s during Easterbrook’s reign though. The fast-food chain has been under pressure to become more employee-friendly for instance. This has included raising the minimum wage and putting in place measures to protect employees from sexual harassment.

Easterbrook, who is British, has also come under scrutiny over his pay. In 2017 his total compensation was $21.8 million while last year’s pay package amounted to $15.9 million. This contrasts sharply with McDonald’s median employee salary of around $7,500. In 2017 he earned 2,900 times the median employee salary while last year it was about 2120 the median employee salary.

The newly promoted

The Briton will be succeeded  by the immediate former president of McDonald’s USA, Chris Kempczinski. The new president of McDonald’s USA  will be Joe Erlinger – he was previously the company’s head for international operated markets.

Even as he departs, Kempczinski has ruled out a radical change in strategy. Speaking to the Wall Street Journal, Kempczinski said there’s no need to veer away  from Easterbrook’s technology-focused vision, including offering a drone burger-delivery service:

“There isn’t going to be some radical, strategic shift. The plan is working.”