RPT-NEWSMAKER-McDonald's new CEO Thompson a study in contrasts

Mon Mar 26, 2012 8:00am EDT

By Lisa Baertlein

March 23 (Reuters) - Don Thompson's journey to the top spot at McDonald's Corp started in front of a computer, not a deep fryer.

For many executives at McDonald's, including retiring CEO Jim Skinner, the first rung on the corporate ladder began in a restaurant -- logging long hours flipping burgers, bagging fries and manning busy drive-thru windows.

Thompson, an electrical engineer recruited in 1990 from the fighter-jet maker that is now Northrop Grumman Corp, got his start designing robotic equipment for transporting food and making control circuits for cooking equipment.

People who know the man set to become McDonald's first African-American chief executive on July 1 say he possesses the relatively rare mix of social prowess and sophisticated mathematical skills.

"Don is very intelligent, he's very strategic -- and he's tactful. You don't often find tact in the people who are intelligent and strategic," said John Kendall, a Chicago patent attorney who met Thompson at an event for the historic black fraternity Alpha Phi Alpha when they were attending neighboring colleges, and worked with him at Northrop.

As the new chief of the world's biggest fast-food chain, Thompson, 48, faces the challenge of adding to nearly nine years of sales gains at established restaurants. Wall Street gives him high marks for overseeing the successful U.S. McCafe roll-out of lattes, frappes and other beverages. He also flexed his operational muscle in various U.S. roles along his path, measuring store performance with an engineer's zeal and using the resulting statistics to tweak operations.

But some investors worry that Thompson, who has never had an international posting, is taking the helm at a time when the company's overseas business has never been more important. McDonald's faces a potential slowdown in debt-troubled Europe, the company's biggest market for sales, and is pushing to grow in places like China, where rival Yum Brands Inc has a big lead.

"He just doesn't have as diverse of a set of experiences as some of his predecessors," said Janna Sampson, co-chief investment officer at OakBrook Investments, who has met Thompson. However, she said the company's deep management bench likely would compensate: "I'm not troubled to the point where I would get out of the stock."

McDonald's declined to make Thompson available for an interview.

NICE GUY MAKES GOOD

Thompson is described as soft-spoken without being a pushover, approachable and humble. Friends say he's given to broad smiles, bear hugs and hearty handshakes.

At Northrop, his league basketball team knew him as a player who cleared the way for his friends to shine.

Today, he is poised to become one of the most powerful U.S. CEOs -- and one of the few who are African-American.

NBA star LeBron James, who is a forward for the Miami Heat and is featured in McDonald's commercials, has high praise for Thompson. James, who has worked directly with the new CEO, told Reuters that Thompson is an "inspiration" and said McDonald's is in good hands.

"Don is an amazing leader who will make an incredible CEO. He is a friend, mentor, and business partner," James said in an email.

Roland Martin, a reporter, CNN political analyst and fellow member of Alpha Phi Alpha, has known Thompson since the mid-2000s and calls the incoming CEO "one of the most down-to-earth brothers I've met."

Martin has seen Thompson, now McDonald's chief operating officer, talk nuts-and-bolts with franchisees. He has also been on the receiving end of the executive's requests to talk about McDonald's new oatmeal and espresso drinks on Twitter.

"He's really a personable guy -- serious about his job, but certainly loves to have fun," said Martin, who a couple of years ago spent a night hopping between two Atlanta parties with him.

"We were dancing ... our wives were having a good time. Don wasn't the guy who was standing on the walls saying, 'No, no, no, no ... I'm on the path to be CEO of McDonald's.' He was right there."

STICKING WITH THE PLAN

Thompson moved from engineering to operations after just a few years at McDonald's. He rose quickly through the ranks, holding key roles in the company's West and Midwest divisions before being named McDonald's USA president in 2006.

Four years later, he was promoted to chief operating officer -- a position seen as a stepping stone to the top job.

Analysts and McDonald's both say Thompson played an important part in executing the company's "Plan to Win," which has resulted in its best-ever financial performance. That strategy has included extending operating hours, sprucing up restaurants and expanding menus to include value-priced food, "premium" hamburgers and espresso drinks.

Separately, McDonald's has addressed concern over its role in the U.S. obesity crisis by adding a serving of apples and shrinking the french fry portion in its Happy Meals for children.

Still, some worry that Thompson may not fully appreciate how things like menu changes play out in the real world.

"There's general concern that he doesn't have any real restaurant experience," said Richard Adams, a former McDonald's franchise director and restaurant owner, who now advises McDonald's franchisees.

Sticking to McDonald's current business strategy will be crucial to maintaining the chain's lead over fast-food competitors and supporting the company's stock price, which is trading near record levels.

"If Don doesn't try to change too many things too fast, he'll be OK," Adams said.