The wheels of McDonald’s lauded succession planning are now in motion.
The fast food giant announced on Wednesday night that Jim Skinner, who led the company for seven-and-a-half years, is retiring. McDonald’s (MCD) president and COO Don Thompson will step into the top job on July 1.
Fortune profiled Skinner last summer, when we described his leadership as having brought on nothing short of a Golden Age for the Golden Arches. Last year’s profits hit $5.5 billion, more than double what they were in 2004, the year Skinner took over. The stock reached an all-time high of $102.22 on January 20.
Beyond delivering stellar financials, Skinner also developed a deep bench; he cared deeply about succession planning at all levels of the company. He became CEO under tragic circumstances, after former CEO Jim Cantalupo died of a heart attack and Cantalupo’s successor underwent treatment for cancer.
Thompson’s biggest challenge as CEO will be to maintain the momentum that took hold on Skinner’s watch. Last May, I interviewed Thompson at McDonald’s headquarters in Oak Brook, Ill., while reporting the Skinner profile. “He has been one of the strongest mentors I’ve ever had,” he said of his boss. “He’s given me tremendous room in terms of the day-to-day business of McDonald’s.”
The no-nonsense Skinner, who spent 41 years with the company, is an operations guru with a penchant for always putting the customer first. In our 2011 story, we noted that Skinner had his own stash of the old type of McDonald’s coffee cup lids, because even though customers liked the new design, he really didn’t.
At the time, I tried to get Skinner to talk about retirement, but he only joked that he would retire when he ran out of his supply of lids.
The following are edited excerpts of one of Skinner’s first interviews since Wednesday night’s announcement.
Fortune: So you ran out of lids?
Jim Skinner: I assessed my lid collection, and I think I’ve got about 25 years left, so I’ll be taking those with me.
Everybody’s asking this question, and I think it’s the perfect time for McDonald’s. The true measure of a successful succession plan is manifested by the CEO handing off at the right time. In many cases, that’s sooner rather than later.
Some other people have also said, “It’s a little sooner than we thought.” I’m 67 years old, I’ve been here 41 years, and I had 10 years in the Navy before that. What better time than now, when the company’s performing at the highest level ever and there’s the opportunity to pass it on to someone who’s more than ready and capable of delivering sustained growth well into the future.
Succession planning has been a priority for you. Can tell you me how long this has been in the works?
I basically felt the responsibility to the board of directors to be sure I provided them with someone who could run the company when I’m gone. Until I was capable of doing that I would not have left, and it takes time. Don’s been in the [COO] job for two years. I’ve been tutoring him and mentoring him and will continue to do so over the next 90 days. But he’s a very talented guy, 22 years at McDonald’s, ran the U.S. company. As I like to say, he’s the real deal.
What will be the biggest challenge for the company going forward?
The challenge stays the same: how do you deliver hot food fast in a clean environment, great price, everyday affordability, develop your people, and make sure you continue to develop the talent and develop the leadership team to be able to execute the strategies of McDonald’s over the long term.
Right now, we have headwinds on commodities, and headwinds on currency. Economies are not exactly robust, particularly in Europe. But that’s cyclical. We’ve been through that before so it comes with the territory, and the team is well developed and well versed in terms of handling those challenges.
Forty-one years is a long time. Do you think you’re going to have a hard time letting go? You spent your whole career after the Navy at McDonald’s.
First of all, I don’t know the answer to that question, because I haven’t let go yet. But I don’t think so.
One of the directors said, “That’s really a class act, because one could argue you could stay here as long as you want.” There are a lot of people who would not be willing to step away. You can’t wait too long. You have to go when the time is right, even when, in fact, it turns out to be a surprise to the analyst community or the media.
Is there anything you’ve wanted to accomplish that you just feel like you haven’t had the time to do?
I left nothing unturned of what I wanted to get done. The extraordinary success we’ve had has been even a little bit of a surprise to me. Let’s be realistic. If you would have told me seven-and-a-half or eight years ago, when I was vice chairman, with the trials and tribulations of what was going on then, that we’d be a $100 billion company [in market capitalization] today and have a 21.3% five-year compound on the annual shareholder return, you just wouldn’t have been able to say that’s reasonable.
Do you consider that your legacy?
The results speak for themselves, but I think the real legacy is the talent management and leadership development and the people. If you get the people right, the rest is easy.
How do you think Don’s tenure will differ from your own, both in terms of his leadership style and also the external factors he might face?
Everybody is going to have their own style. I think Don’s style will be different from mine. Just in terms of his presence, he’s more of a charismatic guy, he doesn’t have the same sense of humor that I have — few do. He’s 48 years old. When I came into the job, I had just turned 60. My life and what I had accomplished and what I’d already lived through was just different. So Don will have a different view of things, handle things a little bit differently relative to people, but the fundamental focus of continuous improvement will not be different.
There will always be, I suppose, personality differences. But Don will mature quickly. You can’t figure out how to be a CEO until you are one. You can look at it every day and watch someone else do it, but until you’re sitting there by yourself and you feel the yoke of responsibility, and, in this particular case of McDonald’s, 1.7 million people waiting for your next move, you don’t feel that responsibility until you get it.