Preliminary Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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McDonalds Corporation
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[Cover page to come]
CONTENTS
Notice of 2011 Annual Shareholders Meeting
TO McDONALDS CORPORATION SHAREHOLDERS:
McDonalds Corporation will hold its 2011 Annual Shareholders Meeting on Thursday, May 19, 2011, at 9:00 a.m. Central Time, in the Prairie
Ballroom at The Lodge at McDonalds Office Campus, Oak Brook, Illinois. The registration desk will open at 7:30 a.m. At the meeting, shareholders will be asked to:
1. |
Elect five Directors, each for a three-year term expiring in 2014; |
2. |
Cast an advisory vote on the appointment of an independent registered public accounting firm to serve as independent auditors for 2011; |
3. |
Cast an advisory vote on executive compensation; |
4. |
Cast an advisory vote on the frequency of future advisory votes on executive compensation; |
5. |
Vote on three proposals to eliminate super-majority voting requirements in our Restated Certificate of Incorporation; |
6. |
Cast advisory votes on [five] shareholder proposals, if presented; and |
7. |
Transact other business properly presented at the meeting. |
Your Board of Directors recommends that you vote FOR the Boards nominees for Director, FOR the approval of the independent
auditors, FOR the approval of our 2010 executive compensation, in favor of an ANNUAL advisory vote on executive compensation, FOR the elimination of the super-majority voting requirements in our Restated
Certificate of Incorporation, and AGAINST each shareholder proposal.
Your vote is important. Please note that in the absence of
your specific instructions as to how to vote, brokers may only vote on the approval of the appointment of the independent auditors and the three proposals to eliminate super-majority voting requirements in our Restated Certificate of Incorporation,
but no other proposals described in this Proxy Statement. In order for your vote to be counted, please make sure that you submit your vote to your broker.
If you are unable to attend the meeting in person, you may listen to a live webcast by going to www.investor.mcdonalds.com and selecting the appropriate link under Webcasts. The Annual
Shareholders Meeting webcast will be available for a limited time after the meeting.
If you plan to attend the meeting in person,
please be aware that you must pre-register with McDonalds Shareholder Services. Please see page [ ] of this Proxy Statement for information about how to pre-register.
Please consider the issues presented in this Proxy Statement and vote your shares as promptly as possible.
Thank you.
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By order of the Board of Directors, |
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Gloria Santona Corporate
Secretary |
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Oak Brook, Illinois April 8,
2011 |
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McDonalds Corporation 2011 1 |
Corporate governance and Board matters
CORPORATE GOVERNANCE
Corporate governance practices remain an important focus for all public companies, including McDonalds. Although our Proxy Statement responds to the requirements of the Securities and Exchange Commission
(SEC) and the New York Stock Exchange (NYSE) in this area, we believe that good governance is more than compliance with a collection of regulations or adherence to a one size fits all approach advocated by some. At McDonalds, good
governance is guided by the values that have been part of our business for more than 50 yearsintegrity, fairness, diligence and ethical behavior, and is guided by the relationships among our Board of Directors (Board), our management and our
shareholders. We believe that our proven governance practices contribute to the strong alignment among the Company, its franchisees and supplierswhat we refer to as the McDonalds System. This alignment has been a key ingredient to
McDonalds success over many years.
We believe the foundation of good governance starts with a Board whose independence,
stability and diversity ensures candid and constructive engagement with management and each other about all aspects of McDonalds business. Our Board has been led by an independent Chairman, Andrew McKenna, since 2004. Mr. McKenna was
appointed to facilitate a transition to a new Chief Executive Officer after the untimely death of our previous Chairman and Chief Executive Officer at a time when McDonalds was in the early stages of implementing its new business strategy, the
Plan to Win. Independent leadership of the Board allowed management to focus fully on operations during this period. At the same time, it assured that the Chief Executive Officer had an appropriately strong counterpoint on the Board when considering
the challenges associated with a change in strategy. The Board has retained this structure because it has worked well to assure constructive engagement with the Chief Executive Officer and effective oversight of management as a whole.
Our Director nomination process seeks persons with the initiative, time, attributes and experience to be effective contributors. In addition,
Directors must limit outside activities and abide by a specific code of conduct so that we can be confident about their commitment. To underscore their alignment with shareholders, Directors receive stock-equivalent compensation and must own a
specified value of McDonalds common stock. Our independent Directors meet regularly without management present to evaluate the Companys results, plans and challenges, as well as managements performance and the strength and
development of our leadership bench. We refer to these meetings as executive sessions. In 2010, the full Board met eight times. Our independent Directors also met in executive session six times. Directors are expected to attend the Companys
Annual Shareholders Meeting, and all Board meetings and meetings of the Committees of the Board on which they serve. In 2010, all Directors attended the Annual Shareholders Meeting. Nine of our Directors attended 100% of all Board
meetings and meetings of the Committees of the Board on which they serve, and no Director attended fewer
than 88% of all Board meetings and meetings of the Committees of the Board on which they serve.
As part of our governance processes, the Board is actively engaged in overseeing and reviewing the Companys strategic direction and objectives, taking into account (among other considerations) the
Companys risk profile and exposures. The Board conducts an annual in-depth review of the business, which includes consideration of risk exposures. The Board also regularly reviews the development of leaders, and short and long-term succession
plans for the Chief Executive Officer and other senior management positions.
Board oversight is also effected through six standing
committees. They are the Audit, Compensation, Governance, Corporate Responsibility, Finance and Executive Committees. Each of them operates under a separate written charter to promote clarity in their responsibilities and accountability among their
members. These Committees work in a coordinated way to address recurring matters and respond to unanticipated events, and they are discussed in greater detail beginning on page [ ] of this Proxy Statement.
Although the Board as a whole has responsibility for risk oversight, these Committees also oversee the Companys risk profile and exposures
relating to matters within the scope of their authority and report to the Board about their deliberations. The Audit Committee considers audit, accounting and compliance risk, and it periodically receives reports from the head of internal audit, the
head of corporate tax, the General Counsel, the Chief Compliance Officer and the Chief Information Officer. The Audit Committee annually reviews the Companys policies with respect to financial risk assessment and financial risk management. The
Audit Committee is also responsible for discussing with management, internal audit and Ernst & Young the Companys major risk exposures (whether financial, operational or otherwise), and the steps management has taken to monitor and
control such exposures, and for evaluating managements process to assess and manage the Companys enterprise risk issues. The Compensation Committee considers the level of risk posed by our compensation programs, including incentive
compensation programs in which the CEO and other employees participate. The Governance Committee monitors potential risks to the effectiveness of the Board, notably Director succession and Board composition, and the principal policies that guide the
Companys governance. The Corporate Responsibility Committee reviews risks to the business that may result from trends in corporate social responsibility, including risks pertaining to the environment, health and safety issues of the Company
and its supply chain, employment practices, government relations initiatives, diversity initiatives, and marketing practices that may affect the Companys brand reputation. The Finance Committee annually reviews the Companys worldwide
insurance program.
The Board continually reviews its governance practices to ensure their relevance and appropriateness for the
Company and all of our shareholders. Our governance processes also address matters that are responsive to shareholder interests. This year
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we are proposing that shareholders approve amendments to the Companys Restated Certificate of Incorporation to eliminate super-majority voting requirements. For the first time, our
shareholders will also have the opportunity to provide an advisory vote on the Companys executive compensation program and our Board has recommended that shareholders approve an annual advisory executive compensation vote for future years.
McDonalds is proud of its governance structure, but is mindful that good governance is a journey, not a destination. We welcome
shareholder communications about our practices, which can be sent to the Company as described on page [ ] of this Proxy Statement. We are committed to continuously improving our governance practices to promote an effective
collaboration of management and our Board that ensures continued alignment of the McDonalds System and that yields value for all of our shareholders.
DIRECTOR INDEPENDENCE
Our Corporate Governance Principles require that all Directors
except management Directors be independent. The Board is responsible for determining the independence of each Director, and the Board has adopted Standards on Director Independence for this purpose. The Board considers relationships involving
Directors and their immediate family members that may implicate any of these Standards or other applicable law or the listing standards of the NYSE, and relies on information derived from Company records, questionnaires completed by Directors and
inquiries of other relevant parties.
The relationships reviewed by the Board as part of its most recent independence determinations
consisted of commercial relationships with companies:
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at which Board members then served as officers (including Mattel, Inc., Inter-Con Security Systems, Inc. and NIKE, Inc.); |
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in which Board members or their immediate family members then held an aggregate 10% or more direct or indirect interest (including Schwarz Supply Source and
Inter-Con Security Systems, Inc.); and |
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at which Board members then served as outside Directors (including Aon Corporation, Bank of America Corporation, Chevron Corporation, ConAgra Foods, Inc.,
Discover Financial Services, Exelon Corporation, Hewitt Associates, Inc., Jones Lang LaSalle Incorporated, Nordstrom, Inc., The Walt Disney Company and Wells Fargo & Company). |
The relationships with the companies noted above involved McDonalds purchase of products and services in the ordinary course of business
that were made on arms-length terms in amounts and under other circumstances that did not affect the relevant Directors independence under the Boards Standards on Director Independence or under applicable law and listing standards.
The Board also reviewed donations made by the Company to not-for-profit organizations with which Board members or their immediate
family members were affiliated by membership or service as directors or trustees.
Based on its review of the above relationships, the Board determined that none of its
non-management Directors has a material relationship with the Company and that all of them are independent within the meaning of the Boards Standards on Director Independence, as well as applicable law and listing standards. Currently, our
non-management Directors are Susan E. Arnold, Robert A. Eckert, Enrique Hernandez, Jr., Jeanne P. Jackson, Richard H. Lenny, Walter E. Massey, Andrew J. McKenna, Cary D. McMillan, Sheila A. Penrose, John W. Rogers, Jr., Roger W. Stone and Miles D.
White.
BOARD COMMITTEES
Our Corporate Governance Principles provide for six standing committees: Audit, Compensation, Governance, Corporate Responsibility, Finance and Executive.
Charters for each of the committees are available on the Companys website at www.governance.mcdonalds.com.
The Audit
Committee oversees financial reporting matters and is critical in setting the right tone at the top for accounting, control and compliance matters. The Audit Committee appoints the Companys independent auditors and evaluates
their independence and performance. The Audit Committee reviews with the internal auditors and the independent auditors the overall scope and results of their respective audits, the adequacy and effectiveness of the Companys internal
accounting and financial controls. The Audit Committee also reviews the Companys material financial disclosures and pre-approves all audit and permitted non-audit services. In addition, the Audit Committee annually reviews the adequacy and
appropriateness of the Companys compliance programs, and receives regular updates about compliance activities. The Audit Committee also annually reviews the Companys disclosure controls and procedures. The Audit Committee also reviews
related person transactions and makes recommendations to the Board about those matters. Members of the Audit Committee are Directors Hernandez (Chairperson), Massey, McMillan, Penrose and Stone. All members of the Audit Committee are independent
within the meaning of the listing standards of the NYSE. The Board determined that Directors Hernandez, McMillan and Stone qualify as audit committee financial experts and that each member of the Audit Committee is financially literate,
all within the meaning of applicable rules of the SEC and the listing standards of the NYSE. In 2010, the Audit Committee met nine times, including meetings to review the Companys annual and quarterly financial reports prior to filing with the
SEC.
The Audit Committee Report, a discussion of the Policy for Pre-Approval of Audit and Permitted Non-Audit Services and a
summary of Auditor Fees and Services can be found on pages [ ] of this Proxy Statement.
The Compensation Committee approves the Chief Executive Officers compensation based upon an evaluation of his performance by the independent Directors. Based on recommendations from management, the
Compensation Committee also reviews and approves senior managements compensation and approves compensation guidelines for all other officers of the Company. The Compensation Committee administers the Companys incentive and equity
compensation plans and, in
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McDonalds Corporation 2011 3 |
consultation with senior management, reviews and approves compensation policies. The Compensation Committee has oversight for the detailed disclosure requirements regarding executive
compensation. Members of the Compensation Committee are Directors Eckert (Chairperson), Arnold, Lenny, Rogers and White. All members of the Compensation Committee are independent within the meaning of the listing standards of the NYSE and are also
outside directors within the meaning of Section 162(m) of the Internal Revenue Code and non-employee directors within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934. In 2010, the Compensation
Committee met five times.
The Compensation Committee Report can be found on page [ ] of this Proxy
Statement and additional information about the Committees processes and procedures for the consideration and determination of executive compensation can be found in the Compensation Discussion and Analysis, also beginning on page
[ ] of this Proxy Statement.
The Governance Committee monitors our Board structure and operations.
As part of its functions, the Governance Committee sets criteria for Board membership; searches for and screens candidates to fill Board vacancies; recommends appropriate candidates for election each year and, in this regard, evaluates individual
Director performance; assesses overall Board performance; considers Board composition and size; recommends to the Board the compensation paid to non-management Directors and evaluates the Companys corporate governance processes. The Governance
Committee also considers and makes recommendations to the Board regarding shareholder proposals for inclusion in the Companys annual Proxy Statement. In addition, under our majority voting standard for uncontested Director elections, if an
incumbent Director fails to be re-elected, the Governance Committee is responsible for making a recommendation to the Board about whether to accept the resignation tendered by a Director. Members of the Governance Committee are Directors McKenna
(Chairperson), Eckert, Hernandez, Jackson, Stone and White. All members of the Governance Committee are independent within the meaning of the listing standards of the NYSE. In 2010, the Governance Committee met seven times.
The Corporate Responsibility Committee acts in an advisory capacity to the Companys management with respect to policies and
strategies that pertain to the Companys responsibilities as a global corporate citizen and its reputation as a socially responsible organization. Members of the Committee are independent Directors Massey (Chairperson), Arnold, Penrose and
Rogers. In 2010, the Corporate Responsibility Committee met four times.
The Finance Committee ensures that McDonalds dividend policy and share repurchase
program, are considered in appropriate detail in light of the Companys overall strategy and performance. The Finance Committee has principal oversight responsibility with respect to certain material financial matters, including the
Companys treasury activities, as well as acquisitions and divestitures that are significant to the Companys business. The Finance Committee annually reviews the Companys banking arrangements, and policies with respect to dividends
and share repurchase. Members of the Finance Committee are independent Directors Jackson (Chairperson), Lenny, McMillan, Rogers and Stone. In 2010, the Finance Committee met two times.
The Executive Committee may exercise most Board powers during the periods between Board meetings. Members of the Committee are Directors
Skinner (Chairperson), Eckert, Hernandez and McKenna. In 2010, the Executive Committee did not meet.
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DIRECTOR COMPENSATION
Under McDonalds Corporate Governance Principles, the Governance Committee recommends to the Board the form and amount of compensation for non-management Directors. Only non-management Directors are paid for
their service on the Board. The compensation structure for the non-management Directors is as follows: (i) an annual cash retainer of $90,000; (ii) an annual retainer fee of $20,000 for each Director serving as Chairperson of the Audit,
Compensation and Governance Committees and an annual retainer fee of $10,000 for each Director serving as Chairperson of other Board Committees; and (iii) stock equivalent units with a $130,000 value granted annually to each Director serving
for the entire calendar year, under the McDonalds Corporation Directors Deferred Compensation Plan. (Directors serving for a portion of the year receive prorated grants of stock equivalent units.)
The following table summarizes the compensation received by the non-management Directors in 2010:
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Name (a) |
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Fees Earned or Paid in Cash (1)(2) ($) (b) |
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Stock Awards
(3)(4) ($)
(c) |
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All other compensation
(5) ($)
(g) |
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Total
($) (h) |
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Susan E. Arnold |
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$90,000 |
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$130,000 |
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$10,000 |
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$230,000 |
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Robert A. Eckert |
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110,000 |
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130,000 |
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10,000 |
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250,000 |
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Enrique Hernandez, Jr. |
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110,000 |
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130,000 |
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10,000 |
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250,000 |
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Jeanne P. Jackson |
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100,000 |
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130,000 |
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230,000 |
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Richard H. Lenny |
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90,000 |
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130,000 |
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10,000 |
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230,000 |
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Walter E. Massey |
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100,000 |
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130,000 |
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10,000 |
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240,000 |
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Andrew J. McKenna (6) |
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110,000 |
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889,135 |
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10,000 |
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1,009,135 |
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Cary D. McMillan |
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90,000 |
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130,000 |
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10,000 |
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230,000 |
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Sheila A. Penrose |
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90,000 |
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130,000 |
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5,000 |
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225,000 |
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John W. Rogers, Jr. |
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90,000 |
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130,000 |
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10,000 |
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230,000 |
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Roger W. Stone |
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90,000 |
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130,000 |
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10,000 |
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230,000 |
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Miles D. White |
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90,000 |
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130,000 |
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10,000 |
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230,000 |
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(1) |
In 2010, the Chairperson of each of the Audit, Compensation and Governance Committees (Directors Hernandez, Eckert and McKenna, respectively) received an annual retainer fee of
$20,000. The Chairperson of each of the Corporate Responsibility and Finance Committees (Directors Massey and Jackson, respectively) received an annual retainer fee of $10,000 for service in these capacities. The Company reimburses non-management
Directors for expenses incurred in connection with attending Board, Committee and shareholder meetings, as well as attending McDonalds business meetings at managements invitation. |
On limited occasions, the Company may determine that it is appropriate for non-management Directors to be accompanied by their
spouses in connection with these meetings and/or at other events related to their service on the Board. In these circumstances, the Company also reimburses the spouses travel expenses. In addition, in accordance with our Corporate Governance
Principles, the Company reimburses reasonable expenses related to continuing education for our Directors.
(2) |
Non-management Directors may elect to defer all or a portion of their retainer and/or fees in the form of common stock equivalent units under the Companys Directors
Deferred Compensation Plan. Such deferrals, as well as the annual grant of common stock equivalent units described in note 3 below, are credited to an account that is periodically adjusted to reflect the gains, losses and dividends associated with a
notional investment in McDonalds common stock. The number of common stock equivalent units credited to a
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non-management Directors account is based on a per-share price equal to the closing price of McDonalds stock on the NYSE on the date the credit is made. Amounts credited to the
non-management Directors accounts are paid in cash, in a single lump sum after the non-management Director retires from the Board or dies or on the date specified by the non-management Director in a deferral election. If the non-management
Director has made a valid prior written election in accordance with the terms of the plan, all or a portion of the amount in the non-management Directors account may be paid in equal annual installments over a period of up to 15 years
beginning after retirement from the Board. |
(3) |
Represents the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (formerly SFAS 123R)
(FASB ASC Topic 718), as reported in our financial statements of (i) common stock equivalent units granted under the Directors Deferred Compensation Plan on December 31, 2010 to each non-management Director who served on the Board
during 2010; and (ii) in the case of Director McKenna, a special grant of 12,453 restricted stock units on June 9, 2010, awarded in recognition of Director McKennas service as non-executive Chairman of the Board, as described in note
6 below. |
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McDonalds Corporation 2011 5 |
(4) |
The aggregate number of outstanding stock awards held by each of the non-management Directors as of December 31, 2010 is set forth in the table below. Stock awards include
common stock equivalent units under the Directors Deferred Compensation Plan and, in the case of Director McKenna, both common stock equivalent units and restricted stock units: |
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Name |
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Aggregate number of outstanding stock awards
as of December 31, 2010 |
Susan E. Arnold |
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7,510 |
Robert A. Eckert |
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31,973 |
Enrique Hernandez, Jr. |
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54,421 |
Jeanne P. Jackson |
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41,196 |
Richard H. Lenny |
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16,877 |
Walter E. Massey |
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24,418 |
Andrew J. McKenna |
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180,554 |
Cary D. McMillan |
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23,413 |
Sheila A. Penrose |
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10,911 |
John W. Rogers, Jr. |
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28,883 |
Roger W. Stone |
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89,087 |
Miles D. White |
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2,782 |
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The aggregate number of
outstanding stock options held by each of the non-management Directors as of December 31, 2010 is set forth in the table below. For Director Stone, the options are held indirectly by a revocable trust, of which Mr. Stone is trustee. The
Company has not granted any stock options to non-management Directors since May 20, 2004.
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Name |
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Aggregate number
of outstanding stock options as of December 31, 2010 |
Susan E. Arnold |
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Robert A. Eckert |
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15,000 |
Enrique Hernandez, Jr. |
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Jeanne P. Jackson |
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10,000 |
Richard H. Lenny |
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Walter E. Massey |
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Andrew J. McKenna |
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4,998 |
Cary D. McMillan |
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Sheila A. Penrose |
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John W. Rogers, Jr. |
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15,000 |
Roger W. Stone |
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18,000 |
Miles D. White |
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(5) |
Represents Company matching gifts of charitable contributions to tax-exempt organizations for non-management Directors who participated in this program. This program is generally
available to the Companys employees and for the non-management Directors matches up to $10,000 of charitable contributions made to certain categories of tax-exempt organizations. The total cost of matching contributions made on behalf of
non-management Directors was $105,000 during 2010. |
(6) |
The amount reported in the Stock Awards column for Director McKenna represents the sum of (i) the $130,000 credit to his account under the Directors
Deferred Compensation Plan on December 31, 2010; and (ii) the aggregate grant date fair value of $759,135 computed in accordance with FASB ASC Topic 718 relating to the special award of 12,453 restricted stock units granted on June 9,
2010 in recognition of his service as non-executive Chairman of the Board. These restricted stock units will be paid out on the later of one year from the date of grant or Director McKennas retirement date. |
BOARD AND COMMITTEE EVALUATIONS
In accordance with our Corporate Governance Principles, the Governance Committee conducts an annual evaluation of the performance of the Board of Directors.
Individual Directors are evaluated periodically, but no less often than each time they are slated for re-election. In addition, each of the Audit, Compensation and Governance Committees annually conducts self-evaluations and each of the Corporate
Responsibility and Finance Committees conducts such evaluations at least every two years. Results of these evaluations are discussed at committee meetings and with the full Board.
CODE OF CONDUCT FOR THE BOARD OF DIRECTORS
Each year, Directors confirm that they
have read the Code of Conduct for the Board of Directors and will comply with its standards.
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DIRECTOR SELECTION PROCESS
The Company has a policy with regard to the consideration of Director candidates. Under the policy, the Governance Committee establishes criteria for Director nominees, screens candidates and evaluates the
qualifications of the persons nominated by or recommended by shareholders. The Governance Committee recommends Director nominees who are ultimately approved by the full Board. The Governance Committee considers candidates suggested by its members,
other Directors, senior management and shareholders in anticipation of upcoming elections and actual or expected Board vacancies. The Committee may, at the Companys expense, retain search firms, consultants and other advisors to identify,
screen and/or evaluate candidates.
The Governance Committee reviews the size and structure of the Board and considers Director
tenure, skills and experiences in determining the slate of nominees. All candidates, including those recommended by shareholders, are evaluated on the same basis in light of their credentials and the needs of the Board. The Governance Committee
seeks Directors with records of achievement in their chosen fields and experience relevant to the Companys scope, strategy and operations. Director candidates also are expected to possess certain qualities, such as integrity, independence of
mind, analytical skills, a commitment to serve the interests of shareholders, and a willingness to challenge management in a constructive and collegial environment, as well as an ability to exercise good judgment, and provide practical insights and
diverse perspectives. In selecting candidates, the Governance Committee and the Board take diversity into account, seeking to ensure a representation of varied perspectives and experience, although the Companys nomination policy does not
prescribe specific standards for diversity. Candidates also are evaluated in light of Board policies, such as those relating to Director independence and service on other boards, as well as considerations relating to the size, structure and needs of
the Board. As part of its consideration of Director succession, the Board and the Governance Committee monitor whether the Directors as a group meet the Companys criteria for the composition of the Board, including overall diversity of
perspective and experience.
Candidates with appropriate qualifications are interviewed in person, typically by the Chairman, the
Chief Executive Officer, a majority of the members of the Governance Committee and other available Directors. The Governance Committee also periodically evaluates all Directors in light of the above considerations and their contributions to the
Board.
Shareholders who wish to suggest candidates for nomination by the Board or who wish to directly nominate Director candidates
for election at the Companys 2012 Annual Shareholders Meeting should follow the procedures described in the section on Consideration of Director Nominations for the 2012 Annual Shareholders Meeting, which can be found on page
[ ] of this Proxy Statement.
DIRECTOR QUALIFICATIONS AND BIOGRAPHICAL INFORMATION
We believe that our Directors have the qualifications, skills and experience that are consistent with our policy for selection of Directors and that as a group,
they function collegially, constructively and effectively together in overseeing McDonalds business.
The Company is the leading global quick service restaurant retailer, and franchises and operates
McDonalds restaurants around the world. Each of our Directors holds, or has held, senior executive positions in large, complex organizations, many of which have significant international operations, as well as directorships at other U.S.
public companies and senior-level roles in charitable, civic and other not-for-profit organizations. In these positions, all of our Directors have demonstrated their leadership, intellectual and analytical skills, gained deep experience in core
management skills, such as strategy and business development, finance, risk assessment, and leadership development and succession planning, and have gained significant experience in corporate governance and oversight. These skills and experiences
are relevant to the Companys current and evolving business strategies, as well as to the Boards oversight role, and enable our Directors to provide diverse perspectives about the complex issues facing a global restaurant organization
like McDonalds.
Biographical information for our Directors is set forth below, including the specific qualifications, skills
and experiences considered by the Governance Committee in recommending the Companys slate of Director nominees.
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Susan E. Arnold. Nominee. Ms. Arnold served in a special assignment reporting to the Chief Executive Officer with The Procter & Gamble Company, a manufacturer and marketer of consumer
goods, from March 2009 through September 1, 2009. Prior to that time, |
Ms. Arnold was the PresidentGlobal Business Units of The
Procter & Gamble Company from 2007 until March 2009 when she retired from that post. Ms. Arnold served as Vice Chair of P&G Beauty and Health since 2006 and Vice Chair of P&G Beauty since 2004. She is currently a director of The Walt
Disney Company. Ms. Arnold, 57, joined McDonalds Board in 2008 and is a nominee for the class of 2014.
Ms. Arnold was a
senior executive responsible for major consumer brands in a large, complex retailing and global brand management company. Her skills include knowledge of product development, strategy and business development, finance, marketing and consumer
insights, and sustainability and other social responsibility matters.
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Robert A. Eckert. Mr. Eckert is Chairman of the Board and Chief Executive Officer of Mattel, Inc., a designer, manufacturer and marketer of family products, a post he has held since
May 2000. He is currently a director of Levi Strauss & Co. Mr. Eckert, 56, joined McDonalds Board in |
2003 and is a member of the class of 2012. |
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Mr. Eckert is the chief executive officer of a large, complex global brand management company. His skills include knowledge of manufacturing,
product development, marketing and consumer insights, finance, supply chain management and distribution, and strategy and business development for major consumer brands. |
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McDonalds Corporation 2011 7 |
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Enrique Hernandez, Jr. Mr. Hernandez has been President and Chief Executive Officer of Inter-Con Security Systems, Inc., a provider of high-end security and facility support services to government,
utilities and industrial customers, since 1986. He joined McDonalds Board in |
1996 and is a member of the class of 2012.
Mr. Hernandez, 55, currently serves as the non-executive Chairman of the Board of Nordstrom, Inc., and as a director of Chevron Corporation and Wells Fargo & Company. In the last five years, Mr. Hernandez also served as a director of
Tribune Company.
Mr. Hernandez is the chief executive officer of a global security company and has been a director of several
large public companies in various industries. His skills include knowledge of strategy and business development, corporate governance, finance and accounting, and succession planning.
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Jeanne P. Jackson. Ms. Jackson is President of Direct to Consumer for NIKE, Inc., a designer, marketer and distributor of athletic footwear, equipment and accessories, a post she has held since
March 2009. Between 2002 and 2009, she was the Chief |
Executive Officer of MSP Capital, a private investment company. Ms. Jackson, 59,
joined McDonalds Board in 1999 and is a member of the class of 2012. She currently serves as a director of Motorola Mobility Holdings, Inc. In the last five years, she also served as a director of Harrahs Entertainment, Inc., NIKE, Inc.,
Nordstrom, Inc. and Williams-Sonoma, Inc.
Ms. Jackson has had experience as a senior executive in retailing and global brand
management for several major consumer brands and has been a director of several large public companies, primarily involved in consumer goods and services. Her skills include knowledge of product development, strategy and business development,
finance, and marketing and consumer insights.
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Richard H. Lenny. Nominee. Mr. Lenny is an operating partner of Friedman, Fleischer & Lowe, LLC, a private equity firm, a post he has held since January 2011. From January 2002 until his
retirement in December 2007, Mr. Lenny was Chairman, President and |
Chief Executive Officer of The Hershey Company, a manufacturer,
distributor and marketer of candy, snacks and candy-related grocery products. He currently serves as a director of ConAgra Foods, Inc. and Discover Financial Services. In the last five years, he also served as a director of The Hershey Company and
Sunoco Inc. Mr. Lenny, 59, joined McDonalds Board in 2005 and is a nominee for the class of 2014.
Mr. Lenny has experience
as a chief executive officer for a global retail food company that is a major consumer brand. His skills include knowledge of strategy and business development, finance, marketing and consumer insights, supply chain management and distribution,
sustainability and other social responsibility matters.
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Walter E. Massey. Dr. Massey is the President of the School of the Art Institute of Chicago, a post he assumed in September 2010. He is also President Emeritus of Morehouse College, having served
as its President from 1995 to June 2007. In the last five years, |
Dr. Massey, 73, also served as a director of Bank of America
Corporation, BP p.l.c., Delta Airlines, Inc. and Motorola, Inc. Dr. Massey joined McDonalds Board in 1998 and is a member of the class of 2013.
Dr. Massey has experience as the chief executive officer of several large, complex academic organizations and as a director of multiple large public companies in various industries. His skills include
knowledge of strategy, policy matters (including sustainability matters), leadership development and succession planning, risk assessment, finance, and shareholder and government relations.
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Andrew J. McKenna. Mr. McKenna has been the non-executive Chairman of the Board since 2004 and is also the Chairman of Schwarz Supply Source, a printer, converter, producer and distributor of
packaging and promotional materials. Mr. McKenna, 81, joined |
McDonalds Board in 1991 and is a member of the class of 2012. He
is currently a director of Aon Corporation and Skyline Corporation. In the last five years, Mr. McKenna also served as a director of Click Commerce Inc.
Mr. McKenna has experience as the chief executive officer of a large, complex international supplier of paper-based goods. His skills include knowledge of strategy and business development, finance, corporate
governance, risk assessment, and leadership development and succession planning. He also has experience as a director of multiple large public companies, charities and civic organizations.
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Cary D. McMillan. Nominee. Mr. McMillan has been Chief Executive Officer of True Partners Consulting LLC, a professional services firm providing tax and other financial services, since
December 2005. From October 2001 to May 2004, he was the Chief Executive Officer of Sara Lee Branded Apparel, |
and Executive Vice
President, from January 2000 to May 2004, of Sara Lee Corporation, a branded consumer packaged goods company. Mr. McMillan, 53, joined McDonalds Board in 2003 and is a nominee for the class of 2014. He currently serves as a director of
American Eagle Outfitters, Inc. and, in the last five years, also served as a director of Hewitt Associates, Inc.
Mr. McMillan
has experience as a senior executive at a large, complex major consumer brand company, as chief executive of a professional services firm and he is also a certified public accountant. His skills include knowledge of strategy and business
development, finance and accounting, international operations, product development, and supply chain management and distribution.
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8 McDonalds Corporation 2011 |
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Sheila A. Penrose. Nominee. Ms. Penrose is the non-executive Chairman of the Board of Jones Lang LaSalle Incorporated, a global real estate services and money management firm, since her
election to that post in January 2005. She has served on Jones Lang |
LaSalles Board since 2002. From October 2000 to December 2007,
Ms. Penrose was the President of the Penrose Group, a provider of strategic advisory services on financial and organizational strategies. From January 2001 until December 2008, Ms. Penrose served as Executive Advisor to Boston Consulting Group. Ms.
Penrose, 65, joined McDonalds Board in 2006 and is a nominee for the class of 2014. In the last five years, she also served as a director of eFunds.
Ms. Penrose has experience as a senior executive of a large, complex investment services and banking company, as executive advisor to a leading global consulting firm, and as a Chairman of a large, complex,
global real estate company. Her skills include knowledge of strategy and business development, finance, risk assessment, and leadership development and succession planning.
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John W. Rogers, Jr. Mr. Rogers is the Chairman and Chief Executive Officer of Ariel Investments, LLC, a privately held institutional money management firm that he founded in 1983. Mr. Rogers, 53,
joined McDonalds Board in 2003 and is a member of the class of 2013. |
Mr. Rogers currently serves as a director of Aon Corporation
and Exelon Corporation, and as a trustee of Ariel Investment Trust. In the last five years, he also served as a director of Bally Total Fitness and Commonwealth Edison Company.
Mr. Rogers is the chief executive officer of an institutional money management firm. His skills include knowledge of finance, shareholder
and investor relations, risk assessment, succession planning, and strategy and business development. He also has experience as a director of multiple public companies, charities and civic organizations.
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James A. Skinner. Nominee. Mr. Skinner is Vice Chairman and Chief Executive Officer, a post to which he was elected in November 2004, and also has served as a Director since that date. He
served as Vice Chairman from January 2003 to November 2004. |
Mr. Skinner, 66, has been with the Company for 39 years and is a nominee for
the class of 2014. He currently serves as a director of Illinois Tool Works Inc. and Walgreen Co.
Mr. Skinner provides a Company
perspective in Board discussions about the business, relationships with key constituencies with the McDonalds System, competitive landscape and finance, senior leadership and strategic opportunities and challenges for the Company.
Mr. Skinner also has experience serving as an independent director of two other public companies.
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Roger W. Stone. Mr. Stone has been and is the Chairman and Chief Executive Officer of KapStone Paper and Packaging Corporation, formerly Stone Arcade Acquisition Corporation, since April 2005.
Since August 2010, Mr. Stone also has been the Chairman |
of Stone Tan China Holding Corporation and Stone Tan China Acquisition (Hong Kong)
Co. Ltd. Mr. Stone, 76, was manager of Stone-Kaplan Investments, LLC from July 2004 to January 2007. Mr. Stone joined McDonalds Board in 1989 and is a member of the class of 2013.
Mr. Stone is the chief executive officer of a large, complex, international paper and packaging business. His skills include experience in
the sourcing and sale of product packaging and related commodities, supply chain management and distribution, environmental sustainability, strategy and business development, finance and accounting and risk assessment.
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Donald Thompson. Mr. Thompson is President and Chief Operating Officer, a position to which he was elected in January 2010. Mr. Thompson was also elected a Director in January 2011. He previously
served as President, McDonalds USA, from August 2006 to |
January 2010, and as Executive Vice President and Chief Operations Officer
for McDonalds USA from January 2005 to August 2006. Mr. Thompson, 48, has been with the Company for 20 years and is a member of the class of 2012. He currently serves as a director of Exelon Corporation.
Mr. Thompson provides a Company perspective in Board discussions about the business, particularly with respect to worldwide restaurant
operations, competitive landscape, senior leadership and strategic opportunities and challenges for the Company. Mr. Thompson also has experience serving as an independent director of another public company.
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Miles D. White. Mr. White has been Chairman of the Board and Chief Executive Officer of Abbott Laboratories, a pharmaceuticals and biotechnology company, since 1999. Mr. White joined Abbott in
1984. Mr. White, 56, joined McDonalds Board in 2009 |
and is a member of the class of 2013. He currently serves as a director of
Caterpillar, Inc. In the last five years, Mr. White served as a director of Motorola, Inc. and Tribune Company.
Mr. White
is the chief executive officer of a large, complex pharmaceutical and biotechnology company. His skills include knowledge of cross-border operations, strategy and business development, risk assessment, finance, leadership development and succession
planning, and corporate governance.
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McDonalds Corporation 2011 9 |
Communications
COMMUNICATIONS WITH THE BOARD OF DIRECTORS AND NON-MANAGEMENT DIRECTORS
Interested persons wishing to communicate directly with the Board or the non-management Directors, individually or as a group, may do so by sending written
communications addressed to them at McDonalds Corporation, P.O. Box 4953, Oak Brook, IL 60522-4953 or by e-mail at mcdbod@us.mcd.com. Under the Boards policy for communications addressed to the Board, the Office of the Corporate
Secretary collects mail from the Directors post office box and e-mail box, forwards correspondence directed to an individual Director to that Director, and screens correspondence directed to multiple Directors or the full Board in order to
forward it to the most appropriate Committee Chairperson, the Chairman or the full Board. Communications to the Board, the non-management Directors or to any individual Director that relate to the Companys accounting, internal accounting
controls or auditing matters are referred to the Chairperson of the Audit Committee. In order to ensure timely receipt of your communication by the Office of the Corporate Secretary, please address it as set forth in this Proxy Statement and send it
only to the address or e-mail provided above.
CONSIDERATION OF DIRECTOR NOMINATIONS FOR THE 2012 ANNUAL
SHAREHOLDERS MEETING
DIRECTOR CANDIDATES NOMINATED BY THE BOARD
Shareholders can suggest Director candidates for consideration for nomination by the Board by writing to the Governance Committee, c/o Office of the Corporate Secretary, McDonalds Corporation, One
McDonalds Plaza, Department 010, Oak Brook, IL 60523-1928 or by e-mail to corporatesecretary@us.mcd.com. In order to ensure timely receipt of your communication by the Office of the Corporate Secretary, please address it as set forth in
this Proxy Statement and send it only to the address or e-mail provided above. Shareholders should provide the candidates name, biographical data, qualifications and the candidates written consent to being named as a nominee in the
Companys Proxy Statement and to serve as a Director, if elected.
DIRECTOR CANDIDATES NOMINATED BY A SHAREHOLDER
For Director nominations to be properly brought before the 2012 Annual Shareholders Meeting by a shareholder, timely notice in writing must be given by the
shareholder to the Office of the Corporate Secretary. With respect to the 2012 Annual Share- holders Meeting, notice will be timely if it is sent to the Office of the Corporate Secretary at McDonalds Corporation, One McDonalds
Plaza, Department 010, Oak Brook, IL 60523-1928 or by e-mail to corporatesecretary@us.mcd.com, and delivered on or after 5:00 p.m. Central Time on January 20, 2012 and on or before 5:00 p.m. Central Time on February 19, 2012. In
order to ensure timely receipt of your communication by the Office of the Corporate Secretary, please address it as set forth in this Proxy Statement and send it only to the address or e-mail provided above. A shareholder presenting a nominee for
Director must satisfy certain other requirements set forth in the Companys By-Laws, which are available on the Companys website at www.governance.mcdonalds.com.
QUALIFICATIONS FOR DIRECTORS
Article II, Section 6 of the Companys By-Laws provide that, in order
to be eligible for election as a Director, a candidate must deliver to the Corporate Secretary statements indicating whether
the candidate: (a) will deliver a resignation effective upon (i) failure to receive the required vote for election after a re-election and (ii) Board acceptance of such resignation;
(b) is a party to any voting commitment that could limit the nominees ability to carry out his/her fiduciary duties; (c) intends to refrain from entering into certain voting commitments; (d) is a party to any arrangements for
compensation, reimbursement or indemnification in connection with service as a Director, or intends to enter into any such arrangement; and (e) intends to comply with the Companys publicly disclosed policies and guidelines. The foregoing
is a summary of the requirements of Article II, Section 6 of the Companys By-Laws and is qualified by reference to the actual provisions of Article II, Section 6.
In addition, a Director candidate nominated by a shareholder for election at the 2012 Annual Shareholders Meeting will not be eligible for
election unless the shareholder proposing the nominee has provided timely notice of the nomination in accordance with the deadlines specified under the section entitled Director candidates nominated by a shareholder and has otherwise
complied with the other applicable requirements set forth in the By-Laws.
SHAREHOLDER PROPOSALS FOR INCLUSION IN NEXT
YEARS PROXY STATEMENT
To be considered for inclusion in the Companys Proxy Statement for the 2012 Annual Shareholders Meeting,
shareholder proposals must be received by the Office of the Corporate Secretary no later than 5:00 pm Central Time on December 9, 2011. These proposals must be sent to the Office of the Corporate Secretary, McDonalds Corporation, One
McDonalds Plaza, Department 010, Oak Brook, IL 60523-1928 or by e-mail to corporatesecretary@us.mcd.com. In order to ensure timely receipt of your communication by the Office of the Corporate Secretary, please address it as set forth in
this Proxy Statement and send it only to the address or e-mail provided above. This notice requirement is in addition to the SECs requirements that a shareholder must meet in order to have a shareholder proposal included in the Companys
Proxy Statement.
OTHER SHAREHOLDER PROPOSALS FOR PRESENTATION AT THE 2012 ANNUAL SHAREHOLDERS MEETING
For any proposal that is not properly submitted for inclusion in the Companys Proxy Statement for the 2012 Annual Shareholders Meeting
pursuant to the SECs proxy rules, but is instead sought to be presented directly from the floor of the 2012 Annual Shareholders Meeting, the Companys By-Laws require that timely notice must be given in writing to the Office of the
Corporate Secretary. To be timely, the notice must be delivered to the Office of Corporate Secretary at McDonalds Corporation, One McDonalds Plaza, Department 010, Oak Brook, IL 60523-1928 or by e-mail to
corporatesecretary@us.mcd.com on or after 5:00 p.m. Central Time on January 20, 2012 and on or before 5:00 p.m. Central Time on February 19, 2012. In order to ensure timely receipt of your communication by the Office of the
Corporate Secretary, please address it as set forth in this Proxy Statement and send it only to the address or e-mail provided above. The By-Laws also provide that the proposal, as determined by the Chairman of the meeting, must be a proper subject
for shareholder action under Delaware corporation law, and the proposal must satisfy certain other requirements set forth in the Companys By-Laws.
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10 McDonalds Corporation 2011 |
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Proposals to be voted on
MANAGEMENT PROPOSALS
PROPOSAL NO. 1.
ELECTION OF DIRECTORS
The Board is divided
into three classes, each having three-year terms that expire in successive years.
Nominees
The nominees for Director are: Susan E. Arnold, Richard H. Lenny, Cary D. McMillan, Sheila A. Penrose and James A. Skinner.
All of the nominees are standing for election as Directors at the 2011 Annual Shareholders Meeting to hold office for three-year terms expiring in 2014. Five
directorships are currently subject to election.
Your shares will be voted according to your instructions. If you return your signed
proxy card but do not provide voting instructions, your shares will be voted FOR the election of the five nominees named above. The Companys By-Laws provide that nominees for Director are elected by majority vote, which means that a
nominee is elected only if the votes cast for his/her election exceed the votes cast against his/her election (with abstentions and broker non-votes having no effect on the outcome of the election), except that Directors will
be elected by plurality vote if the Corporate Secretary receives notice of a shareholder nomination for Director election in accordance with the By-Laws and that nomination is not withdrawn within a specified time period set forth in the By-Laws.
Shareholders are permitted to nominate candidates for Director election only if they provide timely notice of a nomination in accordance with the Companys By-Laws. Directors will be elected by majority vote at the 2011 Annual
Shareholders Meeting.
Each of the incumbent Directors who is nominated for re-election at the 2011 Annual Shareholders
Meeting tendered an irrevocable resignation for the 2011 Annual Shareholders Meeting that will be effective (i) if the nominee is not re-elected by the required vote for election at the Annual Shareholders Meeting; and (ii) if
the Board accepts such resignation following the meeting. The Governance Committee will act on an expedited basis to determine whether or not to accept the nominees resignation and will submit such recommendation for prompt consideration by
the Board. The Governance Committee and the Board may consider any factors they deem appropriate and relevant in deciding whether or not to accept a nominees resignation.
The Board of Directors expects all five nominees named above to be available for election. If any of them should become unavailable to serve as a
Director for any reason prior to the Annual Shareholders Meeting, the Board may substitute another person as a nominee. In that case, your shares will be voted for that other person.
Biographical information for the Directors continuing in office and for the five nominees can be found beginning on page
[ ] of this Proxy Statement.
The Board of Directors recommends that shareholders vote FOR all five
nominees.
PROPOSAL NO. 2.
ADVISORY VOTE ON THE APPROVAL OF THE APPOINTMENT OF AN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO SERVE AS INDEPENDENT AUDITORS FOR 2011
The Audit Committee is responsible for the appointment of the independent auditors engaged by the Company. The Audit Committee has appointed Ernst & Young LLP as independent auditors for 2011. The Board is
asking shareholders to approve this appointment. Ernst & Young LLP audited the Companys financial statements and internal control over financial reporting for 2010. A representative of that firm will be present at the Annual
Shareholders Meeting and will have an opportunity to make a statement and answer questions.
See page [ ]
of this Proxy Statement for additional information regarding the independent auditors, including a description of the Audit Committees Policy for Pre-Approval of Audit and Permitted Non-Audit Services and a summary of Auditor Fees and
Services.
The Board of Directors recommends that shareholders vote FOR the appointment of Ernst & Young LLP, an
independent registered public accounting firm, to serve as independent auditors for 2011.
PROPOSAL NO. 3.
ADVISORY VOTE ON EXECUTIVE COMPENSATION
As
required by SEC rules, we are asking our shareholders to provide an advisory, nonbinding vote to approve the compensation awarded to our named executive officers, as we have described it in the Executive Compensation section of this
Proxy Statement, beginning on page [ ].
As described in detail in the Compensation Discussion and Analysis
section, the Compensation Committee oversees the program and compensation awarded, adopting changes to the program and awarding compensation as appropriate to reflect McDonalds circumstances and to promote the main objectives of the program.
These objectives include: to compete effectively for and retain managerial talent, to reward profitable growth and increase shareholder returns, and to tie pay to performance effectively.
We are asking our shareholders to indicate their support for our named executive officer compensation. We believe that the information we have
provided in this Proxy Statement demonstrates that our executive compensation program was designed appropriately and is working to ensure that managements interests are aligned with our shareholders interests to support long-term value
creation.
You may vote for or against the following resolution, or you may abstain. This vote is not intended to address any specific
item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and procedures described in this Proxy Statement.
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McDonalds Corporation 2011 11 |
Resolved, that the shareholders approve the compensation awarded to McDonalds named
executive officers for 2010, as disclosed under SEC rules, including the Compensation Discussion and Analysis, the compensation tables and related material included in this Proxy Statement.
While this vote is advisory and not binding on our Company, the Board and the Compensation Committee expect to consider the outcome of the vote,
along with other relevant factors, when considering future executive compensation decisions.
The Board of Directors recommends
that shareholders vote FOR the approval of the foregoing resolution.
PROPOSAL NO. 4.
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
In addition to providing our shareholders with the opportunity to cast an advisory vote on executive compensation, we are also seeking an advisory, nonbinding vote on how frequently the advisory vote on executive
compensation should be presented to shareholders, as required by SEC rules. You may vote your shares to have the advisory vote held annually, every two years or every three years, or you may abstain.
After careful consideration of this proposal, the Board of Directors recommends an annual vote. Our Board believes that this will allow our
shareholders to provide us with your input on our compensation philosophy, policies and practices as disclosed in the proxy statement every year.
While this vote is advisory and not binding on our Company, the Board expects to take into account the outcome of the vote, along with other relevant factors, and when considering future advisory votes on executive
compensation.
The Board of Directors recommends that shareholders vote FOR the option of ANNUAL
advisory votes on executive compensation.
PROPOSALS NO. 5, 6 AND 7
ELIMINATE SUPER-MAJORITY VOTING REQUIREMENTS IN RESTATED CERTIFICATE OF INCORPORATION
At the 2010 Annual
Shareholders Meeting, shareholders approved an advisory proposal that requested the Board of Directors to take the steps necessary so that each shareholder voting requirement in our Restated Certificate of Incorporation and Amended and
Restated By-Laws that calls for a greater than simple majority vote be changed to a majority vote. After careful consideration, the Board has adopted proposed amendments to eliminate the super-majority voting requirements in our Restated Certificate
of Incorporation, and, in the case of Article Twelfth, to repeal such Article.
The Board of Directors is requesting that shareholders
approve Proposal Nos. 5, 6 and 7 to eliminate each of the super-majority voting requirements in our Restated Certificate of Incorporation at the 2011 Annual Shareholders Meeting. The super-majority voting requirements included in our Restated
Certificate of Incorporation relate to (i) the sale of the Companys assets to, or merger of the Company with, a party that owns 2% or more of the Companys stock; (ii) the
removal of Directors; and (iii) amendments to certain provisions of our Restated Certificate of Incorporation that govern the size and structure of the Board and how shareholders may take action.
You are being provided with an opportunity to vote separately on the amendments to each of the affected Articles of our Restated Certificate
of Incorporation and, in the case of Article TWELFTH, to repeal such Article, as described below under Proposal Nos. 5, 6 and 7.
In accordance with Delaware law, the Board of Directors has adopted resolutions approving and declaring advisable these proposed amendments and
is recommending them to shareholders for approval. Under our Restated Certificate of Incorporation, approval of Proposal No. 5 requires the affirmative vote of the holders of not less than 66-2/3% of the Companys outstanding common stock,
and approval of each of Proposal Nos. 6 and 7 requires the affirmative vote of the holders of at least 80% of the Companys outstanding common stock.
Based on the outcome of the votes for Proposal Nos. 5, 6 and 7, the Board of Directors may consider amendments to provisions of the Companys Amended and Restated By-Laws that include super-majority voting
requirements.
PROPOSAL NO. 5
ELIMINATE SUPER-MAJORITY VOTING REQUIREMENTS IN ARTICLE TWELFTH OF OUR RESTATED CERTIFICATE OF INCORPORATION BY REPEALING SUCH ARTICLE (TRANSACTIONS WITH INTERESTED SHAREHOLDERS)
Proposal No. 5 requests approval to eliminate the super-majority voting requirements in Article TWELFTH of our Restated Certificate of Incorporation by
repealing Article TWELFTH, which relates to transactions with interested shareholders. Article TWELFTH provides that the Company may not approve the merger or consolidation of the Company with another corporation or sell, lease or exchange all or
substantially all of the property and assets of the Company if a party to the transaction is an interested shareholder (i.e., a holder, of record or beneficially, of 2% or more of the Companys voting stock) without the affirmative vote of the
holders of at least 66-2/3% of the Companys outstanding stock having voting power. Article TWELFTH also requires that any amendment to its terms must be approved by the affirmative vote of the holders of at least 66-2/3% of the Companys
outstanding stock having voting power.
Under Delaware law, shareholders have the right, subject to limited exceptions, to vote on a
merger or consolidation of the Company with another corporation and to vote on the sale, lease or exchange of all or substantially all of the property and assets of the Company. Under the default voting rights provided by Delaware law, these actions
require approval by the affirmative vote of a majority of the voting power of the capital stock of the Company outstanding and entitled to vote thereon. The rights specified by Delaware law, as described in this paragraph, will apply to the
Companys shareholders if they approve the repeal of Article TWELFTH.
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12 McDonalds Corporation 2011 |
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The proposed changes are set forth below:
TWELFTH: Subject to all other applicable provisions of this Restated Certificate of Incorporation and to all applicable provisions
of the law of Delaware, relating, inter alia, to stockholder approval, the Board of Directors shall have the power to merge or consolidate the Corporation with another corporation or to sell, lease or exchange all or substantially all of the
property and assets of the Corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may be in whole or in part shares of stock in, and/or other securities of, any corporation
or corporations, as the Board of Directors shall deem expedient and for the best interests of the Corporation, but, regardless of any other provision of this Restated Certificate of Incorporation, if any party to any such transaction shall be a
person or entity owning, immediately prior to the consummation of such transaction, of record or beneficially, 2% or more of the stock of the Corporation issued and outstanding having voting power, such power of the Board of Directors shall be
exercisable only when and as duly authorized by the affirmative vote of the holders of not less than 66-2/3% of the stock of the Corporation issued and outstanding having voting power given at a stockholders meeting duly called for that
purpose; provided, however, that the Board of Directors shall have the power to merge the Corporation with another corporation without action by the stockholders to the extent and in the manner permitted from time to time by the law of Delaware. In
determining whether or not any person or entity (the Primary Holder) owns, of record or beneficially, 2% or more of the stock of the Corporation issued and outstanding having voting power, there shall be aggregated with all shares of
such stock owned of record or beneficially by the Primary Holder (a) all shares of such stock owned of record or beneficially by any person or entity who or which would be deemed to be controlling, controlled by or under common control with the
Primary Holder under the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, any federal statute enacted to take the place of either or both such statutes or any regulation promulgated under either of such statutes
or such successor statutes (an Affiliate) and (b) all shares of such stock owned of record or beneficially by any person or entity acting in concert with the Primary Holder and/or with an Affiliate of the Primary Holder. This
Article Twelfth shall not be altered, amended or repealed except by the affirmative vote of the holders of not less than 66-2/3% of the stock of the Corporation issued and outstanding having voting power, given at a stockholders meeting duly
called for that purpose, upon a proposal adopted by the Board of Directors.
In the event shareholders approve the
repeal of Article TWELFTH, then the remaining articles will be renumbered so that all references to Articles THIRTEENTH, FOURTEENTH and FIFTEENTH, respectively, will be replaced with references to Articles TWELFTH, THIRTEENTH and FOURTEENTH,
respectively.
The Board of Directors recommends that shareholders vote FOR this proposal to eliminate the super-majority voting
requirements in Article TWELFTH of our Restated Certificate of Incorporation by repealing Article TWELFTH (Transactions With Interested Shareholders) in its entirety.
PROPOSAL NO. 6
ELIMINATE SUPER-MAJORITY VOTING REQUIREMENTS IN ARTICLE THIRTEENTH OF OUR RESTATED CERTIFICATE OF INCORPORATION (BOARD OF DIRECTORS)
Proposal No. 6 requests approval to eliminate the super-majority voting requirements in Article THIRTEENTH of our Restated Certificate of Incorporation related to the Board of Directors. Article THIRTEENTH
provides for the structure of, and processes and procedures related to, the Board of Directors. Among other things, this provision requires that the removal of any director for cause be approved by the affirmative vote of the holders of at least 80%
of the voting power of all the shares of the Company entitled to vote in the election of directors. Article THIRTEENTH also requires that any amendment to its terms must be approved by the affirmative vote of the holders of at least 80% of such
voting power.
The amendments in this Proposal No. 6 would eliminate these super-majority voting requirements and replace them
with provisions requiring the affirmative vote of the holders of a majority of the voting power of the capital stock of the Company outstanding and entitled to vote on those actions (which is the minimum vote permitted by Delaware corporation law),
as set forth below:
(c) Removal. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any
director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative votes of the holders of at least 80% of the voting power of all the shares of the Corporation entitled to vote
for the election of directors a majority of the voting power of the capital stock of the Corporation outstanding and entitled to vote thereon.
(d) Amendment, Repeal, Etc. Notwithstanding anything to the contrary contained in this Restated Certificate of Incorporation, the affirmative vote of the holders of at least 80% of the voting power of all
of the shares of the Corporation entitled to vote for the election of directors a majority of the voting power of the capital stock of the Corporation outstanding and entitled to vote thereon shall be required to amend, alter or
repeal, or to adopt any provision inconsistent with, this Article Thirteenth.
The Board of Directors recommends that
shareholders vote FOR this proposal to eliminate the super-majority voting requirements in Article THIRTEENTH of our Restated Certificate of Incorporation (Board of Directors).
PROPOSAL NO. 7
ELIMINATE SUPER-MAJORITY VOTING REQUIREMENT IN ARTICLE FOURTEENTH
OF OUR RESTATED CERTIFICATE OF INCORPORATION (SHAREHOLDER ACTION)
Proposal No. 7 requests approval to eliminate the super-majority voting
requirement regarding shareholder amendments to Article FOURTEENTH of our Restated Certificate of Incorporation, which relates to the manner in which shareholders take action. Article FOURTEENTH requires that any amendment to its terms must be
approved by the affirmative vote of the holders of at least 80% of the voting power of all shares of the Company entitled to vote in the election of directors.
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McDonalds Corporation 2011 13 |
The amendment in this Proposal No. 7 would eliminate this super-majority voting requirement
and replace it with a provision requiring the affirmative vote of the holders of a majority of the voting power of the capital stock of the Company outstanding and entitled to vote on amendments to the Restated Certificate of Incorporation (which is
the minimum vote permitted by Delaware corporation law), as set forth below:
FOURTEENTH: Stockholder Action. Any action
required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders. Special
meetings of stockholders of the Corporation may be called upon not less than 10 nor more than 60 days written notice only by the Board of Directors pursuant to a resolution approved by a majority of the Board of Directors. Notwithstanding
anything contained in this Restated Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the Corporation entitled to vote for the election of
directors a majority of the voting power of the capital stock of the Corporation outstanding and entitled to vote thereon shall be required to amend, alter or repeal, or to adopt any provision inconsistent with, this Article
Fourteenth.
The Board of Directors recommends that shareholders vote FOR this proposal to eliminate the super-majority
voting requirement in Article FOURTEENTH of our Restated Certificate of Incorporation (Shareholder Action).
SHAREHOLDER PROPOSALS
In accordance with SEC regulations, the shareholder proposals and supporting statements are presented below as submitted by the shareholders and are quoted verbatim (including the use of bolding and italics). The
Company disclaims all responsibility for the content of the proposals and the supporting statements, including sources referenced in the supporting statements.
PROPOSAL NO. 8
ADVISORY VOTE ON SHAREHOLDER PROPOSAL RELATING TO CLASSIFIED
BOARD
The State Board of Administration of Florida advised the Company that it intends to present the following shareholder proposal at the Annual
Shareholders Meeting. The proponent owns 2,529,660 shares of the Companys common stock. The address of the proponent is available upon request by calling 1-630-623-2553 or by sending a request to McDonalds Corporation, Shareholder
Services, Department 720, One McDonalds Plaza, Oak Brook, IL 60523.
Shareholder proposal
PROPOSAL TO REPEAL CLASSIFIED BOARD
RESOLVED,
that shareholders of McDonalds Corporation urge the Board of Directors to take all necessary steps (other than any steps that must be taken by shareholders) to eliminate the classification of the Board of Directors, and to require that,
commencing no later than the annual meeting of 2013, all directors stand for elections annually.
SUPPORTING STATEMENT
This resolution, submitted by the Florida State Board of Administration with the assistance of the American Corporate Governance Institute, LLC, urges the board of directors to facilitate a declassification of the
board. Such a change would enable shareholders to register their views on the performance of all directors at each annual meeting. Having directors stand for elections annually makes directors more accountable to shareholders, and could thereby
contribute to improving performance and increasing firm value.
Over the past decade, many S&P 500 companies have declassified their board of
directors. According to FactSet Research Systems, between 2000 and 2009, the number of S&P 500 companies with classified boards declined from 300 to 164. Furthermore, according to Georgeson reports, there were 187 shareholder proposals to
declassify boards during the five proxy seasons of 2006 through 2010. The average percentage of votes cast in favor of proposals to declassify exceeded 65% in each of these five years.
The significant shareholder support for proposals to declassify boards is consistent with evidence in academic studies that classified boards could be associated with lower firm valuation and/or worse corporate
decision-making. Studies report that:
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takeover targets with classified boards are associated with lower gains to shareholders (Bebchuk, Coates, and Subramanian, 2002); |
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classified boards are associated with lower firm valuation (Bebchuk and Cohen, 2005); |
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firms with classified boards are more likely to be associated with value-decreasing acquisition decisions (Masulis, Wang, and Xie, 2007); and
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classified boards are associated with lower sensitivity of compensation to performance and lower sensitivity of CEO turnover to firm performance (Faleye, 2007).
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Although one study (Bates, Becher and Lemmon, 2008) reports that classified boards are associated with higher takeover premiums, this
study also reports that classified boards are associated with a lower likelihood of an acquisition, and that classified boards are associated with lower firm valuation.
Please vote for this proposal to make directors more accountable to shareholders.
[Statement in Opposition to
be inserted.]
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14 McDonalds Corporation 2011 |
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PROPOSAL NO. 9
ADVISORY VOTE ON SHAREHOLDER PROPOSAL RELATING TO ANNUAL ELECTION OF DIRECTORS
John Chevedden advised the
Company that he intends to present the following shareholder proposal at the Annual Shareholders Meeting. The proponent owns 60 shares of the Companys common stock. The address of the proponent is available upon request by calling
1-630-623-2553 or by sending a request to McDonalds Corporation, Shareholder Services, Department 720, One McDonalds Plaza, Oak Brook, IL 60523.
9 - Elect Each Director Annually
RESOLVED, shareholders ask that our Company take the steps necessary to
reorganize the Board of Directors into one class with each director subject to election each year and to complete this transition within one-year.
Arthur Levitt, former Chairman of the Securities and Exchange Commission said, In my view its best for the investor if the entire board is elected once
a year. Without annual election of each director shareholders have far less control over who represents them.
In 2010 over 70% of S&P 500
companies had annual election of directors. Shareholder resolutions on this topic won an average of 68%-support in 2009.
This proposal topic is one of
several proposal topics that often win high shareholder support, such as the Simple Majority Vote proposal that won our 70%-support at our 2010 annual meeting. This 70%-support even translated into 50.3% of all shares outstanding.
It is important that our company implement this proposal promptly. If our company took more than one-year to phase in this proposal it could create conflict among
our directors. Directors with 3-year terms could be more
casual because they would not stand for election immediately while directors with one-years terms would be under more immediate pressure. It could work out to the detriment of our company that
our companys most qualified directors would promptly have one year-terms and that our companys least qualified directors would retain 3-year terms the longest.
The merit of this Elect Each Director Annually proposal should also be considered in the context of the need for improvement in our companys 2010 reported corporate governance status:
The Corporate Library www.thecorporatelibrary.com, an independent investment research firm, rated our company D with High Governance
Risk and High Concern regarding Takeover Defenses and executive pay - $20 million for our CEO James Skinner. Part of the $20 million was even based on subjective assessment.
Four directors had 12 to 21-years long tenure (independence concern). And such directors were allowed to have at least 50% of the seats on our key Audit and Nomination Committees and also chair these committees. A
CEO was even allowed to sit on our executive Pay committee - Robert Eckert. There have been shareholder proposals to exclude CEOs from a seat on an Executive Pay Committee due to the conflict of interest.
As for future trends in director selection, Miles White, one of our newest directors, brings to our Board experience with the D-rated Abbott Laboratories.
We also had no shareholder right to proxy access, no cumulative voting, no right to call a special shareholder meeting, no shareholder written consent
and no right of selection by majority vote on certain key issues.
Please encourage our board to respond positively to this proposal to help turnaround
the above type practices: Elect Each Director Annually - Yes on 9.
[Statement in Opposition to be inserted.]
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McDonalds Corporation 2011 15 |
PROPOSAL NO. 10
ADVISORY VOTE ON SHAREHOLDER PROPOSAL RELATING TO THE USE OF CONTROLLED ATMOSPHERE STUNNING
People for the
Ethical Treatment of Animals advised the Company that it intends to present the following shareholder proposal at the Annual Shareholders Meeting. The proponent owns 51 shares of the Companys common stock. The address of the proponent is
available upon request by calling 1-630-623-2553 or by sending a request to McDonalds Corporation, Shareholder Services, Department 720, One McDonalds Plaza, Oak Brook, IL 60523.
Shareholder proposal
RESOLVED, that to advance the companys financial interests and the
welfare of chickens killed for its restaurants, shareholders encourage the board to require the companys chicken suppliers to switch to controlled-atmosphere killing (CAK) within four years.
Supporting statement
The industry is rapidly moving toward
CAK in an effort to improve animal welfare, with at least two chicken processers transitioning to CAK in 2011. It is only a matter of time until the rest of the industry follows suit and implements this less cruel, improved method of slaughter.
McDonalds suppliers current slaughter method is cruel and inefficient. Consider the following:
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McDonalds poultry suppliers use electric immobilization in their slaughterhouses. This involves shackling live birds, shocking them with electrified
water in a stun bath, cutting their throats, and removing their feathers in tanks of scalding-hot water. |
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Birds often suffer broken bones, bruising, and hemorrhaging during the shackling process, which lowers product quality and yield. They also scratch and
peck at each other, which increases carcass contamination. |
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Because the electric current in the stun bath is kept too low to effectively render birds unconscious, many have their throats cut while they
are still able to feel pain. |
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Birds are often scalded to death in defeathering tanks. When this happens, they often defecate, further decreasing yield and increasing the likelihood of
contamination. |
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Frenzied birds flap their wings, kick workers, and vomit and defecate on them, leading to increased worker injuries and illness and poor overall
ergonomics. |
CAK is better for the birds welfare and more efficient. Consider the following benefits:
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With CAK, birds who are still in their transport crates are placed in chambers, where their oxygen is replaced with a nonpoisonous gas that puts them
to sleep. |
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Every published report on CAK and all meat-industry scientific advisors with a demonstrated interest in animal welfare-including Drs. Temple Grandin,
Mohan Raj, and Ian Duncan-have concluded that it is superior to electric immobilization with regard to animal welfare.
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Because there is no live shackling or live scalding, product quality and yield are greatly improved, and contamination is drastically decreased. And
because workers never handle live birds, ergonomics improve, injury and illness rates decrease, and the opportunities for workers to abuse live birds are eliminated. |
McDonalds has the ability to leverage its financial and industry power to require its suppliers to adopt this less cruel slaughter method for poultry and move the industry in the right direction, like many of
its competitors are already doing. The following companies are moving toward sourcing birds from suppliers that use CAK or already do so: Chipotle, Starbucks, KFCs in Canada, Ruby Tuesday, Subway, Quiznos, Kroger, A&P, Harris Teeter, Subway, and
Winn-Dixie.
We urge shareholders to support this socially and ethically responsible resolution.
[Statement in Opposition to be inserted.]
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16 McDonalds Corporation 2011 |
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PROPOSAL NO. 11
ADVISORY VOTE ON SHAREHOLDER PROPOSAL RELATING TO A REPORT ON CHILDRENS NUTRITION
The Sisters of St.
Francis of Philadelphia, the Benedictine Sisters of Mount St. Scholastica, Trinity Health, Academy of Our Lady of Lourdes, Benedictine Sisters of Mt. Angel, Sisters of St. Dominic, Congregation of the Most Holy Name, Benedictine Sisters of Boerne,
Texas, Sisters of Charity of the Blessed Virgin Mary, Mercy Investment Services Inc., Adrian Dominican Sisters, Sisters of Saint Dominic of Tacoma, Catholic Health East, Friends Fiduciary and Catholic Healthcare Partners advised the Company that
they intend to present the following shareholder proposal at the Annual Shareholders Meeting. The lead proponent, The Sisters of St. Francis of Philadelphia, owns at least $2,000 of the Companys common stock. The address of the proponent
is available upon request by calling 1-630-623-2553 or by sending a request to McDonalds Corporation, Shareholder Services, Department 720, One McDonalds Plaza, Oak Brook, IL 60523.
Shareholder proposal
Risk
Evaluation: Childhood Obesity
2011 McDonalds Corp.
WHEREAS, the contribution of the fast food industry to the global epidemic of childhood obesity and to diet-related diseases, such as diabetes, cancer and cardiovascular disease, have become a major public
issue:
* |
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The Centers for Disease Control claims that 1 in 3 US children born in the year 2000 will be diagnosed with type 2 diabetes as a result of childhood obesity.
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* |
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In 2005, the National Academies Institute of Medicine (10M) conducted a study concluding that fast food marketing influences childrens food
preferences, diets and health in the US. |
* |
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In a 2009 follow-up report, the IOM recommended that local governments take such actions as adopting zoning policies that restrict fast food establishments near
schools and playgrounds and implementing zoning to limit the density of fast food restaurants in residential communities. |
* |
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A 2010 study published by the National Bureau of Economic Research found the annual estimated cost of treating obesity is $168 billion; 16.5 percent of the
countrys total medical care costs. |
Growing public concerns have spurred action by public policy makers:
* |
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The World Health Organization developed recommendations regarding marketing of unhealthy foods to children that urges governments to enact policies to reduce the
impact of food marketing on children. |
* |
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In 2005, Congress subpoenaed 44 food companies, including our company, to submit data to the Federal Trade Commission regarding the extent and expenditures of
their marketing. The FTC is currently planning a follow-up report. |
* |
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In November 2009, a bill, The Healthy Kids Act, was introduced in Congress with the intent of curbing childhood obesity. The bill seeks to
give the FTC and relevant federal agencies regulatory authority over food marketing. |
* |
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On April 27, 2010, Santa Clara County Board of Supervisors approved an ordinance that banned toys and other promotions that come with childrens meals
that exceed set levels of calories, fat, salt, and sugar. A similar measure was adopted by the San Francisco Board of Supervisors in November 2010. |
* |
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The Affordable Care Act, signed into law on March 23, 2010, included federal menu-labeling legislation requiring the posting of calories on fast food menu
boards. |
In November 2009, the Center for Science in the Public Interest released a report demonstrating that 88 percent of the
products that our company had deemed appropriate to market to children under the industrys voluntary marketing initiative, the Childrens Food and Beverage Advertising Initiative, met no third-party nutrition standard.
RESOLVED: Shareholders ask the Board of Directors to issue a report, at reasonable expense and excluding proprietary information, within six months of the
2011 annual meeting, assessing the companys policy responses to public concerns regarding linkages of fast food to childhood obesity, diet-related diseases and other impacts on childrens health. Such report should include an assessment
of the potential impacts of public concerns and evolving public policy on the companys finances and operations.
[Statement in Opposition to
be inserted.]
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McDonalds Corporation 2011 17 |
PROPOSAL NO. 12
ADVISORY VOTE ON SHAREHOLDER PROPOSAL RELATING TO BEVERAGE CONTAINERS
Ruth Valere Adar advised the Company
that she intends to present the following shareholder proposal at the Annual Shareholders Meeting. The proponent owns at least $2,000 of the Companys common stock. The address of the proponent is available upon request by calling
1-630-623-2553 or by sending a request to McDonalds Corporation, Shareholder Services, Department 720, One McDonalds Plaza, Oak Brook, IL 60523.
Shareholder proposal
WHEREAS McDonalds Corp. has repeatedly emphasized its commitment to
environmental leadership, yet continues to use polystyrene-based beverage cups 20 years after phasing out use of polystyrene-based clamshell food containers due to its negative environmental impact.
The Sustainable Packaging Coalition, of which McDonalds is a member, defines sustainable packaging as beneficial, safe & healthy for
individuals and communities throughout its life cycle. The International Agency for Research on Cancer has determined that styrene, used in the production of polystyrene, is a possible human carcinogen. In 2009, the California Office of
Environmental Health Hazard Assessment proposed that styrene be listed as a known human carcinogen. Several epidemiologic studies suggest an association between occupational styrene exposure and an increased risk of leukemia and lymphoma.
Polystyrene is not widely recycled and has become pervasive in the marine environment, carried through storm drains to the ocean. Polystyrene breaks
down into small indigestible pellets which animals perceive as food, resulting in the death of birds and marine mammals, 46 cities and counties in California have banned or restricted the use of polystyrene food packaging.
The company says it uses an eco-filter tool to inform packaging decisions, focusing on minimizing weight, maximizing recycled materials, preference for renewable
and certified sustainably managed materials, minimizing the amount of harmful chemicals used in production, reducing CO2 and other greenhouse gas emissions and maximizing end-of-life options like recycling. McDonalds states that it
continually searches for best practices to ensure that product materials and design, their manufacture, distribution and use minimize lifecycle impacts on the environment. The company also states in its 2009 Corporate Responsibility
Report that it continues exploring ways to reduce the environmental impacts of our consumer packaging and waste in our restaurant operations.
A chief competitor that retails hot beverages has made significant environmental commitments in regard to containers. Starbucks uses 10% recycled paper fiber in
its hot beverage cups. It has made a public commitment to recycle all post-consumer paper and plastic cups discarded in company owned stores by 2015. It offers a discount for customers who bring reusable beverage containers into stores, and pledged
to serve 25% of beverages made in its stores from reusable containers by 2015.
BE IT RESOLVED THAT Shareowners of McDonalds request that the board of directors issue a report assessing its
progress and describing policy options for implementing the companys environmental policies to ensure more environmentally beneficial beverage containers such as incorporating a comprehensive container recycling strategy, including recycled
content goals and container recovery goals, and considering relative environmental impacts of different types of beverage containers. The board shall prepare a report by November 1, 2011 on the companys efforts to achieve this strategy.
The report, to be prepared at reasonable cost, may omit confidential information.
SUPPORTING STATEMENT
We believe the requested report is in the best interest of McDonalds and its shareholders. Leadership in this area will protect our brand and enhance the
companys reputation.
[Statement in Opposition to be inserted.]
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18 McDonalds Corporation 2011 |
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Stock ownership
STOCK OWNERSHIP GUIDELINES
The Company imposes minimum stock ownership guidelines for Directors and senior officers. These guidelines are available on the Companys website at www.governance.mcdonalds.com.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows all beneficial owners of more than five percent of the Companys common stock outstanding as of December 31, 2010:
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Name and address of
beneficial owner |
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Amount and nature of beneficial ownership |
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Percent of class (2) |
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BlackRock, Inc. (1)
40 East 52nd Street
New York, NY 10022 |
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53,390,500 |
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5.03 |
% |
(1) |
Reflects shares deemed to be beneficially owned by BlackRock, Inc. (BlackRock), directly or through its subsidiaries, as of December 31, 2010, according to a statement on
Schedule 13G/A filed with the SEC on February 7, 2011, which indicates that BlackRock, an investment adviser, has sole voting power and sole dispositive power with respect to all of the shares. The Schedule 13G/A certifies that the securities
were acquired in the ordinary course and not with the purpose or with the effect of changing or influencing the control of McDonalds. |
(2) |
Based on the number of outstanding shares of common stock on December 31, 2010.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the ownership of the common stock and common stock equivalent units for the named individuals and the group as of March 1, 2011,
except as noted below. Directors and executive officers as a group owned (directly, indirectly and through benefit plans) [less than 1.0%] of the Companys common stock:
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Name |
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Common stock (1)(2)(3)(4)(5) |
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Stock equivalents (6) |
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Total |
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Susan E. Arnold |
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7,510 |
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7,510 |
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Peter J. Bensen |
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Robert A. Eckert |
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25,000 |
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31,973 |
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56,973 |
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Timothy J. Fenton |
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Janice L. Fields |
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Enrique Hernandez, Jr. |
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11,108 |
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54,421 |
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65,529 |
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Jeanne P. Jackson |
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12,250 |
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41,196 |
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53,446 |
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Richard H. Lenny |
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2,000 |
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16,877 |
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18,877 |
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Walter E. Massey |
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5,750 |
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24,418 |
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30,168 |
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Andrew J. McKenna |
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49,408 |
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87,491 |
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136,899 |
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Cary D. McMillan |
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15,784 |
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23,413 |
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39,197 |
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Sheila A. Penrose |
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3,000 |
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10,911 |
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13,911 |
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John W. Rogers, Jr. |
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92,600 |
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28,883 |
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121,483 |
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James A. Skinner |
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Roger W. Stone |
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36,000 |
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89,087 |
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125,087 |
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Donald Thompson |
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Miles D. White |
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5,000 |
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2,782 |
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|
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7,782 |
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Denis Hennequin (7) |
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176,182 |
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1,466 |
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177,648 |
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Directors and executive officers as a group (the Group)(26 persons)
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(1) |
Beneficial ownership of shares that are owned by members of their immediate families directly or through trusts is disclaimed as follows: Directors McKenna, 640; and Rogers, 100.
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(2) |
Includes unallocated shares held in the Companys Profit Sharing and Savings Plan as follows: Directors Skinner,
[ ]; and Thompson, [ ]; Mr. Bensen,
[ ]; Ms. Fields [ ] and the Group,
[ ]. |
(3) |
Includes shares that could be purchased by exercise of stock options on or within 60 days after March 1, 2011 (for Mr. Hennequin, on or within 60 days after
November 30, 2010; see footnote (7) below), under the Companys option plans as follows: Directors Eckert, 15,000; Jackson, 10,000; McKenna, 4,998; Rogers, 15,000; Skinner, 1,327,888; Stone, 18,000 (options are held by a trust, of
which Mr. Stone is Trustee) and Thompson, 291,868; Messrs. Bensen, 129,581; Fenton, 97,211; and Hennequin, 69,646; and Ms. Fields, 202,257; and the Group, 2,681,725.
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McDonalds Corporation 2011 19 |
(4) |
Directors and executive officers as a group have sole voting and investment power over shares of common stock listed in the prior table except as follows: (i) shared voting
and investment powers for shares held by Directors Eckert, 10,000; Hernandez, 11,108; Jackson, 2,250; Lenny, 2,000; Skinner, 97,964; and Thompson, 253; Mr. Fenton, 2,441; and the Group, 162,821 ; (ii) for the benefit of children, shares
held by Mr. Fenton, 3,159; and the Group, 3,242; (iii) for Mr. Skinner, 2,926 shares are held in a trust of which his spouse is a trustee; and (iv) 18,000 shares held by a family foundation as to which Director Stone maintains
voting and/or transfer rights. |
(5) |
For Mr. Rogers, includes 77,500 shares of common stock held in a margin account. |
(6) |
Includes common stock equivalent units credited under the Companys retirement plans and the Directors Deferred Compensation Plan, which are payable in cash. In
addition, for Mr. Hennequin, includes shares credited to his Plan dÉpargne Entreprise account as of November 30, 2010. |
(7) |
All amounts reported for Mr. Hennequin are as of November 30, 2010, as a result of his retirement on that date as President, McDonalds Europe.
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20 McDonalds Corporation 2011 |
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Executive compensation
COMPENSATION COMMITTEE REPORT
Dear Fellow Shareholders:
The Compensation Committee reviewed and discussed the Companys Compensation Discussion and Analysis with McDonalds management. Based on this review and
discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2010.
Respectfully submitted,
The Compensation Committee
Robert A. Eckert, Chairman
Susan E. Arnold
Richard H. Lenny
John W. Rogers, Jr.
Miles D. White
COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE SUMMARY
McDonalds executive compensation program supports our long-term business plan, the Plan to Win. The key objectives of our executive compensation program are:
to motivate our executives to increase profitability and shareholder returns; to pay compensation that varies based on performance; and to compete for and retain managerial talent.
Our pay package includes base salary, our annual bonus plan, which we refer to as TIP, our long-term cash incentive plan, which we refer to as
CPUP, and stock options and restricted stock units, each as described below. We seek to align metrics under our pay package with our main objectivelong-term sustainable growth. Operating income is therefore a key focus. The level of operating
income growth measures how effectively management has grown comparable sales by executing our strategic initiatives. It also measures how well management has managed costs and deployed capital to achieve strong cash flow that we can reinvest in the
business and return to shareholders. In short, operating income is the best measure of whether we are achieving our goal to grow by being better, and not just bigger.
We also believe using a variety of performance metrics is important to
promote a balanced evaluation of executive performance, just as we believe a mix of awards is important to balance incentives and mitigate risk. For this reason, we also consider return on total assets and earnings per share as additional
perspectives about how well management is executing the Plan to Win. Although our stock price is affected by many factors apart from our performance, we believe it should also be an important driver of compensation to align management and
shareholder interests. Our pay package includes significant equity-based incentives, and we use total return to shareholders relative to the S&P 500 Index as a performance metric in our CPUP. The table on page [ ] further
describes the primary quantitative metrics
we use and how we incorporate them into our pay package. We complement them with other measures, some of which are qualitative and more subjective in their application.
In 2010, McDonalds performance for the year was very strong, resulting in TIP payouts well above target levels. Highlights of our
performance in 2010 include the following:
> |
2010 was McDonalds seventh consecutive year of positive comparable sales growth in every geographic segment, with a global increase of 5.0% over 2009.
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> |
2010 operating income increased by 9% (9% in constant currencies) to $7.47 billion. |
> |
Earnings per share was $4.58, an increase of 11% (11% in constant currencies). |
> |
We returned $5.1 billion to our shareholders through share repurchases and dividends paid in 2010. |
> |
Our total return to investors for the year ended December 31, 2010 was 27%, which was third among the 30 companies that comprise the Dow Jones Industrial Average.
|
> |
For the three-year and five-year periods ending December 31, 2010, our compound annual rate of return to investors was 13% and 21%, respectively. |
Over the last five years, we have produced consistent year-over-year growth in operating income (excluding one-time charges associated with our
Latin American business in 2007) and have paid TIP bonuses for each year despite an exceptionally challenging global economic and operating environment.
KEY TERMS
We use the following terms in describing our
compensation plans, measures of Company performance and other aspects of our executive compensation program.
COMPANY COMPENSATION PLANS
TIP. Target Incentive Plan. Our annual cash incentive plan.
CPUP. Cash Performance Unit Plan. Our three-year cash incentive plan.
RSUs. Restricted stock units. An
RSU provides the right to receive a share of McDonalds stock (or, at the Companys discretion, the equivalent cash value). RSUs granted to executives generally have both service and performance-based vesting requirements.
QUANTITATIVE MEASURES OF COMPANY PERFORMANCE
Operating
income, ROTA and EPS are based on the corresponding measures reported in our financial statements and are adjusted for purposes of our compensation program. For more information about adjustments in measuring performance, see page
[ ].
Operating income. Profit attributed to the operations.
ROTA. Return on total assets (operating income divided by average assets).
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McDonalds Corporation 2011 21 |
EPS. Earnings per share (net income divided by diluted weighted-average shares). Diluted weighted-average
shares include weighted-average shares outstanding plus the dilutive effect of share-based compensation.
TSR. Total shareholder return. The
total return on our shares over a specified period, expressed as a percentage (calculated based on the change in our stock price over the relevant measurement period and assuming reinvestment of dividends).
GROUPS OF COMPANY EMPLOYEES
Staff. Company
employees, including home office, divisional office and regional office employees.
Senior management. Employees at the level of senior vice
president and above; about 50 employees.
Executives. The 12 most senior executives of the Company.
Named executive officers (NEOs). The following six executives compensation is described in this Proxy Statement, pursuant to SEC
requirements.
> |
James A. Skinner, Vice Chairman and Chief Executive Officer or CEO |
> |
Peter J. Bensen, Chief Financial Officer or CFO |
> |
Donald Thompson, President and Chief Operating Officer or President/COO |
> |
Timothy J. Fenton, President of McDonalds Asia/Pacific, Middle East and Africa, or APMEA (based in Asia through April, 2010. Mr. Fenton relocated to the U.S.
thereafter.) |
> |
Janice L. Fields, President of McDonalds USA |
> |
Denis Hennequin, former President of McDonalds Europe (based in Europe). Mr. Hennequin resigned from the Company effective November 30, 2010.
|
OTHER
Total direct
compensation. Base salary, TIP, CPUP, stock options and RSUs.
Total direct compensation opportunity for 2010. The targeted value of direct
compensation that the NEOs had an opportunity to earn in 2010 for target performance.
Committee. The Compensation Committee of the
Companys Board of Directors.
AOWs. The Companys geographic business units, namely the U.S., Europe and APMEA.
McDONALDS EXECUTIVE COMPENSATION PROGRAM
KEY OBJECTIVES
The Companys executive compensation program focuses on achieving three key objectives:
¡
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Motivating our executives to increase profitability and shareholder returns |
¡
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Varying compensation based upon performance |
¡
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Competing for and retaining managerial talent |
QUANTITATIVE PERFORMANCE FACTORS
The following table
highlights the primary quantitative performance measures the Company uses in its executive compensation program. The rationale for the use of each measure is explained below in the detailed discussions of each element of compensation.
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Performance measure |
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TIP |
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CPUP |
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Stock
options |
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RSUs |
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Operating income |
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X |
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X |
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ROTA |
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X |
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EPS |
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X |
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Share price |
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X |
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X |
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TSR |
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X |
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QUALITATIVE PERFORMANCE FACTORS
Determinations of base salary, TIP payouts and annual equity-based compensation grants take into account qualitative aspects of individual performance, as well as
potential for future performance. A multiplier based on the assessment of individual performance is used in calculating final TIP awards and has significant potential to affect the amount of such awards, as described on page
[ ]. For example, in 2010, the key priorities for our CEO were:
> |
Long-term sustainable growth |
> |
Talent management and leadership development |
> |
Balanced, active lifestyles initiatives |
ELEMENTS OF
McDONALDS EXECUTIVE COMPENSATION
ALLOCATION OF TOTAL DIRECT COMPENSATION AMONG THE ELEMENTS
Approximately 78% of the NEOs total direct compensation opportunity for 2010 was allocated to variable compensation that is at-risk based on performance,
including short-term and long-term incentive compensation.
Long-term incentive compensation is allocated approximately two thirds to equity-based compensation and one third to long-term cash incentive
compensation under the CPUP. 70% of the equity-based compensation is granted in the form of stock options and 30% in the form of RSUs.
The following charts illustrate the allocation of total direct compensation opportunity for 2010 between fixed and variable elements, as well as
between short- and long-term elements.
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22 McDonalds Corporation 2011 |
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Because they illustrate compensation opportunity for 2010, the charts reflect target TIP, an annualized portion of
target CPUP, and the grant date fair value of stock options and RSUs granted in 2010. Actual TIP payouts were above target, reflecting our results. Executives have the opportunity to earn the full number of RSUs covered by their awards only if
applicable EPS performance targets and service requirements are met.
DETAILED INFORMATION ABOUT ELEMENTS OF COMPENSATION
> Annual base salary
In setting base salary levels annually, we take into account competitive
considerations (including local market conditions), individual performance, tenure in position, internal pay equity, and the effect on our general and administrative expenses. For 2010, the Company used the 50th percentile of salaries paid to
executives in comparable positions at companies in our peer group to inform its decision regarding salary. On an individual basis, salaries are then adjusted as necessary and set above or below the 50th percentile based on individual circumstances.
For example, in 2010, our CEOs base salary was around the 75th percentile due to his tenure and strong contributions to the success of the Company. In 2010, NEOs base salaries were increased by between 2.85% and 8.33%, except for
Mr. Thompson, who received a 39.1% increase in connection with his promotion to President/COO, and Ms. Fields, who received a 14.7% increase in connection with her promotion to President of McDonalds USA.
> TIP
Our TIP is designed primarily to reward growth in operating income, which measures the success of the most important elements of our business strategy. Operating income growth requires the Company to balance
increases in revenue with financial discipline to produce strong margins and a high level of cash flow. The individual performance of our executives is also an important part of their TIP award.
Operating income is measured on a consolidated (referred to as Corporate) basis or an AOW basis, or a combination of the two,
depending on the participants responsibilities. If there is no growth in operating income, the TIP formula results in no payouts. In addition to operating income growth, final TIP payouts take into account pre-established modifiers
reflecting other measures of Corporate and/or AOW performance (such as, for 2010, comparable guest count increases, customer service improvements and corporate G&A management). In addition to Company performance, TIP payouts are adjusted based
on the application of an individual performance factor (up to 150% in 2010) which may act as a multiplier and can have a significant effect, whether positive or negative, in determining the final payout amount (final payouts are capped at 250% of
target). The description following the Grants of Plan Based Awards table on page [ ] provides additional details on how each element of performance translates into actual TIP payouts.
Target awards for our executives for 2010 were set at approximately the 60-65th percentile of target awards granted to individuals in comparable
positions at companies in our peer group.
In 2010, operating income growth exceeded the targets under the TIP for each AOW and
Corporate. Further, performance by each AOW and Corporate met or exceeded the pre-established targets for each modifier.
The
operating income targets and results under the 2010 TIP are shown in the following table:
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(Dollars in millions) |
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Target 2010 operating income* |
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2010 operating income* |
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Target 2010 operating income growth over 2009* |
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2010 operating income growth over 2009* |
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Corporate |
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$7,242.7 |
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$7,489.1 |
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6.8 |
% |
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10.5 |
% |
U.S. |
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3,404.6 |
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3,461.5 |
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5.4 |
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7.1 |
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APMEA |
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1,086.1 |
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1,131.3 |
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9.8 |
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14.4 |
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* |
Adjusted for compensation purposes as described on page [ ].
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McDonalds Corporation 2011 23 |
In addition (as reflected in the table on page [ ]), the NEOs
qualitative individual performance factors were all above 100%.
Consistent with our 2010 results, our executives TIP awards
were well above target. The target awards and final TIP payouts for the NEOs are shown in the following table:
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Named executive officer |
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Target TIP award |
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TIP final payout |
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TIP final payment as percentage of target |
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James A. Skinner |
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$ |
2,160,000 |
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$ |
4,500,000 |
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208.3 |
% |
Peter J. Bensen |
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650,000 |
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1,296,000 |
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199.4 |
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Donald Thompson |
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991,200 |
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1,855,000 |
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187.1 |
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Timothy J. Fenton |
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496,400 |
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961,000 |
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193.6 |
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Janice L. Fields |
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487,945 |
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780,000 |
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159.9 |
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Denis Hennequin |
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566,822 |
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0 |
* |
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0.0 |
|
* |
Mr. Hennequin did not receive a payout under TIP due to his resignation in November, 2010. |
Additional detail about the NEOs 2010 TIP awards begins on page [ ].
> CPUP
Senior management is eligible for
triennial long-term cash incentive awards under CPUP that primarily focus on performance other than stock price. The Committee approved new CPUP awards in February 2010 for the performance period January 1, 2010 to December 31, 2012.
Participants will not receive any payout under the 2010-2012 CPUP until after the performance period ends. The Committee determined a target award for each NEO based on his/her respective level of responsibility and on our practice to allocate
approximately one third of long-term incentive compensation opportunities to CPUP. As with the 2007-2009 CPUP, final payouts will be determined based on the following three quantitative measures over the three-year performance period: consolidated
compound annual growth in operating income (weighted 75%), average ROTA (weighted 25%) and TSR relative to the S&P 500 Index (+/-15% multiplier). No final awards will be earned unless threshold levels of the operating income and ROTA measures
are both met.
The Company believes the combination of operating income growth and ROTA provide the appropriate
balance in a long-term plan as operating income growth focuses on the key elements of growing our business (as previously discussed) and ROTA measures the efficiency of our capital investments. The Company believes that the TSR multiplier rewards
above-market performance while holding senior management accountable for below-market performance.
The matrix below shows examples of
2010-2012 CPUP payouts (prior to adjustment based on the TSR multiplier) as a percentage of the target award at different levels (threshold, target and maximum) of operating income and ROTA:
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Average 2010-2012 |
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Threshold 0% |
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Target 100% |
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Maximum 200% |
|
Consolidated compound operating income growth* |
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1.5 |
% |
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6.5 |
% |
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11.5 |
% |
ROTA* |
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22.0 |
|
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25.0 |
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27.0 |
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* |
Adjusted for compensation purposes as described on page [ ]. |
> Stock options
Stock options, including those granted in 2010, have an exercise price equal to
the closing price of our common stock on the grant date, a term of ten years and vest ratably over four years. The Companys policies and practices regarding stock option grants, including the timing of grants and the determination of the
exercise price, are described on page [ ].
> RSUs
The RSUs granted to executives in 2010 are scheduled to cliff vest at the end of a three-year service period, subject to the Companys achievement of increased EPS over that period. The target performance
level for the RSUs granted to executives in 2010 is 6% compounded annual growth in EPS on a cumulative basis over baseline 2009 EPS of $3.97. If target performance is achieved, the full number of RSUs covered by the award will be eligible to vest.
Achievement of above target performance does not increase the number of RSUs earned, but below target performance does reduce the number of RSUs that will vest.
Although the value of RSUs is linked to our stock price, the performance-based vesting conditions based upon EPS growth require the executives to achieve the Companys strategic objectives in order to receive
the awards. The Company believes that EPS growth is a strong indicator of effective strategic growth.
All of the RSUs granted to the
NEOs in 2007 vested in 2010 based on the achievement of 17.7% compounded annual EPS growth over the performance period, which exceeded the target of 7%.
> Retirement savings plans
The NEOs who are
currently employed by the Company participate in our broad-based tax-efficient defined contribution retirement savings plan.
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24 McDonalds Corporation 2011 |
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> Severance and change in control arrangements
Severance plan. Messrs. Bensen, Thompson and Fenton, and Ms. Fields participate in our severance plan, a broad-based plan that provides severance
benefits to certain U.S. employees based on their level within the Company and years of service. The severance plan is described on page [ ].
Change in control employment agreements. The Company has change in control employment agreements with its active NEOs. Benefits under the change in control employment agreements are described under
Potential Payments Upon Termination of Employment or Change in Control beginning on page [ ].
Executive Retention
Replacement Plan (ERRP). Mr. Skinner participates in the Executive Retention Replacement Plan or ERRP. Since Mr. Skinner fulfilled the retention period and satisfies the retirement age requirement under the ERRP, he is entitled to
retire at any time and receive certain cash benefits, as well as the vesting of all of his outstanding equity awards. Stock options would continue to become exercisable on their originally scheduled dates and RSUs would be paid out on
the originally scheduled dates, based on the Companys achievement of the applicable performance goals. In addition, Mr. Skinner would receive substantially similar economic benefits if his employment is terminated for any reason other
than death, disability or cause. Mr. Skinners receipt of benefits under the ERRP is subject to the execution of an agreement that includes covenants not to compete, not to solicit employees, nondisparagement and nondisclosure
covenants as well as a release of claims.
Denis Hennequin resignation. Pursuant to a Settlement Agreement under French law, upon
Mr. Hennequins resignation, he received a settlement amount of $414,525 (310,000); an expatriate premium of $58,657; amounts
in respect of 42 days of accrued and unused vacation; and the ability to exercise any vested stock options until February 28, 2011, subject to certain sale restrictions on the underlying shares. Mr. Hennequin forfeited all unvested stock
options and RSUs. In accordance with his employment contract, Mr. Hennequin remains subject to a one-year covenant not to compete and other customary restrictive covenants, including a two-year non-solicit covenant, in exchange for monthly
payments equal to his former monthly salary for a period of up to one year. Mr. Hennequin has also waived all claims against the Company relating to his resignation of employment.
> Perquisites and other fringe benefits
McDonalds provides the following limited
perquisites to executives: Company-provided cars or an allowance, financial planning, annual physical examinations (which are also available for the executives spouses), limited executive security, matching charitable donations, limited
personal items and, generally in the case of the CEO only, personal use of the Companys aircraft. See footnote [ ] to the Summary Compensation Table on page [ ] for a discussion of perquisites.
Executives also participate in all of the broad-based benefit and welfare plans and perquisites available to McDonalds employees in general.
CERTAIN ADJUSTMENTS IN MEASURING PERFORMANCE
In measuring performance against financial metrics, the Committee focuses on the fundamentals of the underlying business performance and makes adjustments for items that are not indicative of ongoing results. For
example, operating income and EPS are expressed in constant currencies (i.e., excluding the effects of foreign currency translation), since we believe that period-to-period changes in foreign exchange rates can cause our reported results to appear
more or less favorable than business fundamentals would indicate. The Committees approach to other types of adjustments is subject to pre-established guidelines to provide clarity in how it views the business when evaluating managements
performance. Charges/credits that may be excluded from operating income include: strategic items (such as restructurings, acquisitions and divestitures); regulatory items (changes in tax or accounting rules); and
external items (such as natural disasters). Similar principles apply to exclusions from EPS and when calculating ROTA.
Significant items
excluded in calculating adjusted operating income for 2010 TIP include:
> |
Charges related to certain strategic Japan store closings; and |
> |
Pretax income related to the resolution of certain liabilities retained in connection with the 2007 Latin America developmental license transaction. |
Significant items excluded from base EPS (2009 EPS) for the RSUs granted to the executives in 2010 include:
> |
Pretax income primarily related to the resolution of certain liabilities retained in connection with the 2007 Latin American developmental licensee transaction and recognition of
a tax benefit in connection with this income. |
Significant items excluded from base EPS (2006 EPS) for RSUs that were granted in 2007
and vested in 2010 include:
> |
Discontinued operations (related to divestiture of Chipotle and Boston Market). |
THE PROCESS FOR SETTING COMPENSATION
The Committee is responsible for reviewing and approving senior
managements compensation. The Chairmen of the Governance and Compensation Committees lead the Boards independent Directors in the evaluation of the CEOs performance. Based upon the results of this performance evaluation, the
Committee determines the CEOs compensation.
THE ROLE OF MANAGEMENT
Management recommends compensation packages for executives other than the CEO to the Committee for consideration and approval. The CEO recommends compensation packages for the NEOs who report directly to him:
Messrs. Bensen and Thompson. The President/COO does the same for the NEOs who report directly to him: Messrs. Fenton and (prior to his resignation) Hennequin and Ms. Fields. The head of human resources also provides input on compensation
packages for each of the executives. In 2010, prior to each Committee meeting, the CEO and
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McDonalds Corporation 2011 25 |
the CFO provided input on the materials prepared by management and presented to the Committee (except with respect to their own compensation).
THE ROLE OF COMPENSATION CONSULTANTS
The Committee has
adopted a policy governing the engagement of its independent compensation consultant, under which the Committee has the sole authority to select, evaluate, retain and dismiss the consultant and approve the terms of the consultants retention.
Management may not engage the consultant.
Frederic W. Cook & Co., Inc. (Fred Cook) is the Committees
independent compensation consultant. Other than assistance to the Board in carrying out certain routine functions (compiling and summarizing the results of certain Board and Director evaluations) and advice on Director fees, Fred Cook does not
provide any other services to the Company or to management.
Management also considers survey data and similar information about
compensation programs that it obtains from various sources, including Hewitt Associates LLC, which also provides significant benefit plan administration services to McDonalds, and Towers Watson & Co. From time to time, data obtained
from these other sources is provided to the Committee.
THE COMMITTEES CONSIDERATION OF TALLY SHEETS AND RETIREMENT SAVINGS
The Committee annually reviews tally sheets which summarize all components of our executives total compensation. In addition, the Committee annually reviews
wealth accumulated by our executives under our retirement savings plans (which is comprised mostly of the executives contributions under the plans) and equity compensation plans. It is not our practice to take this information in
account when determining compensation. We believe that it would be inconsistent with the purpose of our executive compensation program to make decisions about current awards by taking into account the executives accumulated savings and
investment returns.
COMPANIES IN OUR PEER GROUP IN 2010
Consistent with our goal of providing competitive compensation, we compare our executives compensation to executive compensation at a peer group of companies. The companies in the peer group are companies
with which we compete for talent, including our direct competitors, major retailers, producers of consumer branded goods and companies with a significant global presence.
The Committee reviews our peer group annually. The table below shows market capitalization for each
of our peer group companies for 2010 (except for Nestlé and Unilever, which are U.S. divisions of non-U.S. companies for which such information is not available), which ranges from $1.8 billion to $194.1 billion. McDonalds market
capitalization as of the end of 2010 was $81 billion (or the 76th percentile of our comparator group).
McDONALDS 2010 PEER
GROUP COMPANIES (1)
(Dollars In billions)
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Peer |
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Market capitalization |
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Branded Consumer Products: |
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3M Company |
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$62.0 |
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The Coca-Cola Company |
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136.9 |
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Colgate-Palmolive |
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37.1 |
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The Walt Disney Company |
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63.1 |
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General Mills, Inc. |
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22.5 |
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Johnson & Johnson |
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169.7 |
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Kellogg Company |
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21.3 |
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Kraft Foods, Inc. |
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53.9 |
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Nestlé (United States) (2) |
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NIKE, Inc. |
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41.2 |
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PepsiCo, Inc. |
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103.7 |
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The Procter & Gamble Company |
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167.9 |
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Unilever (United States)
(2) |
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Major Retailers/Services: |
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Best Buy Co., Inc. |
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17.8 |
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Costco Wholesale Corporation |
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29.0 |
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The Home Depot, Inc. |
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50.7 |
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Lowes Companies Inc. |
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29.7 |
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Sears Holding Corporation |
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7.9 |
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Target Corporation |
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36.8 |
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Walgreen Co. |
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32.1 |
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Wal-Mart Stores, Inc. |
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194.1 |
|
Retail Eating Places: |
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Yum! Brands, Inc. |
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20.8 |
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Starbucks Corporation |
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19.3 |
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Wendys/Arbys Group, Inc. |
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1.8 |
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Burger King Holdings, Inc. (formerly Burger King) |
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3.3 |
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(1) |
Source for market capitalization: Bloomberg.com. Data as of December 31, 2010, except Burger King Holdings, Inc. which ceased to be publicly traded in October 2010.
|
(2) |
Unlisted U.S. division of non-U.S. company.
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26 McDonalds Corporation 2011 |
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COMPENSATION POLICIES AND PRACTICES
RISK AND COMPENSATION PROGRAMS
In considering the risks to the Company and its business that may be implied by
our compensation plans and programs, the Committee focuses primarily on senior management, but also considers the design, operation and mix of the plans and programs at all levels of the Company. Our compensation program is designed to mitigate the
potential to reward risk-taking that may produce short-term results that appear in isolation to be favorable, but that may undermine the successful execution of our long-term business strategy and destroy shareholder value.
INTERNAL PAY EQUITY
Overall compensation opportunities
reflect our executives positions, responsibilities and tenure and are generally similar for executives who have comparable levels of responsibility (although actual payouts may differ depending on relative performance). Our CEO,
Mr. Skinner, has ultimate responsibility for the strategic direction of the Company, and therefore is the most highly paid. Mr. Skinners compensation also reflects the importance of his leadership to the successful design and
execution of our business strategy and his tenure as CEO.
SECTION 409A OF THE INTERNAL REVENUE CODE
All of the Companys compensation programs are designed to comply with Section 409A of the Internal Revenue Code which imposes certain requirements on
nonqualified deferred compensation plans.
POLICY WITH RESPECT TO DEDUCTIBILITY OF COMPENSATION
While the Committee retains flexibility, we generally design our compensation programs to allow the Company to deduct compensation expense under Section 162(m)
of the Internal Revenue Code, which generally limits to $1 million the tax deductibility of annual compensation paid to certain officers unless the compensation is performance based.
POLICY REGARDING STOCK OWNERSHIP OF MANAGEMENT
The Company has adopted share ownership requirements because we
believe that senior management will more effectively pursue the long-term interests of shareholders if they are shareholders themselves (for example, our CEO is required to own McDonalds stock equal in value to at least six times his base
salary). The Committee reviews share ownership requirements annually. Further, the Company has adopted restrictions that prohibit specified employees, including senior management, from engaging in derivative transactions and require approval in
order to hold Company shares in a margin account.
POLICIES AND PRACTICES REGARDING EQUITY AWARDS
Equity awards cannot be granted when the Company possesses material non-public information. The Company generally makes broad-based equity grants at approximately the same time each year following the
Companys release of financial information; but the Company may choose to make equity awards outside of the annual broad-based grant. Stock options may be granted only with an exercise price at or above the closing market price of the
Companys stock on the date of grant.
POLICY REGARDING FUTURE SEVERANCE PAYMENTS
The Company has adopted a policy under which the Company will seek shareholder approval for future severance payments to a NEO if such payments would exceed 2.99 times the sum of (i) the NEOs annual base
salary as in effect immediately prior to termination of employment; and (ii) the highest annual bonus awarded to the NEO by the Company in any of the Companys three full fiscal years immediately preceding the fiscal year in which
termination of employment occurs. Certain types of payments are excluded from this policy, such as amounts payable under arrangements that apply to classes of employees other than the NEOs or that predate the implementation of the policy, as well as
any payment that the Committee determines is a reasonable settlement of a claim that could be made by the NEO.
RECOUPMENT AND FORFEITURE OF
COMPENSATION
The Companys compensation plans contain recoupment provisions that apply to a larger group of employees than the recoupment
provisions under the Sarbanes-Oxley Act.
Senior management may be required to repay to the Company compensation previously
awarded under TIP and CPUP in certain circumstances (for example, willful fraud) and to the extent permitted under applicable law.
Payments under the ERRP, including some stock option gains and RSU payouts, are also subject to forfeiture and recoupment in certain
circumstances, such as violation of an applicable restrictive covenant or the commission of an act that would have resulted in termination for cause.
Under our severance plan that applies to eligible employees on the U.S. payroll, the Company may cease payment of any future benefits and require repayment of any previously paid severance amounts if an employee
violates an applicable restrictive covenant or commits an act that would have resulted in termination for cause.
Unexercised stock options and unpaid RSUs are subject to forfeiture if any employee commits an act or acts involving dishonesty, fraud,
illegality or moral turpitude. Further, if an executive violates a restrictive covenant, the Company will be able to cancel outstanding awards.
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McDonalds Corporation 2011 27 |
COMPENSATION TABLES
SUMMARY COMPENSATION TABLE
The table below summarizes the total compensation earned by or paid to our NEOs in 2008, 2009 and 2010.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
principal position
(a) |
|
|
Year (b) |
|
|
|
Salary (1) ($) (c) |
|
|
|
Stock awards (2) ($) (e) |
|
|
|
Option awards (3) ($) (f) |
|
|
Non-equity
incentive plan compensation (4) ($) (g) |
|
|
|
All other compensation (5) ($) (i) |
|
|
|
Total ($) (j) |
|
James A. Skinner |
|
|
2010 |
|
|
|
$1,433,333 |
|
|
|
$1,415,255 |
|
|
|
$1,752,389 |
|
|
Annual: |
|
|
$4,500,000 |
|
|
|
$631,641 |
|
|
|
$9,732,618 |
|
Vice Chairman |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
0 |
|
|
|
|
|
|
|
|
|
and Chief Executive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
4,500,000 |
|
|
|
|
|
|
|
|
|
Officer |
|
|
2009 |
|
|
|
1,391,667 |
|
|
|
1,670,500 |
|
|
|
2,238,608 |
|
|
Annual: |
|
|
3,250,000 |
|
|
|
743,350 |
|
|
|
17,574,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
8,280,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
11,530,000 |
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
|
1,337,500 |
|
|
|
2,708,203 |
|
|
|
4,393,542 |
|
|
Annual: |
|
|
4,600,000 |
|
|
|
557,674 |
|
|
|
13,596,919 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
4,600,000 |
|
|
|
|
|
|
|
|
|
Peter J. Bensen |
|
|
2010 |
|
|
|
641,667 |
|
|
|
398,084 |
|
|
|
492,891 |
|
|
Annual: |
|
|
1,296,000 |
|
|
|
198,800 |
|
|
|
3,027,441 |
|
Corporate Executive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
0 |
|
|
|
|
|
|
|
|
|
Vice President and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
1,296,000 |
|
|
|
|
|
|
|
|
|
Chief Financial |
|
|
2009 |
|
|
|
554,167 |
|
|
|
291,702 |
|
|
|
390,873 |
|
|
Annual: |
|
|
956,000 |
|
|
|
177,514 |
|
|
|
4,981,715 |
|
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
2,611,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
3,567,459 |
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
|
450,000 |
|
|
|
401,728 |
|
|
|
285,585 |
|
|
Annual: |
|
|
938,000 |
|
|
|
98,178 |
|
|
|
2,173,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
938,000 |
|
|
|
|
|
|
|
|
|
Donald Thompson |
|
|
2010 |
|
|
|
794,952 |
|
|
|
583,838 |
|
|
|
722,908 |
|
|
Annual: |
|
|
1,855,000 |
|
|
|
174,662 |
|
|
|
4,131,360 |
|
President and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
0 |
|
|
|
|
|
|
|
|
|
Chief Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
1,855,000 |
|
|
|
|
|
|
|
|
|
Officer |
|
|
2009 |
|
|
|
570,833 |
|
|
|
344,725 |
|
|
|
715,758 |
|
|
Annual: |
|
|
581,000 |
|
|
|
166,077 |
|
|
|
5,138,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
2,760,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
3,341,000 |
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
|
545,833 |
|
|
|
324,982 |
|
|
|
527,230 |
|
|
Annual: |
|
|
794,708 |
|
|
|
140,074 |
|
|
|
2,332,827 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
794,708 |
|
|
|
|
|
|
|
|
|
Timothy J. Fenton |
|
|
2010 |
|
|
|
581,083 |
|
|
|
371,564 |
|
|
|
460,033 |
|
|
Annual: |
|
|
961,000 |
|
|
|
386,893 |
|
|
|
2,760,573 |
|
President, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
0 |
|
|
|
|
|
|
|
|
|
McDonalds Asia / |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
961,000 |
|
|
|
|
|
|
|
|
|
Pacific, Middle East |
|
|
2009 |
|
|
|
563,750 |
|
|
|
344,725 |
|
|
|
461,941 |
|
|
Annual: |
|
|
834,000 |
|
|
|
1,164,702 |
|
|
|
6,129,118 |
|
and Africa (6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
2,760,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
3,594,000 |
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
|
545,000 |
|
|
|
324,982 |
|
|
|
527,230 |
|
|
Annual: |
|
|
930,000 |
|
|
|
1,729,824 |
|
|
|
4,057,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
930,000 |
|
|
|
|
|
|
|
|
|
Janice L. Fields |
|
|
2010 |
|
|
|
573,351 |
|
|
|
291,947 |
|
|
|
361,459 |
|
|
Annual: |
|
|
780,000 |
|
|
|
146,659 |
|
|
|
2,153,416 |
|
President, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
0 |
|
|
|
|
|
|
|
|
|
McDonalds USA (7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
780,000 |
|
|
|
|
|
|
|
|
|
Denis Hennequin |
|
|
2010 |
|
|
|
586,651 |
|
|
|
371,564 |
|
|
|
460,033 |
|
|
Annual: |
|
|
0 |
|
|
|
830,199 (9) |
|
|
|
2,248,447 |
|
Former President, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
0 |
|
|
|
|
|
|
|
|
|
McDonalds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
0 |
|
|
|
|
|
|
|
|
|
Europe (8) |
|
|
2009 |
|
|
|
671,628 |
|
|
|
342,126 |
|
|
|
715,591 |
|
|
Annual: |
|
|
868,550 |
|
|
|
320,125 |
|
|
|
5,678,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
2,760,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
3,628,550 |
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
|
686,341 |
|
|
|
350,894 |
|
|
|
570,866 |
|
|
Annual: |
|
|
1,208,940 |
|
|
|
344,450 |
|
|
|
3,161,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term: |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
1,208,940 |
|
|
|
|
|
|
|
|
|
|
|
|
28 McDonalds Corporation 2011 |
|
|
(1) |
The base salary earned in 2010 by the NEOs reflects regular annual increases in base salary that took effect March 1, 2010, except for Mr. Thompson and Ms. Fields
who each received their raise in connection with their promotion to President/COO and President of McDonalds USA, respectively. The NEOs annualized rates of base salary as of December 31, 2010 were as follows:
|
|
|
|
|
|
James A. Skinner |
|
$ |
1,440,000 |
|
Peter J. Bensen |
|
|
650,000 |
|
Donald Thompson |
|
|
800,000 |
|
Timothy J. Fenton |
|
|
584,000 |
|
Janice L. Fields |
|
|
575,000 |
|
(2) |
Represents the aggregate grant date fair value, as computed in accordance with FASB ASC Topic 718, based on the probable outcome of the applicable performance conditions and
excluding the effect of estimated forfeitures during the applicable vesting periods, of RSUs granted to the NEOs under the McDonalds Corporation Amended and Restated 2001 Omnibus Stock Ownership Plan, as amended (Amended 2001 Plan) in each of
2008, 2009 and 2010. The values in this column are based on the closing market price of the Companys common stock on the date of the award, less the present value of expected dividends over the vesting period. Generally, RSUs vest on the third
anniversary of the grant date and are subject to performance-based vesting conditions linked to the Companys achievement of target levels of diluted earnings per share growth. Information with respect to the RSUs granted to the NEOs in 2010 is
disclosed in the Grants of Plan-Based Awards table on page [ ] and the accompanying notes. Information with respect to RSUs reflected in this column that were granted in years before 2010 is disclosed in the Outstanding Equity
Awards at 2010 Year-End table on page [ ] and the accompanying notes. |
(3) |
Represents the aggregate grant date fair value, as computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures during the applicable vesting
periods, of stock options granted to the NEOs in each of 2008, 2009 and 2010. Options have an exercise price equal to the closing price of the Companys common stock on the date of grant, vest in equal annual installments over a four-year
period and are subject to the provisions of the Amended 2001 Plan. The values in this column for stock options granted in 2010 are determined using a closed-form pricing model based on the following assumptions, as described in the footnotes to
financial statements: expected volatility based on historical experience of 22.1%; an expected annual dividend yield of 3.5%; a risk-free return of 2.8%; and expected option life based on historical experience of 6.2 years. Information with respect
to the options granted to the NEOs in 2010 is disclosed in the Grants of Plan-Based Awards table on page [ ] and the accompanying notes. Information with respect to options reflected in this column that were granted in years
before 2010 is disclosed in the Outstanding Equity Awards at 2010 Year-End table on page [ ] and the accompanying notes. |
(4) |
The values for non-equity incentive plan awards reported in column (g) reflect the fact that our long-term cash incentive plan or CPUP operates on non-overlapping three year
cycles. Payouts under our annual cash incentive plan, TIP, are reflected in column (g) for each of 2008, 2009 and 2010. |
(5) |
All other compensation for 2010 includes the Companys contributions to the Companys Profit Sharing and Savings Plan and Excess Benefit and Deferred Bonus
Plan on behalf of the NEOs other than Mr. Hennequin, in the following amounts: |
|
|
|
|
|
James A. Skinner |
|
$ |
515,167 |
|
Peter J. Bensen |
|
|
175,744 |
|
Donald Thompson |
|
|
151,355 |
|
Timothy J. Fenton |
|
|
155,659 |
|
Janice L. Fields |
|
|
118,999 |
|
All other compensation also includes limited categories of perquisites, including personal use of Company-provided cars or an allowance; Company-paid life insurance; financial counseling; annual
physical examinations for the executives (which are also available for the executives spouse); limited executive security; matching charitable donations; limited personal items, and for the CEO only, personal use of the Companys aircraft
(with a net cost to the Company in 2010 of $58,487). In general, the CEO is the only executive who is permitted to use the Companys aircraft for personal travel. However, in certain circumstances the CEO may in his discretion determine that it
is appropriate for other executives to use the corporate aircraft for personal travel (this did not occur in 2010) . In addition, on certain occasions, at the discretion of the CEO, other executives may be accompanied by their spouses when traveling
to business events on the Companys aircraft.
In the case of the Companys NEOs based overseas, Messrs.
Fenton and Hennequin, the amount in this column for 2010 also includes certain benefits in connection with their international assignments, as follows:
For Mr. Fenton: Company-provided residence in Hong Kong through April 2010; housing insurance and utilities for his Hong
Kong residence; a cost-of-living adjustment; home leave and family travel allowance for Mr. Fenton and his family (in the amount of $55,925); relocation expenses (in the amount of $68,865); and tax preparation services. As previously disclosed,
the Company maintained a tax equalization program for Mr. Fenton designed to reimburse tax obligations arising solely as a result of his international assignment that were in excess of the taxes he would have paid had he remained in the U.S.
Mr. Fentons return to the United States in April 2010 affected his aggregate tax obligations in respect of 2010 income and resulted in no aggregate incremental cost to the Company in 2010. Certain tax payments were made by the Company
during 2010 for Mr. Fentons benefit; however, all amounts were previously disclosed or offset by other amounts withheld from Mr. Fentons compensation. Amounts paid in Hong Kong dollars were converted into U.S. dollars as
described in note 6 below.
|
|
|
|
|
McDonalds Corporation 2011 29 |
For Mr. Hennequin: Company-provided residence in Geneva, Switzerland (in the
amount of $101,000); utilities, security, maintenance and cleaning services for his Geneva residence; certain local taxes reimbursed by the Company in connection with his Geneva residence; Company-paid expenses incurred in traveling to and from his
home in Paris and the Companys office in Geneva; an expatriation allowance; relocation expenses; and tax preparation services (in the amount of $36,786). These amounts were converted from Euros or Swiss Francs as described in note 8 below.
The incremental cost of perquisites is included in the amount provided in the table and based on actual charges to
the Company, except as follows: (i) personal use of Company-provided cars includes a pro rata portion of the purchase price, fuel and maintenance, based on personal use and (ii) with respect to Mr. Skinner, personal use of corporate
aircraft includes fuel costs, on-board catering, landing/handling fees and costs associated with the flight crew, and excludes fixed costs, which do not change based upon usage, such as pilot salaries and the cost of capital invested in corporate
aircraft. When Mr. Skinner uses the Companys aircraft for personal use he is required to reimburse to the Company the value of the flight calculated as the lower of (i) amount determined under the Internal Revenue Code based on four
times the Standard Industry Fare Level (SIFL) rate per person or (ii) 200% of the actual fuel cost.
(6) |
Certain amounts included in All other compensation for Mr. Fenton in 2010 were paid in Hong Kong dollars and converted into U.S. dollars at a rate of HKD 7.7674
to U.S. $1. For 2008 and 2009, certain amounts included in All other compensation were paid in Hong Kong dollars and converted into U.S. dollars at rates of HKD 7.7862 to U.S. $1 and HKD 7.7516 to U.S. $1, respectively. In each case, the
rate used represents the average of the average monthly conversion rates for the applicable year. The conversion rates were provided by Bloomberg and/or Oanda. |
(7) |
Ms. Fields, who became President of McDonalds USA as of January 11, 2010, was not an executive officer in 2008 or 2009. |
(8) |
For 2010, amounts reported as salary and certain amounts included in All other compensation were paid to Mr. Hennequin in Euros. Certain amounts included in
All other compensation for 2010 were also paid to Mr. Hennequin in Swiss Francs. |
For 2010, amounts paid to Mr. Hennequin in Euros were converted into U.S. dollars at a rate of EUR 0.7478 to U.S. $1 and
amounts paid in Swiss Francs were converted into U.S. dollars at a rate of CHF 1.0396 to U.S. $1. For 2009, other than CPUP, amounts paid to Mr. Hennequin in Euros were converted into U.S. dollars at a rate of EUR 0.7173 to U.S. $1 and amounts
paid in Swiss Francs were converted into U.S. dollars at a rate of CHF 1.0828 to U.S. $1. For 2008, amounts paid to Mr. Hennequin in Euros were converted into U.S. dollars
at a rate of EUR 0.6799 to U.S. $1. In each case, the rate used represents the average of the average monthly conversion rates for the applicable year. Mr. Hennequins 2009 long-term
cash incentive, CPUP, payment was converted into U.S. dollars at a rate of EUR 0.7109 to U.S. $1, which represents the three-year average exchange rate. The conversion rates were provided by Bloomberg and/or Oanda.
(9) |
Mr. Hennequin resigned from his employment with the Company effective November 30, 2010. Certain amounts included in All other compensation for
Mr. Hennequin in 2010 resulted from payments in connection with his resignation. Arrangements in connection with his resignation are described under Potential Payments Upon Termination or Change in Control on page
[ ] and in notes [ ] and [ ] to the Grants of Plan-Based Awards table on page [ ], note [ ] to the Outstanding Equity Awards at 2010
Year-End table on page [ ]. |
|
|
|
30 McDonalds Corporation 2011 |
|
|
GRANTS OF PLAN-BASED AWARDS
The table below sets forth grants of cash incentive awards and equity awards to our NEOs in 2010.
In
2010, the NEOs received annual cash awards under TIP. Columns (d) and (e) below show the target and maximum awards they could have earned. Actual payouts are in column (g) of the Summary Compensation Table. The formula for determining
payouts under the TIP is described following the footnotes to the table. In 2010, the NEOs also received two types of equity awards under the Amended 2001 Plan: RSUs subject to performance-based vesting criteria (see columns (f), (g) and (h)),
and stock options (see columns (j), (k) and (l)).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated future payouts under
non-equity incentive plan awards |
|
|
Estimated future payouts under
equity incentive plan awards (1) |
|
|
All other option awards: number of securities underlying |
|
|
Exercise or base price
of option |
|
|
Grant date fair value of stock and option |
|
Name (a) |
|
Plan |
|
Grant
date (b) |
|
|
Threshold
($)(c) |
|
|
Target
($)(d) |
|
|
Maximum
($)(e) |
|
|
Threshold
(#)(f) |
|
|
Target
(#)(g) |
|
|
Maximum
(#)(h) |
|
|
options (2)(#)(j) |
|
|
awards ($/Sh)(k) |
|
|
awards (3)($)(l) |
|
James A. Skinner |
|
TIP Amd 2001 |
|
|
|
|
|
|
0 |
|
|
|
$2,160,000 |
|
|
|
$5,400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan (4) |
|
|
2/10/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,324 |
|
|
|
25,295 |
|
|
|
25,295 |
|
|
|
|
|
|
|
|
|
|
|
$1,415,255 |
|
|
|
Amd 2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
2/10/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
177,009 |
|
|
|
$63.25 |
|
|
|
1,752,389 |
|
Peter J. Bensen |
|
TIP Amd 2001 |
|
|
|
|
|
|
0 |
|
|
|
650,000 |
|
|
|
1,625,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
2/10/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,779 |
|
|
|
7,115 |
|
|
|
7,115 |
|
|
|
|
|
|
|
|
|
|
|
398,084 |
|
|
|
Amd 2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
2/10/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,787 |
|
|
|
63.25 |
|
|
|
492,891 |
|
Donald Thompson |
|
TIP Amd 2001 |
|
|
|
|
|
|
0 |
|
|
|
991,200 |
|
|
|
2,478,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
2/10/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,609 |
|
|
|
10,435 |
|
|
|
10,435 |
|
|
|
|
|
|
|
|
|
|
|
583,838 |
|
|
|
Amd 2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
2/10/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,021 |
|
|
|
63.25 |
|
|
|
722,908 |
|
Timothy J.
Fenton |
|
TIP Amd 2001 |
|
|
|
|
|
|
0 |
|
|
|
496,400 |
|
|
|
1,241,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
2/10/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,661 |
|
|
|
6,641 |
|
|
|
6,641 |
|
|
|
|
|
|
|
|
|
|
|
371,564 |
|
|
|
Amd 2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
2/10/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,468 |
|
|
|
63.25 |
|
|
|
460,033 |
|
Janice L. Fields |
|
TIP Amd 2001 |
|
|
|
|
|
|
0 |
|
|
|
487,945 |
|
|
|
1,219,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
2/10/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,305 |
|
|
|
5,218 |
|
|
|
5,218 |
|
|
|
|
|
|
|
|
|
|
|
291,947 |
|
|
|
Amd 2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
2/10/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,511 |
|
|
|
63.25 |
|
|
|
361,459 |
|
Denis Hennequin |
|
TIP Amd 2001 |
|
|
|
|
|
|
0 |
|
|
|
566,822 |
|
|
|
1,417,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
2/10/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,661(5) |
|
|
|
6,641(5) |
|
|
|
6,641(5) |
|
|
|
|
|
|
|
|
|
|
|
371,564 |
|
|
|
Amd 2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
2/10/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,468 (6) |
|
|
|
63.25 |
|
|
|
460,033 |
|
(1) |
Reflects grants of RSUs subject to performance-based vesting conditions under the Amended 2001 Plan in 2010. The RSUs vest on February 10, 2013, subject to the
Companys achievement of specified EPS growth during the performance period ending on December 31, 2012. The performance target for all the RSU awards granted to the NEOs in 2010 is compounded annual EPS growth of 6% on a cumulative basis.
Both base EPS and EPS for the performance period are adjusted to exclude certain items as described on page [ ]. If the 6% growth target is achieved, 100% of the RSUs will vest. If less than 1% compounded EPS growth is
achieved, none of the RSUs will vest. If compounded EPS
|
|
growth is at or above the 1% threshold, but below the 6% target, the awards will vest in proportion to the level of EPS growth achieved. |
(2) |
Reflects grants of stock options in 2010 under the Amended 2001 Plan. Options have an exercise price equal to the closing price of the Companys common stock on the date of
grant. Subject to the terms of the Amended 2001 Plan, options vest in four equal annual installments on the first, second, third and fourth anniversaries of the grant date, which was February 10, 2010 for all the NEOs.
|
|
|
|
|
|
McDonalds Corporation 2011 31 |
(3) |
Represents the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, of RSUs and stock options granted to the NEOs in 2010 under the Amended 2001 Plan.
The values in this column for RSUs and stock options were determined based on the assumptions described in notes 2 and 3, respectively, to the Summary Compensation Table on page [ ]. |
(4) |
Amd 2001 Plan denotes the Amended 2001 Plan. |
(5) |
Mr. Hennequin resigned from the Company effective November 30, 2010. In accordance with the termination provisions established at the time of grant, Mr. Hennequin
forfeited 6,641 unvested RSUs. The treatment of these RSUs in connection with Mr. Hennequins resignation is also described in note 5 to the Outstanding Equity Awards at 2010 Year-End table on page [ ] and under
Potential Payments Upon Termination or Change in Control on page [ ]. |
(6) |
Mr. Hennequins stock options granted in 2010 were originally scheduled to become exercisable in four equal annual installments on the first, second, third and fourth
anniversaries of the grant date. Pursuant to the terms of the option awards, no stock options vested following Mr. Hennequins resignation and all stock options unvested as of November 30, 2010 were forfeited. The treatment of
Mr. Hennequins stock options upon his retirement is also described under Potential Payments Upon Termination or Change in Control on page [ ]. |
TIP AWARDS
Each NEOs target TIP award for 2010 (shown
in column (d)) to the Grants of Plan-Based Awards table was equal to a percentage of his/her base salary as approved by the Committee. The final payouts (shown in column (g) to the Summary Compensation Table) were determined based on the
following principles:
|
|
|
> |
|
The TIP is designed to measure performance using a team factor that is initially determined based on growth in operating income. The team factor can then be adjusted up or
down, within specified limits, based on pre-established modifiers reflecting other measures of Corporate and/or AOW performance. The target amount is multiplied by the team factor, which includes the modifiers. The product is the
adjusted target award. |
|
|
> |
|
Each participant is assigned an individual performance factor which is determined based on a combination of both subjective and objective factors. The adjusted target award is multiplied
by the individual performance factor, and the product is the final
payout. |
The flowchart below illustrates this process:
The team factor (prior to adjustment based on the modifiers) is determined entirely by growth in operating income for the year. The team factor
increases with growth in operating income up to 100% at the target level of growth and to higher percentages at higher levels of growth, up to the maximum (175% in 2010).
The table below shows how increases in operating income determined the team factor for the NEOs in 2010, prior to adjustment based on the applicable modifiers. The table shows the target and maximum levels of
growth in operating income. Operating income at the Corporate level was included in the TIP team factor calculation for all of our executives. In addition, the results for the U.S. were included in the calculation for Mr. Thompson and
Ms. Fields and the results for APMEA were included in the calculation for Mr. Fenton.
TIP team factor and growth in operating income for
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Team factor as % of target |
|
|
0% |
|
|
|
100% (target) |
|
|
|
175% (maximum) |
|
Growth in operating
income over 2009: |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate factor |
|
|
0% |
|
|
|
6.8% |
|
|
|
11.6% |
|
U.S. factor |
|
|
0 |
|
|
|
5.4 |
|
|
|
9.6 |
|
APMEA factor |
|
|
0 |
|
|
|
9.8 |
|
|
|
19.4 |
|
Operating income growth in 2010 was 10.5% (Corporate), 7.1% (U.S.) and 14.4% (APMEA). The resulting Corporate, U.S. and APMEA team factors were
155.4%, 128.8% and 133.3%, respectively, before the application of modifiers.
|
|
|
32 McDonalds Corporation 2011 |
|
|
The target TIP awards, the team factors (including the modifiers), the individual performance factors
and the final payouts as a percentage of target awards for the NEOs in 2010 are summarized in the table below. Pursuant to his settlement agreement described on page [ ], Mr. Hennequin forfeited any TIP award for 2010 to
which he would otherwise have been entitled.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Team factors (Corporate
factor; AOW factor; blend) |
|
|
|
|
|
|
|
Named executive officer |
|
Target TIP award (% of base salary) |
|
|
Applicable team factor(s) |
|
Team factor(s) before application of modifiers (% of target award) |
|
|
Impact of modifiers (% added or subtracted) |
|
|
Final team factor applied to determine TIP payout (% of target award) |
|
|
Personal factor (%) |
|
|
Final TIP payout (% of target award) |
|
James A. Skinner |
|
|
150.0 |
% |
|
Corporate |
|
|
155.4 |
% |
|
|
+15.0 |
% |
|
|
170.4 |
% |
|
|
122 |
% |
|
|
208.3 |
% |
Peter J. Bensen |
|
|
100.0 |
|
|
Corporate |
|
|
155.4 |
|
|
|
+15.0 |
|
|
|
170.4 |
|
|
|
117 |
|
|
|
199.4 |
|
Donald Thompson |
|
|
123.9 |
(1) |
|
Corporate (1) |
|
|
155.4 |
|
|
|
+15.0 |
|
|
|
170.1 |
|
|
|
110 |
|
|
|
187.1 |
|
Timothy J. Fenton |
|
|
85.0 |
|
|
Corporate (weighted 25%) |
|
|
155.4 |
|
|
|
+15.0 |
|
|
|
161.3 |
|
|
|
120 |
|
|
|
193.6 |
|
|
|
|
|
|
|
APMEA (weighted 75%) |
|
|
133.3
|
|
|
|
+25.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Janice L. Fields |
|
|
84.9 |
(2) |
|
Corporate (weighted 25%) |
|
|
155.4 |
|
|
|
+15.0 |
|
|
|
152.2 |
|
|
|
105 |
|
|
|
159.9 |
|
|
|
|
|
|
|
U.S. (weighted 75%) (2) |
|
|
128.8 |
|
|
|
+17.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
As a result of his promotion in January 2010, Mr. Thompsons target TIP award and team factor are calculated 100% on the corporate factor for 355 days and a blend of
25% based on the corporate factor and 75% based on the U.S. factor for 10 days. |
(2) |
As a result of her promotion in January 2010, Ms. Fields target TIP award and team factor are calculated on a blend of 25% based on the corporate factor and 75% based
on the U.S. factor for 355 days and 100% on the U.S. factor for 10 days. |
The Corporate-level and AOW modifiers applied in
determining the final TIP payouts for the executives are described in the following table:
|
|
|
|
|
|
|
Team factor |
|
Modifiers |
|
Potential weight
of each modifier (range) |
|
Potential overall adjustment
of team factor by modifiers (range) |
Corporate factor |
|
§ Increases in comparable-restaurant guest counts
§ Customer
service improvements § Control of growth in Corporate general and administrative expenses |
|
Up to +7.5 or -5
percentage points |
|
Up to +/- 15 percentage
points |
AOW factor |
|
§ Increases in comparable-restaurant guest counts
§ Customer
service improvements § Improvements in employee commitment |
|
Up to +/- 10 percentage
points |
|
Up to +/- 25 percentage
points |
|
|
|
|
|
McDonalds Corporation 2011 33 |
OUTSTANDING EQUITY AWARDS AT 2010 YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option awards |
|
|
Stock awards |
|
Name (a) |
|
Number of securities underlying unexercised options exercisable
(1) (#)(b) |
|
|
Number of securities underlying unexercised options unexercisable
(1) (#)(c) |
|
|
Option exercise price ($) (e) |
|
|
Option expiration date
(f) |
|
|
Number of shares or units of stock that have
not vested (2) (#)(g) |
|
|
Market value of shares or units of stock that have not vested
(3) ($)(h) |
|
|
Equity incentive plan awards: number of unearned shares, units or other rights
that have not vested (4) (#)(i) |
|
|
Equity
incentive plan awards: market or payout value of
unearned shares, units or other rights that have not vested (3)(4)
($)(j) |
|
James A. Skinner |
|
|
100,000 |
|
|
|
0 |
|
|
|
$40.4375 |
|
|
|
5/19/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
|
0 |
|
|
|
14.31 |
|
|
|
3/18/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,193 |
|
|
|
0 |
|
|
|
35.25 |
|
|
|
3/21/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500 |
|
|
|
0 |
|
|
|
26.63 |
|
|
|
2/16/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500 |
|
|
|
0 |
|
|
|
25.31 |
|
|
|
5/20/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000 |
|
|
|
0 |
|
|
|
31.21 |
|
|
|
12/1/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151,910 |
|
|
|
0 |
|
|
|
34.54 |
|
|
|
3/23/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,442 |
|
|
|
29,147 |
|
|
|
45.02 |
|
|
|
2/14/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
185,383 |
|
|
|
185,380 |
|
|
|
56.64 |
|
|
|
2/13/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,935 |
|
|
|
173,805 |
|
|
|
57.08 |
|
|
|
2/11/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
177,009 |
|
|
|
63.25 |
|
|
|
2/10/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111,374 |
|
|
|
$8,549,068 |
|
Peter J. Bensen |
|
|
13,826 |
|
|
|
0 |
|
|
|
35.25 |
|
|
|
3/21/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000 |
|
|
|
0 |
|
|
|
26.63 |
|
|
|
2/16/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
0 |
|
|
|
25.31 |
|
|
|
5/20/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,971 |
|
|
|
0 |
|
|
|
32.60 |
|
|
|
2/16/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,870 |
|
|
|
0 |
|
|
|
36.37 |
|
|
|
2/14/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,368 |
|
|
|
3,789 |
|
|
|
45.02 |
|
|
|
2/14/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,050 |
|
|
|
12,050 |
|
|
|
56.64 |
|
|
|
2/13/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,118 |
|
|
|
30,345 |
|
|
|
57.08 |
|
|
|
2/11/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
49,787 |
|
|
|
63.25 |
|
|
|
2/10/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,754 |
|
|
|
1,593,077 |
|
Donald Thompson |
|
|
30,000 |
|
|
|
0 |
|
|
|
40.4375 |
|
|
|
5/19/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500 |
|
|
|
0 |
|
|
|
39.50 |
|
|
|
1/24/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,800 |
|
|
|
0 |
|
|
|
35.25 |
|
|
|
3/21/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
0 |
|
|
|
26.63 |
|
|
|
2/16/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
0 |
|
|
|
25.31 |
|
|
|
5/20/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,299 |
|
|
|
0 |
|
|
|
32.60 |
|
|
|
2/16/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,611 |
|
|
|
0 |
|
|
|
36.37 |
|
|
|
2/14/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,738 |
|
|
|
6,246 |
|
|
|
45.02 |
|
|
|
2/14/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,246 |
|
|
|
22,246 |
|
|
|
56.64 |
|
|
|
2/13/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,526 |
|
|
|
55,569 |
|
|
|
57.08 |
|
|
|
2/11/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
73,021 |
|
|
|
63.25 |
|
|
|
2/10/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,624 |
|
|
|
1,813,378 |
|
Timothy J. Fenton |
|
|
21,237 |
|
|
|
7,078 |
|
|
|
45.02 |
|
|
|
2/14/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,246 |
|
|
|
22,246 |
|
|
|
56.64 |
|
|
|
2/13/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,955 |
|
|
|
35,865 |
|
|
|
57.08 |
|
|
|
2/11/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
46,468 |
|
|
|
63.25 |
|
|
|
2/10/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,830 |
|
|
|
1,522,151 |
|
Janice L. Fields |
|
|
47,500 |
|
|
|
0 |
|
|
|
28.75 |
|
|
|
3/20/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,750 |
|
|
|
0 |
|
|
|
40.4375 |
|
|
|
5/19/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,400 |
|
|
|
0 |
|
|
|
35.25 |
|
|
|
3/21/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500 |
|
|
|
0 |
|
|
|
26.63 |
|
|
|
2/16/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000 |
|
|
|
0 |
|
|
|
25.31 |
|
|
|
5/20/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,460 |
|
|
|
0 |
|
|
|
32.60 |
|
|
|
2/16/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,580 |
|
|
|
0 |
|
|
|
36.37 |
|
|
|
2/14/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,991 |
|
|
|
4,996 |
|
|
|
45.02 |
|
|
|
2/14/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,050 |
|
|
|
12,050 |
|
|
|
56.64 |
|
|
|
2/13/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,438 |
|
|
|
19,311 |
|
|
|
57.08 |
|
|
|
2/11/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
36,511 |
|
|
|
63.25 |
|
|
|
2/10/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,123 |
|
|
|
546,761 |
|
|
|
5,218 |
|
|
|
400,534 |
|
Denis Hennequin |
|
|
25,185 |
|
|
|
0 |
|
|
|
44.67 |
|
|
|
2/28/11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,865 |
|
|
|
0 |
|
|
|
54.89 |
|
|
|
2/28/11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,596 |
|
|
|
0 |
|
|
|
53.97 |
|
|
|
2/28/11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0(5) |
|
|
|
0(5)
|
|
|
|
|
34 McDonalds Corporation 2011 |
|
|
(1) |
In general, stock options expire on the tenth anniversary of grant. However, the stock options due to expire on May 19, 2012 were granted on May 19, 1999 and the stock
options due to expire on March 21, 2013 were granted on March 21, 2000. Subject to the terms of the Amended 2001 Plan, stock options vest and become exercisable in equal installments on the first, second, third and fourth anniversaries of
the grant date. In accordance with the termination rules under the option awards, Mr. Hennequins outstanding vested stock options were able to be exercised during the 90-day period following the effective date of his resignation and
outstanding unvested stock options as of November 30, 2010 were forfeited. For further details regarding treatment of equity awards upon termination, see page [ ]. |
(2) |
Ms. Fields RSUs reflected in columns (g) and (h) are not subject to performance-based vesting conditions because they were granted prior to Ms. Fields
serving as President of McDonalds USA. Our practice is to grant RSUs subject to performance-based vesting conditions to our executives. 3,443 of these RSUs vested on February 13, 2011 and 3,680 RSUs are scheduled to vest on
February 11, 2012. |
(3) |
The market value of these awards was calculated by multiplying the number of shares covered by the award by $76.76, the closing price of McDonalds stock on the NYSE on
December 31, 2010. |
(4) |
The awards reflected in columns (i) and (j) are unvested performance-based RSUs that are scheduled to be paid out on the dates set forth in the table below if the
performance targets are met (or were paid out on the dates indicated, in the case of awards that vested in 2011). |
|
|
|
|
|
|
|
|
|
Named executive officer |
|
|
Vesting date |
|
|
|
Number of RSUs |
|
James A. Skinner |
|
|
2/13/11 |
|
|
|
52,967 |
|
|
|
|
2/11/12 |
|
|
|
33,112 |
|
|
|
|
2/10/13 |
|
|
|
25,295 |
|
Peter J. Bensen |
|
|
2/13/11 |
|
|
|
7,857 |
|
|
|
|
2/11/12 |
|
|
|
5,782 |
|
|
|
|
2/10/13 |
|
|
|
7,115 |
|
Donald Thompson |
|
|
2/13/11 |
|
|
|
6,356 |
|
|
|
|
2/11/12 |
|
|
|
6,833 |
|
|
|
|
2/10/13 |
|
|
|
10,435 |
|
Timothy J. Fenton |
|
|
2/13/11 |
|
|
|
6,356 |
|
|
|
|
2/11/12 |
|
|
|
6,833 |
|
|
|
|
2/10/13 |
|
|
|
6,641 |
|
Janice L. Fields |
|
|
2/10/13 |
|
|
|
5,218 |
|
(5) |
Mr. Hennequin forfeited all of his unvested RSUs upon his resignation pursuant to the terms of the awards.
|
OPTION EXERCISES AND STOCK
VESTEDFISCAL 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option awards |
|
|
Stock awards |
|
Name (a) |
|
Number of shares acquired on exercise (#)(b) |
|
|
Value realized on exercise ($)(c) |
|
|
Number of shares acquired on vesting (#)(d) |
|
|
Value
realized
on vesting
($)(e) |
|
James A. Skinner |
|
|
235,000 |
|
|
|
$11,674,025 |
|
|
|
38,872 |
|
|
|
$2,471,870 |
|
Peter J. Bensen |
|
|
53,672 |
|
|
|
2,211,794 |
|
|
|
2,166 |
|
|
|
137,736 |
|
Donald Thompson |
|
|
50,000 |
|
|
|
2,450,260 |
|
|
|
19,437 |
|
|
|
1,235,999 |
|
Timothy J. Fenton |
|
|
52,631 |
|
|
|
2,127,277 |
|
|
|
20,548 |
|
|
|
1,306,647 |
|
Janice L. Fields |
|
|
32,500 |
|
|
|
1,578,525 |
|
|
|
14,439 |
|
|
|
918,176 |
|
Denis Hennequin |
|
|
251,693 |
|
|
|
11,062,910 |
|
|
|
22,301 |
|
|
|
1,439,837 |
|
NON-QUALIFIED
DEFERRED COMPENSATIONFISCAL 2010 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name (a) |
|
Executive contributions in last FY (2)($)(b) |
|
|
Registrant contributions in last FY (2)($)(c) |
|
|
Aggregate earnings in last FY ($)(d) |
|
|
Aggregate withdrawals/ distributions ($)(e) |
|
|
Aggregate
balance
at last FYE
(3)($)(f) |
|
James A. Skinner |
|
|
3,443,000 |
|
|
|
495,100 |
|
|
|
2,080,418 |
|
|
|
0 |
|
|
|
31,180,677 |
|
Peter J. Bensen |
|
|
2,197,721 |
|
|
|
158,725 |
|
|
|
342,379 |
|
|
|
0 |
|
|
|
3,722,026 |
|
Donald Thompson |
|
|
100,626 |
|
|
|
124,405 |
|
|
|
213,065 |
|
|
|
0 |
|
|
|
1,422,989 |
|
Timothy J. Fenton |
|
|
986,325 |
|
|
|
140,726 |
|
|
|
435,918 |
|
|
|
0 |
|
|
|
5,092,038 |
|
Janice L. Fields |
|
|
908,391 |
|
|
|
92,049 |
|
|
|
158,901 |
|
|
|
0 |
|
|
|
3,106,684 |
|
|
|
|
|
|
McDonalds Corporation 2011 35 |
(1) |
The descriptions of the plans below provide details on the terms of the deferral amounts provided in the table. Mr. Hennequin did not participate in these plans.
|
(2) |
The following amounts reported in column (b) represent deferrals of base salary by the executives which are also reported as compensation for 2010 in the Summary
Compensation Table on page [ ]: $193,000 for Mr. Skinner; $86,667 for Mr. Bensen; $40,000 for Mr. Thompson; $152,325 for Mr. Fenton; and $38,334 for Ms. Fields. The remaining amounts reported in column
(b) represent deferrals of the executives bonuses under the TIP and CPUP, which were previously reported as non-equity incentive plan compensation in column (g) in the Summary Compensation Table for 2009 (except for
Mr. Thompson and Ms. Fields who were not reported in the 2009 Summary Compensation Table). The amounts reported in column (c) are included in All other compensation in column (i) of the 2010 Summary Compensation
Table. |
(3) |
The amounts reported in column (f) include amounts previously reported in the Summary Compensation Table, in the aggregate, as follows: |
|
|
|
|
|
James A. Skinner |
|
|
$11,060,633 |
|
Peter J. Bensen |
|
|
517,448 |
|
Timothy J. Fenton |
|
|
2,444,953 |
|
Note: Mr. Thompson and Ms. Fields were not named executive officers in prior years.
McDONALDS CORPORATION EXCESS BENEFIT AND DEFERRED BONUS PLAN
The McDonalds Corporation Excess Benefit and Deferred Bonus Plan (Excess Plan) was established as of January 1, 2005 as a successor plan to the McDonalds Corporation Supplemental Profit
Sharing and Savings Plan, which is described below. The Excess Plan is a non-tax-qualified, unfunded plan that allows certain management and highly compensated employees of the Company, including all executives on the U.S. payroll, to (i) make
tax-deferred contributions from their base salary and incentive awards under the TIP and CPUP; and (ii) receive Company matching contributions (on deferrals of base salary and TIP awards only), in each case in excess of the annual Internal
Revenue Service limits that apply to deferrals and Company contributions under our 401(k) plan.
Participants may elect to receive
distributions of amounts deferred under the Excess Plan either in a lump sum or in regular monthly, quarterly or annual installments over a period of up to 15 years following their separation from service with the Company (within the
meaning of Section 409A of the Internal Revenue Code). Participants must elect their distribution schedules at the time the amounts are deferred and such elections are irrevocable. Distributions for participants in the Excess Plan are
delayed for six months following the participants separation from service.
Amounts deferred under the Excess Plan are credited to accounts established in the
participants names and nominally invested in investment funds selected by the participants from the three available options. Participants accounts are credited with a rate of return based on the nominal investment option or options
selected. All of the available investment options are also options offered under the Companys 401(k) plan. The nominal investment options currently available under the Excess Plan provide participants with substantially the same returns as an
investment in (i) the Companys common stock fund; (ii) a stable value fund; and/or (iii) an index fund based on the S&P 500 Index.
McDONALDS CORPORATION SUPPLEMENTAL PROFIT SHARING AND SAVINGS PLAN
Prior to January 1, 2005, under
the McDonalds Corporation Supplemental Profit Sharing and Savings Plan (Supplemental Plan), participants could defer amounts of compensation in excess of the Internal Revenue Code limits applicable to our 401(k) plan. This
Supplemental Plan allowed participants to defer up to certain percentages of base salary, and all or a portion of their TIP and long-term cash incentive awards. The nominal investment options under the Supplemental Plan are identical to those
described above for the Excess Plan. The Supplemental Plan distribution rules are as follows. If the participant does not file a distribution election in the year of termination, the participants entire Supplemental Plan balance is paid out in
cash the first business day of April of the year following termination of employment. Otherwise a participant may elect to have distributions commence no sooner than April 1 of the year following termination of employment in (i) a single
lump sum that is within 25 years of the April 1 following termination, (ii) installments commencing on a date of the participants choice, provided that all installment payments must be completed within 25 years of April 1
following termination or (iii) an initial lump sum payment with subsequent installment payments completed within the 25-year period described above. In-service withdrawals are permitted as long as the participants withdrawal election is
made in the calendar year prior to and at least six months in advance of the payment date. Participants may request a hardship withdrawal or accelerate the distribution of installment payments to meet a sudden and unexpected financial need, subject
to approval of the officer committee and a forfeiture penalty of 10% of the amount so accelerated. At the end of 2004, the Company froze the Supplemental Plan due to changes under Section 409A of the Internal Revenue Code, so that there will be
no new contributions under or changes to the Supplemental Plan.
|
|
|
36 McDonalds Corporation 2011 |
|
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Our NEOs would become entitled to certain payments and benefits, described below, in connection with a change in control of McDonalds and/or if their
employment with the Company were to terminate in certain circumstances, including following a change in control of McDonalds.
DEPARTURE OF MR.
HENNEQUIN
Denis Hennequin, our former President of McDonalds Europe, resigned from the Company effective November 30, 2010. In connection
with Mr. Hennequins departure, he and the Company entered into a Settlement Agreement under French law on December 20, 2010 (filed as an exhibit to our Current Report on Form 8-K filed with the SEC on December 20, 2010).
Pursuant to the Settlement Agreement, Mr. Hennequin received a lump sum payment of $414,525 (310,000), and in exchange, Mr. Hennequin waived all claims against the Company and its affiliates relating to his resignation of
employment with the Company. Further, Mr. Hennequin agreed to confidentiality covenants and a covenant not to solicit or hire any employee of the Company or its affiliates for two years following the date of his resignation. The Settlement
Agreement reiterates that Mr. Hennequin remains subject to the 12-month non-compete restriction contained in his employment agreement in exchange for salary continuation during the non-compete restriction period. Pursuant to the Settlement
Agreement, Mr. Hennequin has forfeited any TIP award for 2010.
Mr. Hennequin held unexercised vested stock options which,
according to the terms of grant, were able to be exercised during the 90-day period following the effective date of his resignation, provided, however, that Mr. Hennequin is prohibited from selling any underlying shares for a period of four
years from the applicable grant date. No stock options vested following Mr. Hennequins resignation and all stock options unvested as of November 30, 2010 were forfeited. The following chart shows Mr. Hennequins vested and
unexercised options as of November 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant date |
|
|
Grant price |
|
|
|
Exercisable options |
|
|
|
Last day to exercise |
|
3/12/07 |
|
$ |
44.67 |
|
|
|
25,185 |
|
|
|
2/28/11 |
|
3/13/08 |
|
|
54.89 |
|
|
|
24,865 |
|
|
|
2/28/11 |
|
5/12/09 |
|
|
53.97 |
|
|
|
19,596 |
|
|
|
2/28/11 |
|
Total |
|
|
|
|
|
|
69,646 |
|
|
|
|
|
If Mr. Hennequin fails to comply
with the non-solicitation or non-compete covenants or the sales restrictions relating to his stock options, the Company will be entitled to receive from Mr. Hennequin a payment in an amount not less than the remuneration received by
Mr. Hennequin during the last six months of his employment agreement.
Pursuant to prior agreements, Mr. Hennequin received a payment of $58,657 representing the
remaining portion of an expatriate premium and payment for 42 days of accrued and unused vacation. Mr. Hennequin is also entitled to receive a pro rata payout pursuant to the 2010-2012 CPUP, payable in 2013 based on actual Company performance.
Mr. Hennequin held unvested RSU awards, scheduled to cliff vest at the end of three years, which were forfeited upon his resignation.
POTENTIAL
PAYMENTS UPON OR IN CONNECTION WITH A CHANGE IN CONTROL
> Change in control employment agreements
The Company has entered into change in control employment agreements with some of its senior management, including all of the NEOs except Mr. Hennequin. These
agreements provide that, on a change in control of the Company, the executives would be entitled to the benefits described below. An executive who also participates in the ERRP would be entitled to receive the greater of the aggregate benefits under
the ERRP or the aggregate benefits under the change in control agreement, but not both. The change in control employment agreements perpetually retain a two-year term until terminated by the Company with a minimum of two years notice.
Subject to exceptions set out in the agreements, a change in control is generally defined as either (i) the
acquisition of 20% or more of our common stock or voting securities by a single purchaser or a group of purchasers acting together; (ii) the incumbent members of the Board (and certain new directors approved in a specified manner by those
members) cease to constitute at least a majority of the Board as a result of an actual or threatened election contest; (iii) a significant merger or other business combination involving the Company; or (iv) a complete liquidation or
dissolution of the Company.
The agreements provide that,
during the three-year period following a change in control, refered to as the protected period, (i) the executives position and authority may not be reduced; (ii) the executives place of work may not be relocated by
more than 30 miles; (iii) the executives base salary may not be reduced; (iv) the executives annual bonus opportunity may not be reduced; and (v) the executive will continue to participate in employee benefit plans on
terms not less favorable than before the change in control. In addition, within 30 days after a change in control, if it is also a change in control event within the meaning of Section 409A of the Internal Revenue Code (Section
409A), the Company will pay to each executive a prorated portion of the executives target annual bonus for the partial year in which the change in control occurs; and if it is not a change in control event within the meaning of
Section 409A, the Company will pay to each executive a prorated portion of the executives annual bonus, determined based on the Companys actual performance, on the date on which annual bonuses for that year are paid to Company
employees generally. The treatment of outstanding equity awards on a change in control is governed by the Amended 2001 Plan and is described under Equity awards on page [ ].
If the Company fails to comply with the above provisions following a change in control, the executive may terminate his/her employment for
good reason at any time during the protected period.
|
|
|
|
|
McDonalds Corporation 2011 37 |
If the executive terminates his or her employment for good reason or is terminated by the Company
without cause at any time during the protected period, then, in addition to the executives entitlement to receive accrued but unpaid salary, bonus, deferred compensation and other benefit amounts due on termination, the executive
will be entitled to: (i) a lump-sum cash payment equal to three times the sum of the executives base salary, annual bonus (computed at the target level) and contribution received under the Companys deferred compensation plan;
(ii) a pro rata portion of the annual bonus (computed at the target level) for the year of termination, reduced (but not below zero) by the amount of annual bonus paid to the executive for that year; (iii) continued medical, life
insurance, fringe and other benefits for three years after the termination; and (iv) a lump-sum cash payment for any sabbatical leave that has been earned but not yet taken. In addition, for purposes of determining the executives
eligibility for any available post-retirement medical benefits, the executive will be treated as having three additional years of service and being three years older. The executive will be eligible for these benefits subject to execution of an
agreement that includes a covenant not to compete, a covenant not to solicit employees, a nondisclosure covenant and a release of claims. In order to comply with Section 409A, payment of these benefits will be delayed for six months.
Up to the limitations specified in the agreements, the Company will reimburse an executive on an after-tax basis for any excise taxes
incurred by that executive because of any payments or other amounts under
the agreement or otherwise provided, which are considered to be contingent upon a change in control. If the aggregate after-tax amount of benefits to which an executive becomes entitled under his
or her change in control employment agreement is not more than 110% of what the executive would receive if his or her benefits were reduced to a level that would not be subject to excise taxes, the executive will not be entitled to receive a
gross-up and the aggregate amount of benefits to which he or she is entitled will be reduced to the greatest amount that can be paid without triggering excise taxes.
In the case of the death or disability of an executive during the protected period, the executive or his/her estate will be entitled to receive accrued but unpaid salary, bonus, deferred compensation and other
benefit amounts due at the time of such death or disability at levels provided to his/her peer employees and at least as favorable as those in place immediately prior to the change in control.
If (i) the Company terminates an executive for cause following a change in control; (ii) an executive voluntarily terminates employment
without good reason following a change in control; or (iii) an executive who is otherwise eligible to receive severance benefits fails to execute the noncompetition, non-solicit, nondisclosure and release agreement, then that executive will
receive only a lump-sum payment of accrued but unpaid salary, bonus, deferred compensation and other benefit amounts due at the time of the termination.
The following table sets forth the value of the benefits that would have been payable to the NEOs, other than Mr. Hennequin, under the change
in control agreements, assuming that on December 31, 2010 they had been terminated without cause or resigned with good reason in the protected period following a change in control of McDonalds. Pro rata TIP payments in respect of 2010 are
not included in the table because if the NEOs had terminated employment on December 31, 2010 they would have earned these awards in full pursuant to the terms of the 2010 TIP. Accordingly, the amount of pro rata TIP awards they would have been
entitled to under the change in control employment agreements would be zero.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance payment (3x base, bonus and Company contribution to deferred compensation plan) ($) |
|
|
Benefit continuation ($) |
|
|
Sabbatical ($) |
|
|
Tax gross-up payments ($) |
|
|
Total ($) |
|
James A. Skinner |
|
|
$12,458,335 |
|
|
|
$118,592 |
|
|
|
$221,538 |
|
|
|
$8,617,321 |
|
|
|
$21,415,786 |
|
Peter J. Bensen |
|
|
4,366,055 |
|
|
|
120,705 |
|
|
|
0 |
|
|
|
3,297,733 |
|
|
|
7,784,493 |
|
Donald Thompson |
|
|
5,920,740 |
|
|
|
120,607 |
|
|
|
123,077 |
|
|
|
3,435,041 |
|
|
|
9,599,465 |
|
Timothy J. Fenton |
|
|
3,727,420 |
|
|
|
119,566 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,846,986 |
|
Janice L. Fields |
|
|
3,562,440 |
|
|
|
108,990 |
|
|
|
88,462 |
|
|
|
0 |
|
|
|
3,759,892 |
|
|
|
|
38 McDonalds Corporation 2011 |
|
|
> CPUP
Under the 2010-2012 CPUP, all of the NEOs would be entitled to accelerated vesting and, in certain circumstances, payment of CPUP awards on a change in control. For
this purpose the definition of a change in control is the same as it is under the Amended 2001 Plan. If a change in control were to occur before December 31, 2012, each NEO would be entitled to receive a pro rata portion (based on
the number of days in the performance period preceding the change in control) of the award he/she would have received had the CPUP performance goals been achieved over the full performance period at the same level achieved during the period prior to
the change in control. If the change in control also qualified as a change in control for purposes of Section 409A, we intend to pay this amount immediately. Otherwise, the prorated award would be paid out on the originally scheduled payment
date.
The table below sets forth the payments that the NEOs would have been entitled to receive under the 20102012 CPUP if a
change in control (that also qualified as a change in control under Section 409A) had occurred on December 31, 2010:
|
|
|
|
|
James A. Skinner |
|
$ |
5,152,001 |
|
Peter J. Bensen |
|
|
1,803,199 |
|
Donald Thompson |
|
|
2,447,201 |
|
Timothy J. Fenton |
|
|
1,062,600 |
|
Janice L. Fields |
|
|
1,062,600 |
|
> Equity
awards
A change in control under the Amended 2001 Plan is generally defined as either (i) the acquisition of 20% or more of our common stock or
voting securities by a single purchaser or a group of purchasers acting together; (ii) the incumbent members of the Board (and certain new directors approved in a specified manner by those members) cease to constitute at least a majority of the
Board as a result of an actual or threatened election contest; (iii) a significant merger or other business combination involving the Company; or (iv) a complete liquidation or dissolution of the Company.
In the event of a change in control of McDonalds, outstanding unvested stock options and RSUs shall be replaced by equivalent
awards based on publicly traded stock of the successor entity. The replacement awards will vest and become exercisable (in the case of stock options) or be paid out (in the case of service-based RSUs) if the grantees employment with the
Company is terminated for any reason other than cause within two years following the change in control. In addition, if the grantees employment is terminated other than for cause within two years following the change in
control, all outstanding options (whether or not they are replacement awards) will remain outstanding for not less than two years following the date of termination or until the end of the original term of the award, if sooner.
If the awards cannot be replaced (for example, because the acquirer
does not have publicly traded equity securities) or if the Committee so determines, the vesting and, in the case of options, exercisability of the awards shall be accelerated. RSUs would vest (performance-based RSUs would vest at the target amount)
and be paid out upon the change in control if it qualifies as a change in control for purposes of Section 409A; otherwise, the RSUs would be paid out on the originally scheduled payment date or, if earlier, on the executives death,
disability (within the meaning of Section 409A) or termination of employment, subject to any delay required under Section 409A.
The plan does not provide for acceleration of vesting or exercisability of replacement awards in the case of termination of employment following a change in control for any termination initiated by the employee
(whether or not for good reason).
If a change in control had occurred on December 31, 2010 and either (i) if
the outstanding stock options and RSUs held by the NEOs could not be replaced or (ii) if the Committee so determined, assuming that the transaction met the definition of a change in control under the Amended 2001 Plan and also qualified as a
change in control for purposes of Section 409A, the awards would have been affected as follows: (i) stock options would have vested and become exercisable and (ii) RSUs would have vested and been paid out immediately
(performance-based RSUs would be paid out at target level performance). The equity awards held by the NEOs as of December 31, 2010 are set forth in the Outstanding Equity Awards at 2010 Year-End table on page [ ].
The table below summarizes the value of the change in control payouts that the NEOs could have received in respect of their
outstanding equity awards, based on (i) in the case of stock options, the spread between the exercise price and the closing price of the Companys common stock on December 31, 2010 and (ii) in the case of RSUs, the
target number of shares, multiplied by the closing price of the Companys common stock on the NYSE on December 31, 2010. The table sets forth the total hypothetical value that the NEOs (other than Mr. Hennequin) could have realized as
a result of the exercise or payout of accelerated equity awards, based on the assumptions described above. If there were no change in control, the amounts set forth in the table would have vested over time, subject only to continued employment (and
with respect to the RSUs, subject to performance-based vesting conditions). As a result, the values shown in the table below are greater than the incremental benefit attributable solely to acceleration of the awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
Named executive officer |
|
Stock options (closing price on 12/31/10
minus exercise price) ($) |
|
|
RSUs (number of shares/target number of shares multiplied by closing price on 12/31/10) ($) |
|
|
Total ($) |
|
James A. Skinner |
|
|
$10,466,865 |
|
|
|
$8,549,068 |
|
|
|
$19,015,933 |
|
Peter J. Bensen |
|
|
1,632,560 |
|
|
|
1,593,077 |
|
|
|
3,225,637 |
|
Donald Thompson |
|
|
2,725,989 |
|
|
|
1,813,378 |
|
|
|
4,539,367 |
|
Timothy J. Fenton |
|
|
2,005,883 |
|
|
|
1,522,151 |
|
|
|
3,528,034 |
|
Janice L. Fields |
|
|
1,274,375 |
|
|
|
947,295 |
|
|
|
2,221,670 |
|
|
|
|
|
|
McDonalds Corporation 2011 39 |
POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT (OTHER THAN FOLLOWING A CHANGE IN CONTROL)
> McDonalds Corporation Severance Plan
Under the
McDonalds Corporation Severance Plan (Severance Plan), Messrs. Bensen, Thompson and Fenton and Ms. Fields would receive severance benefits if they were terminated as a result of a covered termination, which
includes termination of employment by the Company without cause; termination due to a reduction in work force; and elimination of the participants position, but excluding terminations for performance reasons. The benefits payable
under the Severance Plan consist of a lump sum payment in respect of (i) severance pay, based on the pay rate as in effect immediately prior to termination and (ii) continued medical and dental benefits at the same cost as the participant
paid for such benefits prior to termination. The amount of the benefits are based on the participants position and length of service with the Company. In addition, each eligible NEO, if terminated in a covered termination, would receive a
prorated TIP payment equal to a pro rata portion of his/her bonus based on actual performance of the Company during the applicable performance period, paid at the same time TIP payments are made to other TIP participants for the year in which
termination occurs; a prorated payment under the CPUP based on the actual performance of the Company during the applicable performance period, paid at the same time CPUP payments are made to other CPUP participants; a lump-sum cash payment for any
sabbatical leave that he/she has earned but not yet taken; and outplacement assistance. Payments would be delayed for six months following termination of employment to the extent required under Section 409A. The Severance Plan would not apply
to any termination of a NEOs employment following a change in control of McDonalds because employees who are covered by a change in control employment agreement are not eligible to receive benefits under the Severance Plan for such a
termination.
The value of the benefits that would be payable to Messrs. Bensen, Thompson and Fenton and Ms. Fields if their
employment had terminated in a covered termination under the Severance Plan on December 31, 2010 are set forth in the table below. Pro rata TIP payments in respect of 2010 are not included in the table because if the NEOs had terminated
employment on December 31, 2010 they would have earned these awards in full pursuant to the terms of the 2010 TIP. A pro rata CPUP payment for 2010 under the 2010-2012 CPUP, would be paid after the completion of the 2012 fiscal year at the same
time as payments are made to other CPUP participants.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary continuation |
|
|
Benefit continuation |
|
|
Other (sabbatical and out- placement) |
|
|
Total |
|
Peter J. Bensen |
|
|
$350,000 |
|
|
|
$32,005 |
|
|
|
$12,000 |
|
|
|
$394,005 |
|
Donald Thompson |
|
|
615,385 |
|
|
|
40,044 |
|
|
|
135,077 |
|
|
|
790,506 |
|
Timothy J. Fenton |
|
|
584,000 |
|
|
|
35,475 |
|
|
|
12,000 |
|
|
|
631,475 |
|
Janice L. Fields |
|
|
575,000 |
|
|
|
31,225 |
|
|
|
100,462 |
|
|
|
706,687 |
|
BENEFITS UNDER THE EXECUTIVE RETENTION REPLACEMENT PLAN
Mr. Skinner participates in the ERRP. Under the ERRP, Mr. Skinner would be entitled to certain benefits if
his employment is terminated for any reason other than death, disability or cause or if Mr. Skinner retired or resigned for good reason. If Mr. Skinner were to retire, he would receive the benefits described in
(i) through (vi) below plus secretarial services for two years following his retirement and $135,000 in lieu of fringe benefits and provision of an office. A pro rata portion (based on the portion of the performance period prior to his
retirement) of any outstanding CPUP award would vest and would be paid at the end of the performance period, based on the Companys achievement of the applicable performance goals. All of Mr. Skinners outstanding RSUs would vest and
would be paid out on the originally scheduled payment dates, subject to the Companys achievement of the applicable performance goals. All of Mr. Skinners outstanding stock options would become exercisable in accordance with their
original vesting schedule and remain outstanding for 9 1/2
years following his retirement (or until the expiration of the options original term, if sooner).
If Mr. Skinner
were to be terminated without cause, under the ERRP he would be entitled to receive a cash lump sum equal to the present value of (i) base salary for 18 months; (ii) 50% of final base salary for five years; (iii) prorated
TIP, based on actual performance, for the year of termination; (iv) target TIP for 18 months; (v) the equivalent of Company matching contributions under deferred compensation plans for 6.5 years, based on full final salary for 18 months
and 50% of final salary for five years and (vi) the estimated value of continued participation in Company health and welfare plans for 6.5 years. In addition, all stock options held by Mr. Skinner that would have vested within five
years following termination would vest and become exercisable, and all vested stock options would remain outstanding until five years following termination or until the expiration of the options original term, if sooner. RSUs would vest on a
pro rata basis based on the number of months employed during the vesting period and would be paid out in accordance with actual performance results achieved during the vesting period. A pro rata portion (based on the portion of the performance
period prior to termination) of any outstanding CPUP award would vest and would be paid at the end of the performance period, based on the Companys achievement of the applicable performance goals.
Any payments to Mr. Skinner under the ERRP would be delayed for six months following the termination of his employment as required under
Section 409A. Mr. Skinners receipt of benefits under the ERRP is subject to the execution of an agreement that includes a covenant not to compete, a covenant not to solicit employees, a nondisparagement covenant, a nondisclosure
covenant and a release of claims.
|
|
|
40 McDonalds Corporation 2011 |
|
|
The cash and fringe benefits that would have been payable to Mr. Skinner under the ERRP if his
employment had terminated on December 31, 2010 in circumstances covered under the ERRP are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump-sum ERRP payment ($) |
|
|
Pro rata CPUP payment ($)(1) |
|
|
Other (2) |
|
|
Total ($) |
|
Termination without cause |
|
|
$9,449,453 |
|
|
|
$5,152,001 |
|
|
|
n/a |
|
|
|
$14,601,454 |
|
Retirement |
|
|
9,449,453 |
|
|
|
5,152,001 |
|
|
|
$135,000 |
|
|
|
14,736,454 |
|
(1) |
Upon termination, Mr. Skinner would be entitled to receive a pro rata CPUP award based upon actual Company performance against the specific metrics. The number provided
represents the pro rata CPUP payment based on actual Company performance from January 1, 2010 through December 31, 2010. The award would be paid following completion of the performance period. |
(2) |
Payments in lieu of fringe benefits and provision of an office, plus continued provision of secretarial services, as described above.
|
The table below shows the effect on outstanding equity awards held by Mr. Skinner if his employment had terminated on December 31, 2010 in
circumstances covered under the ERRP based on: (i) in the case of stock options, the spread between the exercise price and the closing price of the Companys common stock on December 31, 2010 and (ii) in the case of
RSUs, the number of prorated shares in which he would vest, multiplied by the closing price of the Companys common stock on December 31, 2010.
|
|
|
|
|
|
|
|
|
Amount of outstanding equity upon termination without cause ($) |
|
Effect of retirement |
|
Effect of termination without cause |
James A. Skinner |
|
$16,636,804 |
|
No acceleration of vesting; outstanding stock options would be exercisable in
accordance with original vesting schedule and remain outstanding for 9 1/2 years or until expiration of the original term if sooner. RSUs would vest in accordance with the original vesting schedule and would be paid out in accordance with actual performance results
achieved. |
|
All stock options that would have vested within five years following
termination would vest and become exercisable, and all vested stock options would remain outstanding until five years following termination or until the expiration of the options original term, if sooner. RSUs would vest on a pro rata basis
based on the number of months employed during the vesting period and would be paid out in accordance with actual performance results achieved. |
If Mr. Skinners employment were to
terminate due to death or disability, under the ERRP, he or his estate would be entitled to receive: (i) accrued but unpaid base salary and annual incentive awards; and (ii) payment or provision of death or disability benefits, as
applicable, equal to the benefits provided by the Company to the estates and beneficiaries of other employees of the Company serving at a comparable level. If Mr. Skinners employment were to be terminated for cause, he would
be entitled to receive only accrued but unpaid base salary and annual incentive awards and no other benefits.
|
|
|
|
|
McDonalds Corporation 2011 41 |
EFFECT OF TERMINATION OF EMPLOYMENT UNDER EQUITY INCENTIVE PLANS
> Stock options
Unvested stock options are generally
forfeited in connection with termination of employment, with stock options that are vested at the time of termination remaining outstanding and exercisable for 90 days, except if employment is terminated for cause. For grants prior to
2010, executives (and all other employees) may be entitled to accelerated exercisability and an extended post-termination exercise period (generally 13 years) upon certain termination events (including retirement and termination by the Company
without cause).
Beginning with awards granted to executives in 2010, the Committee changed the termination rules that
apply to stock options so that such stock options no longer provide for accelerated exercisability. Instead, the stock options will continue to become exercisable on the originally scheduled date(s) and will remain exercisable for the extended
post-termination exercise period. If an executive violates a restrictive covenent following termination, the Company is able to cancel any outstanding stock options. Further, beginning in 2011, except for participants in the ERRP, if an executive
(or any other employee) terminates employment for any reason other than death or disability, all stock options granted in the last 12 months are immediately forfeited upon termination.
The table to the right summarizes the value of the payouts that the NEOs, other than Mr. Hennequin, could have received in respect of their
outstanding stock options on termination of employment under the circumstances that would result in acceleration of the awards (i.e., retirement, special circumstanceswhich includes termination by the Company without
cause, death or disability), if termination had occurred on December 31, 2010. The values in the table are based on the spread between the exercise price and the closing price of the Companys common stock on the
NYSE on December 31, 2010. The table sets forth the total hypothetical value that a NEO could have realized as a result of acceleration of their awards in connection with a termination of employment in accordance with the applicable
terms. The values shown in the table below are greater than the incremental benefit attributable solely to acceleration of the awards.
|
|
|
|
|
|
|
Named executive
officer |
|
Type of termination |
|
Stock options (closing price on 12/31/10 minus exercise price) ($) |
|
James A. Skinner |
|
Retirement |
|
|
n/a |
(1) |
|
|
Special circumstances |
|
|
$10,466,865 |
|
|
|
Death/disability |
|
|
10,466,865 |
|
Peter J. Bensen |
|
Retirement |
|
|
0 |
(2) |
|
|
Special circumstances |
|
|
760,875 |
|
|
|
Death/disability |
|
|
1,632,560 |
|
Donald Thompson |
|
Retirement |
|
|
1,739,475 |
|
|
|
Special circumstances |
|
|
1,739,475 |
|
|
|
Death/disability |
|
|
2,725,989 |
|
Timothy J. Fenton |
|
Retirement |
|
|
1,378,100 |
|
|
|
Special circumstances |
|
|
1,378,100 |
|
|
|
Death/disability |
|
|
2,005,883 |
|
Janice L. Fields |
|
Retirement |
|
|
781,111 |
|
|
|
Special circumstances |
|
|
781,111 |
|
|
|
Death/disability |
|
|
1,274,375 |
|
(1) |
Please refer to the table on page [ ] for a description of Mr. Skinners treatment upon retirement under the ERRP. |
(2) |
Mr. Bensen is not eligible to receive favorable treatment upon retirement under the Amended 2001 Plan. |
> RSUs
Unvested RSUs are generally forfeited in
connection with termination of employment. In the case of certain termination events (including retirement and termination by the Company without cause), executives (and all other employees) are entitled accelerated vesting of RSUs,
prorated based upon the number of months worked during the vesting period, as specified in the terms of the awards. However, RSUs subject to performance-based vesting conditions are not accelerated in connection with a termination of employment;
instead any pro rata vesting is subject to the satisfaction of the applicable performance conditions, determined following completion of the performance period. As previously discussed on page [ ], the Companys practice
is to grant RSUs with performance-based vesting conditions to our executives. Further, beginning in 2011, except for participants in the ERRP, if an executive (or any other employee) terminates employment for any reason other than death or
disability, all RSUs granted in the last 12 months are immediately forfeited upon termination.
DEFERRED COMPENSATION
Following their separation from service with the Company for any reason, the NEOs would receive distributions from their accounts under the Supplemental Plan and
the Excess Plan in accordance with their elected distribution schedules, as described on pages [ ].
|
|
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42 McDonalds Corporation 2011 |
|
|
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and Directors, and persons
who own more than 10% of our common stock (Reporting Persons) to file reports with the SEC regarding their ownership of and transactions in our common stock and our other securities related to our common stock. Reporting Persons are also required by
SEC rules to furnish us with copies of the reports they file with the SEC.
Based solely on our review of the copies of the reports provided to us and inquiries that we have made, we believe
that during our fiscal year ended December 31, 2010, all Reporting Persons timely filed all of the reports they were required to file, except that Janice L. Fields timely filed a Form 3 but inadvertently understated the number of shares, which
was corrected in an amended Form 3.
Transactions with
related persons, promoters and certain control persons
POLICIES AND PROCEDURES FOR RELATED PERSON TRANSACTIONS
The McDonalds System has over 32,000 restaurants worldwide, most of which are independently owned and operated. Within this extensive System, it is not
unusual for our business to touch many companies in many industries, including suppliers of food and other products and services. The Board of Directors is responsible for the oversight and approval (or ratification) of transactions, relationships
or arrangements in which the Company is a participant and that involve Board members, our executive officers, beneficial owners of more than 5% of our common stock, their immediate family members, domestic partners and companies in which they have a
material interest. We refer to these as related person transactions and to the persons or entities involved as related persons.
The
Board has adopted a policy that sets out procedures for the reporting, review and ratification of related person transactions. The policy operates in conjunction with other aspects of the Companys compliance program, such as our Standards of
Business Conduct and Code of Conduct for Directors, which require Directors and employees to report any circumstances that may create or appear to create a conflict between the interests of the related person and those of the Company, regardless of
the amount involved. Our Directors and executive officers must also periodically confirm information about related person transactions, and management reviews its books and records and makes other inquiries as appropriate to confirm the existence,
scope and terms of related person transactions.
Under the Boards policy, the Audit Committee evaluates related person
transactions for purposes of recommending to the disinterested members of the Board that the transactions are fair, reasonable and within Company policies and practices and should be approved or ratified.
The Board has considered certain types of potential related person transactions and pre-approved them as not presenting material conflicts of
interest. Those transactions include (a) compensation paid to Directors and executive officers that has been approved by the Board or the Compensation Committee, as applicable; (b) Company contributions to Ronald McDonald House Charities,
Inc. and certain other contributions made in limited amounts to other charitable or not-for-profit organizations; and (c) transactions in which the related persons interest arises solely
from ownership of the Companys common stock and all holders of the common stock receive the same benefit on a pro rata basis. The Audit Committee considers the appropriateness of any
related person transaction not within these pre-approved classes in light of all relevant factors and the controls implemented to protect the interests of McDonalds and its shareholders, including:
¡ |
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the benefits of the transaction to the Company or the McDonalds System; |
¡ |
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the terms of the transaction and whether they are arms-length and in the ordinary course of McDonalds business; |
¡ |
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the direct or indirect nature of the related persons interest in the transaction; |
¡ |
|
the size and expected duration of the transaction; and |
¡ |
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other facts and circumstances that bear on the materiality of the related person transaction under applicable law and listing standards.
|
Related person transactions involving Directors are also subject to approval or ratification by the disinterested
Directors when so required under Delaware law.
RELATED PERSON TRANSACTIONS
In 2010, the Company and its subsidiaries purchased approximately $698,000 worth of paper and other printed products (principally food product liners, trayliners,
french fry bags, hash brown bags and bag stuffers) from Schwarz Supply Source. Director McKenna is Chairman of Schwarz, as well as a 42.70% shareholder. Members of Director McKennas family are also shareholders of Schwarz. Schwarzs
business with the Company and its subsidiaries represents less than 1% of Schwarzs total revenues. The Company believes that these purchases were made on terms at least as favorable as would have been available from other parties. The
disinterested Directors ratified this transaction for 2010 and approved the continuation of this arrangement under similar terms for 2011.
In 2010, Inter-Con Security Systems, Inc., provided physical security services for the Companys home office campus. Director Hernandez is the President and Chief Executive Officer, as well as a 26.99%
shareholder of Inter-Con. Payments by the Company
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|
|
|
|
McDonalds Corporation 2011 43 |
to Inter-Con for 2010 for such services totaled approximately $1.1 million. The Company believes that these services, which represent less than 1% of the revenues of Inter-Con, were made on terms
at least as favorable as would have been available from other parties. The disinterested Directors ratified this transaction for 2010 and approved the continuation of this arrangement under similar terms for 2011.
During 2010, Mr. Stephen Stratton, a former employee of the Company and the brother of Mr. Jeffrey Stratton, Corporate Executive Vice
President and Chief Restaurant Officer, owned and operated three McDonalds restaurants in the U.S. Mr. Stephen Stratton paid rent and service fees under the terms of standard franchise agreements with McDonalds USA, LLC, a
subsidiary of the Company, for the restaurants. These payments totaled $1,094,558 in 2010, were made pursuant to the terms of his
standard franchise agreements, and were net of refunds that are associated with participation in various initiatives and promotions, which are generally available to all owner-operators of U.S.
McDonalds restaurants.
Mr. Jeffrey Strattons son-in-law, Jeff Ringel, is employed as a Vice President, Graphic
Services of the Perseco business unit of HAVI Global Solutions. HAVI Global Solutions and its business units (HGS) have been significant suppliers of products and services to the McDonalds System since 1975, and HGS has advised the Company
that virtually all of its business is attributable to the McDonalds System. Mr. Ringel is employed by HGSPerseco on an at-will basis, and his compensation is determined at the discretion of HGSPerseco. In 2010, the Company and
its subsidiaries made aggregate payments to HGS of approximately $567 million.
Audit Committee
matters
AUDIT COMMITTEE REPORT
Dear Fellow Shareholders:
The Audit Committee is composed of five Directors, each of whom meets
the independence and other requirements of the New York Stock Exchange. As stated previously, Enrique Hernandez, Jr., Cary D. McMillan, and Roger W. Stone qualify as audit committee financial experts. The Committee has the
responsibilities set out in its charter, which has been adopted by the Board of Directors and is reviewed annually.
Management is
primarily responsible for the Companys financial statements, including the Companys internal control over financial reporting. Ernst & Young LLP (Ernst & Young), the Companys independent auditors, is responsible
for performing an audit of the Companys annual consolidated financial statements in accordance with generally accepted accounting principles (GAAP) and for issuing a report on those statements. Ernst & Young also reviews
the Companys interim financial statements in accordance with Statement on Auditing Standards No. 100 (interim financial information). The Committee oversees the Companys financial reporting process and internal control structure on
behalf of the Board of Directors. The Committee met nine times during 2010, including meeting regularly with Ernst & Young and the internal auditors, both privately and with management present.
In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management and Ernst & Young the audited and
interim financial statements, including Managements Discussion and Analysis, included in the Companys Reports on Form 10-K and Form 10-Q. These reviews included a discussion of:
¡ |
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critical accounting policies of the Company; |
¡ |
|
the reasonableness of significant financial reporting judgments made in connection with the financial statements, including the quality (and not just the
acceptability) of the Companys accounting principles;
|
¡ |
|
the clarity and completeness of financial disclosures; |
¡ |
|
the effectiveness of the Companys internal control over financial reporting, including managements and Ernst & Youngs reports thereon,
the basis for the conclusions expressed in those reports and significant changes made to the Companys internal control over financial reporting during 2010; |
¡ |
|
items that could be accounted for using alternative treatments within GAAP, the ramifications thereof and the treatment preferred by Ernst & Young;
|
¡ |
|
the annual management letter issued by Ernst & Young, managements response thereto and other material written communications between management
and Ernst & Young; |
¡ |
|
unadjusted audit differences noted by Ernst & Young during its audit of the Companys annual financial statements; and
|
¡ |
|
the potential effects of regulatory and accounting initiatives on the Companys financial statements. |
In connection with its review of the Companys annual consolidated financial statements, the Committee also discussed with Ernst &
Young other matters required to be discussed with the auditors under Statement on Auditing Standards No. 61, as modified or supplemented (communication with audit committees) and those addressed by Ernst & Youngs written
disclosures and its letter provided under the applicable requirements of the Public Company Accounting Oversight Board, as modified or supplemented (independence discussions with audit committees).
The Committee is responsible for the engagement of the independent auditors and appointed Ernst & Young to serve in that capacity during
2010 and 2011. In that connection, the Committee:
¡ |
|
reviewed Ernst & Youngs independence from the Company and management, including Ernst & Youngs written disclosures described above;
|
|
|
|
44 McDonalds Corporation 2011 |
|
|
¡ |
|
reviewed periodically the level of fees approved for payment to Ernst & Young and the pre-approved non-audit services it has provided to the Company to
ensure their compatibility with Ernst & Youngs independence; and |
¡ |
|
reviewed Ernst & Youngs performance, qualifications and quality control procedures. |
Among other matters, the Committee also:
¡ |
|
reviewed the scope of and overall plans for the annual audit and the internal audit program; |
¡ |
|
consulted with management and Ernst & Young with respect to the Companys processes for risk assessment and risk management;
|
¡ |
|
reviewed and approved the Companys policy with regard to the hiring of former employees of the independent auditors; |
¡ |
|
reviewed and approved the Companys policy for the pre- approval of audit and permitted non-audit services by the independent auditors;
|
¡ |
|
received reports pursuant to our policy for the submission and confidential treatment of communications from employees and others about accounting, internal
controls and auditing matters; |
¡ |
|
reviewed with management the scope and effectiveness of the Companys disclosure controls and procedures, including for purposes of evaluating the accuracy
and fair presentation of the Companys financial statements in connection with certifications made by the CEO and CFO; |
¡ |
|
reviewed significant legal developments and the Companys processes for monitoring compliance with law and Company policies; and
|
¡ |
|
reviewed the Companys related person transactions. |
Based on the reviews and discussions referred to above, the Committee recommended to the Board of Directors that the audited financial statements be included in the Companys Annual Report on Form 10-K for the
year ended December 31, 2010 for filing with the SEC.
Respectfully submitted,
The Audit Committee
Enrique Hernandez, Jr., Chairman
Walter E. Massey
Cary D. McMillan
Sheila A. Penrose
Roger W. Stone
POLICY FOR PRE APPROVAL OF AUDIT AND PERMITTED NON AUDIT SERVICES
The Audit Committee has implemented a policy for the pre- approval of all audit and permitted non-audit services proposed to be provided to the Company by its independent auditors. Under the policy, the Audit
Committee may pre-approve engagements on a case-by-case basis or on a class basis if the relevant services are predictable and recurring.
Pre-approvals for classes of services are granted at the start of each fiscal year. In considering
pre-approvals on a class basis, the Audit Committee reviews a description of the scope of services falling within each class and imposes budgetary estimates that are largely based on historical costs. Pre-approvals granted on a class basis are
effective for the applicable fiscal year.
Any audit or permitted non-audit service that is not included in an approved class, or for
which total fees are expected to exceed the relevant budgetary estimate, must be pre-approved on an individual basis. Pre-approval of any individual engagement may be granted not more than one year before commencement of the relevant service.
Pre-approvals of services that may be provided over a period of years must be reconsidered each year in light of all the facts and circumstances, including compliance with the pre-approval policy and the compatibility of the services with the
auditors independence.
The Corporate Controller monitors services provided by the independent auditors and overall compliance
with the pre- approval policy. The Corporate Controller reports periodically to the Audit Committee about the status of outstanding engagements, including actual services provided and associated fees, and must promptly report any
noncompliance with the pre-approval policy to the Chairperson of the Audit Committee.
The policy is available on the Companys
website at www.governance.mcdonalds.com.
AUDITOR FEES AND SERVICES
The following table presents fees billed for professional services rendered for the audit of the Companys annual financial statements for 2010 and 2009 and
fees billed for other services provided by our independent auditors in each of the last two years:
|
|
|
|
|
|
|
|
|
(In millions) |
|
2010 |
|
|
2009 |
|
Audit fees (1) |
|
$ |
10.4 |
|
|
$ |
10.4 |
|
Audit-related fees (2) |
|
|
.3 |
|
|
|
.3 |
|
Tax fees (3) |
|
|
1.0 |
|
|
|
2.0 |
|
All other fees (4) |
|
|
.2 |
|
|
|
.5 |
|
|
|
|
|
|
11.9 |
|
|
$ |
13.2 |
|
|
|
(1) |
Fees for services associated with the annual audit (including internal control reporting under Section 404 of the Sarbanes- Oxley Act), statutory audits required
internationally, reviews of the Companys Quarterly Reports on Form 10-Q, and accounting consultations. |
(2) |
Fees for employee benefit plan audits and certain attestation services not required by statute or regulation. |
(3) |
Primarily fees for tax compliance in various international markets. The decrease in fees between years was due to the transition of expatriate tax services to another provider.
|
(4) |
Fees for miscellaneous advisory services.
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McDonalds Corporation 2011 45 |
Solicitation of proxies and voting
NOTICE AND ACCESS
This year, we are again following the SECs Notice and Access rule. Most shareholders will receive a notice of Internet availability of proxy materials (Notice) in lieu of a paper copy of the Proxy
Statement and the Companys Annual Report. The Notice provides instructions as to how shareholders can access the proxy materials online, describes matters to be considered at the Annual Shareholders Meeting and gives instructions
as to how shares can be voted. Shareholders receiving the Notice can request a paper copy of the proxy materials by following the instructions set forth in the Notice.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
THE PROXY STATEMENT AND OUR 2010 ANNUAL
REPORT TO SHAREHOLDERS ARE AVAILABLE AT: WWW.INVESTOR.MCDONALDS.COM
RECORD DATE AND VOTING AT THE ANNUAL
SHAREHOLDERS MEETING
Shareholders owning McDonalds common stock at the close of business on March 22, 2011 (the record date), may
vote at the 2011 Annual Shareholders Meeting. On that date, [ ] shares of common stock were outstanding and there were approximately
[ ] shareholders of McDonalds common stock. Each share is entitled to one vote on each matter to be voted upon at the Annual Shareholders Meeting.
Most shareholders have a choice of voting by proxy over the Internet, by telephone or by using a traditional proxy card. Refer to the Notice or
your proxy or voting instruction card to see which options are available to you and how to use them.
The Internet and telephone
voting procedures are designed to authenticate shareholders identities and to confirm that their instructions have been properly recorded.
All valid proxies properly executed and received by the Company prior to the Annual Shareholders Meeting will be voted as you direct. If you do not specify how you want your shares voted, they will be voted
FOR the election of the Boards nominees for Director as set forth under Election of Directors, FOR the approval of the independent auditors, FOR the advisory vote on executive compensation, in favor of an
ANNUAL advisory vote on executive compensation, FOR the three proposals to eliminate super-majority voting requirements in our Restated Certificate of Incorporation, and AGAINST each of the shareholder proposals. You may revoke
your proxy and change your vote at any time before the Annual Shareholders Meeting by submitting written notice to the Corporate Secretary, by submitting a later dated and properly executed proxy (by Internet, telephone or mail) or by voting
in person at the Annual Shareholders Meeting.
All votes cast at the Annual Shareholders Meeting will be tabulated by
Broadridge Financial Solutions, Inc. (Broadridge), which has been appointed the independent inspector of election. Broadridge will determine whether or not a quorum is present. A quorum will be present if the holders of a majority of the shares of
common stock entitled to vote are present in person or represented by proxy at the Annual Shareholders Meeting.
The vote required to elect Directors is set forth under Election of Directors on
page [ ] of this Proxy Statement.
With respect to the approval of the independent auditors, the advisory vote
on executive compensation and the shareholder proposals, shareholders may (a) vote in favor; (b) vote against; or (c) abstain from voting. Under our By-Laws, to be approved, these proposals must receive the affirmative vote of a
majority of the voting power of the shares represented at the Annual Shareholders Meeting and entitled to vote thereon. On the proposal regarding an advisory vote on the frequency of future advisory votes on executive compensation,
shareholders may vote to hold such votes (a) each year, (b) every two years, (c) every three years or (d) may abstain from voting. Under our By-Laws, the voting option, if any, that receives the affirmative vote of a majority of
the voting power of the shares represented at the Annual Shareholders Meeting and entitled to vote thereon will be deemed to be approved by the shareholders. Broadridge will treat abstentions on any one or more of the proposals submitted for
shareholder action as shares present for purposes of determining a quorum, but an abstention on any proposal (other than director elections) will have the effect of a vote against the approval of that proposal, including having the effect of a vote
against each voting option with respect to the advisory vote on the frequency of future advisory votes on executive compensation.
The
proposal to eliminate the super-majority voting requirements in Article Twelfth of our Restated Certificate of Incorporation requires the approval of at least 66-2/3% of the outstanding shares of common stock entitled to vote. The proposals to
eliminate the super-majority voting requirements in Articles Thirteenth and Fourteenth of our Restated Certificate of Incorporation each require the approval of at least 80% of the outstanding shares of common stock entitled to vote. An abstention
will have the effect of a vote against approval of these three proposals.
Under NYSE rules, the proposal to approve the appointment
of independent auditors and the three proposals to eliminate the supermajority voting requirements from Articles Twelfth, Thirteenth and Fourteenth of our Restated Certificate of Incorporation are considered discretionary items. This
means that brokerage firms may vote in their discretion on behalf of clients who have not furnished voting instructions at least 15 days before the date of the Annual Shareholders Meeting. In contrast, all of the other proposals set forth in
this Proxy Statement are non-discretionary items. This means brokerage firms that have not received voting instructions from their clients on these matters may not vote on these proposals. These so-called broker non-votes
will not be considered in determining the number of votes necessary for approval and, therefore, will have no effect on the outcome of the votes for these proposals. Broker non-votes with respect to any proposal will be treated as shares present for
purposes of determining a quorum at the Annual Shareholders Meeting.
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46 McDonalds Corporation 2011 |
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PROXY SOLICITATION
The Company will provide the Notice, electronic delivery of the proxy materials or mail the 2011 Proxy Statement, the 2010 Annual Report and a proxy card to shareholders beginning on or about April 8, 2011 in
connection with the solicitation of proxies by the Board of Directors to be used at the 2011 Annual Shareholders Meeting. The cost of soliciting proxies will be paid by the Company. The Company has retained Georgeson Inc. to aid in the
solicitation at a fee of [$ ] plus reasonable out- of-pocket expenses. Proxies also may be solicited by employees and Directors of the Company by mail, telephone, facsimile, e-mail or in person.
CONFIDENTIAL VOTING
It is the Companys policy to protect the confidentiality of shareholder votes. Throughout the voting process, your vote will not be disclosed to the Company,
its Directors, officers or employees, except to meet legal requirements or to assert or defend claims for or against the Company or except in those limited circumstances where (1) a proxy solicitation is contested; or (2) you authorize
disclosure. The inspector of election has been and will remain independent of the Company. Nothing in this policy prohibits you from disclosing the nature of your vote to the Company, its Directors, officers or employees, or impairs voluntary
communication between you and the Company; nor does this policy prevent the Company from ascertaining which shareholders have voted or from making efforts to encourage shareholders to vote.
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McDonalds Corporation 2011 47 |
Additional information
EXECUTIVE OFFICERS
The following list sets forth the names of our current executive officers, their ages and their positions. (Ages are as of April 8, 2011.)
Jose Armario Age: 51. Group PresidentMcDonalds Canada and Latin America
Peter J. Bensen Age: 48. Corporate Executive Vice President and Chief Financial Officer
Stephen Easterbrook Age: 43. President, McDonalds Europe
Timothy J. Fenton Age: 53. President, McDonalds Asia/ Pacific, Middle East and Africa
Janice L. Fields Age: 55. President, McDonalds USA
Richard Floersch Age: 53. Corporate Executive Vice President and Chief Human Resources Officer
Douglas M. Goare Age: 58. Corporate Executive Vice President, Supply Chain and
Development
Kevin L. Newell Age: 54. Corporate Executive Vice President and Global
Chief Brand Officer
Kevin M. Ozan Age: 47. Corporate Senior Vice
PresidentController
Gloria Santona Age: 60. Corporate Executive Vice
President, General Counsel and Secretary
James A. Skinner Age: 66. Vice Chairman
and Chief Executive Officer
Jeffrey P. Stratton Age: 55. Corporate Executive Vice
PresidentChief Restaurant Officer
Donald Thompson Age: 48. President and Chief
Operating Officer
McDONALDS CORPORATION ANNUAL REPORT ON FORM 10-K, OTHER REPORTS AND POLICIES
Shareholders may access financial and other information on the investor section of the Companys website at www.investor.mcdonalds.com. Also available,
free of charge, are copies of the Companys Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities
Exchange Act of 1934 as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC. Copies of financial and other information are available free of charge by calling 1-800-228-9623 or by sending a
request to McDonalds Corporation, Shareholder Services, Department 720, One McDonalds Plaza, Oak Brook, IL 60523. Also posted on McDonalds website are the Companys Corporate Governance Principles; the charters of the Audit
Committee, Compensation Committee, Governance Committee, Corporate Responsibility Committee, Finance Committee and Executive Committee; the Standards on Director Independence; the Companys Standards of Business Conduct; the Code of
Ethics for the Chief Executive Officer and Senior Financial Officers; the Code of Conduct for the Board of Directors; the Policy for Pre-Approval of Audit and Permitted Non-Audit Services
and the Companys Certificate of Incorporation and By-Laws. Copies of these documents are also available free of charge by calling 1-800-228-9623 or by sending a request to McDonalds Corporation, Shareholder Services, Department 720,
One McDonalds Plaza, Oak Brook, IL 60523.
HOUSEHOLDING OF ANNUAL SHAREHOLDERS MEETING MATERIALS
Shareholders who share the same last name and address will receive one package containing a separate Notice for each individual shareholder at that
address. Shareholders who have elected to receive paper copies and who share the same last name and address will receive only one set of the Companys Annual Report and Proxy Statement, unless they have notified us that they wish to continue
receiving multiple copies. This method of delivery, known as householding, will help ensure that shareholder households do not receive multiple copies of the same document, helping to reduce our printing and postage costs, as well as
saving natural resources.
If you are a MCDirect Shares participant, hold McDonalds stock certificates or have book-entry shares
at Computershare, you can opt out of the householding practice by calling 1-800-621-7825 (toll-free) from the U.S. and Canada, or 1-312-360-5129 from other countries, or writing to McDonalds Shareholder Services, c/o Computershare Trust
Company, N.A., P.O. Box 43078, Providence, RI 02940-3078. If you would like to opt out of this practice and your shares are held in street name, please contact your broker or bank.
If you are receiving multiple copies of proxy materials at your household and would prefer to receive a single copy of these materials, please
contact Computershare at the above numbers or address. If your shares are held in street name, please contact your bank or broker.
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48 McDonalds Corporation 2011 |
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Information about registering for and attending the Annual Shareholders Meeting
|
|
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Date |
|
Thursday, May 19, 2011 |
|
|
Time |
|
9:00 a.m. Central Time |
|
Place Prairie Ballroom, The Lodge, McDonalds Office
Campus, 2815 Jorie Blvd., Oak Brook, Illinois
60523 |
|
Directions Available at www.investor.mcdonalds.com |
|
|
Parking |
|
Limited parking is available on
Campus. |
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Webcast |
|
To listen to a live webcast of the Annual Shareholders Meeting, go to www.investor.mcdonalds.com on May 19 just prior to 9:00 a.m. Central Time and click the appropriate
link under Webcasts. The Annual Shareholders Meeting webcast will be available for a limited time after the
meeting. |
TICKET RESERVATION AND ADMISSION POLICY
As seating in the Prairie Ballroom is very limited, we encourage shareholders to listen to the meeting via the live webcast. If you decide to attend in person, please send the pre-registration form below to
McDonalds Shareholder Services by U.S. mail or e-mail as described below.
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If you are a registered shareholder (i.e., you hold your shares through McDonalds transfer agent, Computershare), you may reserve your ticket by sending
the completed form below, as well as proof of share ownership, such as a copy of your meeting notice or your proxy card, by U.S. mail or by scanning and attaching the documents to an e-mail. |
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If you hold your shares through an intermediary, such as a bank or broker, you must send us the completed form below, as well as proof of share ownership, such
as a copy of your meeting notice, your voting instruction form or your brokerage statement reflecting your McDonalds holdings and your name, by U.S. mail or by scanning and attaching the documents to an e-mail. Please note that requesting a
legal proxy from your intermediary does not constitute pre-registering with McDonalds. If you wish to attend the meeting, you must pre-register directly with McDonalds. |
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If you are a duly appointed proxy for a shareholder, you must send the completed form below, as well as proof of your proxy power and proof of share ownership
for the shareholder for whom you are a proxy, by U.S. mail or by scanning and attaching the documents to an e-mail. |
Requests for tickets must be sent by U.S. mail to McDonalds Corporation, Shareholder Services, Department 720, One McDonalds Plaza,
Oak Brook, IL 60523 or by e-mail to shareholder.services@us.mcd.com. Requests for tickets must be received no later than 5:00 pm Central Time on May 12, 2011.
You will receive a confirmation letter by U.S. mail after we receive your pre-registration materials. Your ticket will be available at the meeting
registration desk, and you must show a government issued photo identification, as well as the confirmation letter, to pick-up your ticket. As admission tickets are limited, only those shareholders who have pre-registered will receive tickets, and on
a first-come, first served basis. Each shareholder may bring only one guest, who also must be listed on the registration form below. The registration desk will open at 7:30 a.m. Central Time on May 19, 2011. All tickets for the Prairie Ballroom
must be picked up by 8:45 a.m. Central Time. Overflow rooms will be available for viewing the meeting.
Please do not bring items such
as bags and briefcases to the meeting. Only small purses will be permitted in the Prairie Ballroom and/or the overflow rooms and these will be subject to inspection prior to admission to the meeting. Individuals attending the meeting must wear
appropriate attire and will not be allowed to enter the meeting wearing any attire that could be construed as intended to conceal ones identity (including, but not limited to hats or costumes). Cameras and other recording devices will not be
permitted in the ballroom. Cellular phones and all other electronic devices must be turned off and put away during the meeting.
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Pre-registration
form for 2011 Annual Shareholders Meeting of McDonalds Corporation |
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I am a shareholder (or duly appointed proxy for a shareholder) of McDonalds Corporation and plan to attend the Annual Shareholders Meeting to be held on May 19,
2011. |
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Name (please
print) |
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Phone number |
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Address |
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Name of guest (only shareholders may bring a
guest) |
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Room preference: ¨ Prairie Ballroom ¨ Overflow room (for viewing only) Room preference will be accommodated on a first come, first served basis. |
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A shareholder must accompany his or her guest in order for a guest to gain admission to the
meeting. A duly appointed proxy for a shareholder will not be allowed to bring a guest to the meeting. All shareholders and proxies must provide proof of share ownership.
To avoid delay in the receipt of your confirmation letter, please do not return this form with
your proxy card or mail it in the business envelope that you may have received with your proxy materials. This form along with proof of ownership must be returned by mail to McDonalds Corporation, Shareholder Services, Department 720, One McDonalds Plaza, Oak Brook, IL 60523 or by e-mail to
shareholder.services@us.mcd.com no later than 5:00 p.m. Central Time on May 12, 2011. Please contact McDonalds Shareholder Services with any questions at 630-623-7428. |
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McDonalds Corporation 2011 49 |
HOME OFFICE
McDonalds Corporation
One McDonalds Plaza
Oak Brook, IL 60523
630-623-3000
www.aboutmcdonalds.com
All trademarks used herein are
the property of their respective
owners.
© 2011
McDonalds
MCD11-4645
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50 McDonalds Corporation 2011 |
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C/O MCDONALDS CORPORATION
POST OFFICE BOX 9112
FARMINGDALE, NY 11735-9544 |
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3 Ways To Vote
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the
web site and follow the instructions to vote the shares.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy
card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we
have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements,
proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to VOTE BY INTERNET and, when prompted, indicate that you agree to receive or access proxy materials
electronically in future years. |
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR
BLACK INK AS FOLLOWS:
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED.
MCDONALDS CORPORATION
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This proxy is solicited on behalf of the
Board of Directors of McDonalds Corporation. If this signed card contains no specific voting instructions, the shares will be voted with the Boards recommendations, except for Profit Sharing Plan participants (see reverse
side). |
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The Board of Directors recommends a vote FOR the nominees identified on this proxy.
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The Board of Directors recommends a
vote FOR proposals 5, 6 and 7. |
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Abstain |
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1. |
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Election of Directors: (5 nominees) |
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Abstain |
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1a. Susan E.
Arnold |
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Eliminate super-majority voting requirements in Article Twelfth of our Restated Certificate of Incorporation by repealing such article (Transactions with Interested
Shareholders). |
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1b. Richard H. Lenny |
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Eliminate super-majority voting requirements in Article Thirteenth of our Restated Certificate of Incorporation (Board of Directors). |
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1c. Cary D. McMillan |
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Eliminate super-majority voting requirement in Article Fourteenth of our Restated Certificate of Incorporation (Shareholder Action). |
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1d. Sheila A. Penrose |
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The Board of Directors recommends a vote AGAINST proposals 8, 9, 10, 11, and 12. |
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1e. James A. Skinner |
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Advisory vote on shareholder proposal relating to classified board.
Advisory vote on shareholder proposal relating to annual election
of directors. |
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The Board of Directors recommends a vote
FOR proposals 2 and 3. |
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2. |
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Advisory vote on the approval of the appointment of an independent registered public accounting firm to serve as independent auditors for 2011. |
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Advisory vote on shareholder proposal relating to the use of controlled atmosphere stunning. |
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Advisory vote on executive compensation. |
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The Board of Directors recommends you vote 1 year on the following proposal: |
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2 Years |
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Abstain |
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4. |
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Advisory vote on the frequency of future advisory votes on executive compensation. |
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Advisory vote on shareholder proposal relating to a report on childrens nutrition. |
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If you have comments, please check this box and
write them on the back where indicated. |
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Advisory vote on shareholder proposal relating to beverage containers.
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Authorized Signatures This section MUST be completed for your vote to be counted. Date and Sign Below |
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I (we) hereby revoke any proxy previously given, and appoint James A. Skinner, Gloria Santona and Peter J. Bensen, and
each of them, as proxies with full power of substitution to vote in the manner provided above all shares the undersigned is entitled to vote at the McDonalds Corporation 2011 Annual Shareholders Meeting, or any postponement or
adjournment thereof, and further authorize each such proxy to vote at his or her discretion on any other matter that may properly come before the meeting or any adjournment or postponement thereof, including without limitation to vote for the
election of such substitute nominee(s) for director as such proxies may select in the event that any nominee(s) named above become(s) unable to serve. (Plan participants are appointing Plan trustees see reverse side.)
Please sign as your name(s) appear(s) above and return the
card promptly. If signing for a corporation or partnership, or as agent, attorney or fiduciary, indicate the capacity in which you are signing. If you attend the meeting and decide to vote in person by ballot, such vote will supercede this
proxy. |
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Signature (PLEASE SIGN WITHIN BOX) |
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Date
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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McDonalds Annual Shareholders Meeting Information
Thursday, May 19, 2011
9:00 a.m. Central Time
Prairie Ballroom at The Lodge
McDonalds Office Campus
2815 Jorie Boulevard Oak
Brook, Illinois 60523 Admission: Please
review the Ticket Reservation and Admission Policy regarding meeting attendance in the Proxy Statement. You will need to pre-register with McDonalds to attend the meeting. As admission tickets are limited, only those shareholders who
have pre-registered will receive tickets, and on a first-come, first served basis. Each shareholder may bring only one guest, who also must be pre-registered for the meeting. The registration desk will open at 7:30 a.m. Central Time. Overflow rooms
will be available for viewing the meeting. Please do
not bring items such as bags and briefcases to the meeting. Only small purses will be permitted in the Prairie Ballroom and/or overflow rooms and these will be subject to inspection prior to admission to the meeting. Individuals attending the
meeting must wear appropriate attire and will not be allowed to enter the meeting wearing any attire that could be construed as intended to conceal ones identity (including, but not limited to hats or costumes). Cameras and other recording
devices will not be permitted in the ballroom. Cellular phones and all other electronic devices must be turned off and put away during the meeting.
Voting at the Meeting: Shareholders attending the live meeting may submit this proxy card or complete a ballot at the meeting.
Directions: Directions to the McDonalds Annual
Shareholders Meeting can be viewed online at www.investor.mcdonalds.com. Webcast: Listen to a live webcast of the McDonalds Annual Shareholders Meeting on www.investor.mcdonalds.com by clicking on the appropriate link under Webcasts. After the
meeting, this webcast will be available on demand for a limited time. Please note that if you participate in the meeting by live webcast, the shares of stock will not be voted or deemed present at the meeting unless you submitted a proxy via mail,
the Internet or telephone before the meeting.
Important Notice Regarding the Availability of Proxy Materials for the McDonalds Annual Shareholders Meeting to be Held on May 19, 2011:
The Proxy Statement and 2010 Annual Report are available at www.proxyvote.com.
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Proxy
McDONALDS CORPORATION |
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Voting Instructions for McDonalds Corporation Profit Sharing and Savings Plan Participants |
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When casting your vote, you are directing the trustees of the McDonalds Corporation Profit Sharing and Savings Plan Trust to vote the McDonalds
shares credited to the accounts under the McDonalds Corporation Profit Sharing and Savings Plan (the Plan). When you vote these shares, you should consider your own long-term best interests as a Plan participant. In addition, you
are directing the trustees to vote shares held in the Plan that have not been voted by other participants and Plan shares that have not yet been credited to participants accounts. When you direct the vote of these shares, you have a special
responsibility to consider the long-term best interest of other Plan participants. |
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Your vote on the reverse side will apply
to: Shares credited to the account(s) under the Plan;
Shares not voted and shares that have not yet been credited to Plan participants accounts, if
applicable; and Shares held at Computershare (MCDirect Shares, certificate and
book-entry). If you wish to vote all the shares in the
same manner, including shares in the Plan, simply mark your voting instructions on the reverse side.
If you do NOT want to vote all shares in the same way, please contact Broadridge via email at mcdonalds@broadridge.com, or indicate that you want to
vote the Plan shares and registered shares separately in the Comments area below and check the corresponding box on the reverse side of the proxy card. Your directions to vote will be kept confidential by Broadridge, the independent inspector
of election. |
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Comments: |
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(If you made any Comments above, please mark
the corresponding box on the reverse side.) |
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M29900-Z54852-P07373
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