DEF 14A of Mcdonalds Corp
Filed Apr 8, 2024 · FY20230001558370-24-004818
Biographical Information
Biographical Information Biographical information about our Board’s Director nominees as of the date of this Proxy Statement, including their ages, professional experiences, Board tenure, Committee memberships, qualifications, and other public company directorships, is set forth on the following pages.
Biographical Information
| ANTHONY CAPUANO | Director Qualifications | Skills & Qualifications | | | PRESIDENT AND CHIEF EXECUTIVE OFFICER, MARRIOTT INTERNATIONAL, INC. Age: 58 Board Tenure: 1 year Board Committees ● Compensation ● Public Policy & Strategy | Mr. Capuano brings to our Board over 25 years of leadership experience gained from his senior executive roles, including president and chief executive officer, at Marriott. His service at a global hospitality company known for its focus on creating a positive guest experience contributes an important perspective to our Board’s discussions regarding enhancing our own customers’ experiences, including through our loyalty programs. Our Board also benefits from Mr. Capuano’s significant global development experience, and his service on the social impact committee of Marriott’s board of directors provides our Board with valuable insights regarding our own corporate responsibility and sustainability efforts. Mr. Capuano’s public company board experience also gives him a broad understanding of governance issues facing public companies. Professional Experience Marriott International, Inc., a global hospitality company ● President and Chief Executive Officer (2023 – Present) ● Chief Executive Officer (2021 – 2023) ● Group President, Global Development, Design and Operations Services (2020 – 2021) ● Executive Vice President and Global Chief Development Officer (2009 – 2020) Other Public Company Directorships Mr. Capuano also serves on the board of Marriott International, Inc. | | Brand Management | | | | | Customer- Centric | | | | | Digital | | | | | Finance / Capital Markets | | | | | Global Experience | | | | | Human Capital Management | | | | | Marketing | | | | | Other Public Company Board | | | | | Real Estate | | | | | Sustainability / Corporate Responsibility |
Biographical Information
| 20 2024 proxy statement | |
Biographical Information
| KAREEM DANIEL | Director Qualifications | Skills & Qualifications | | | FORMER CHAIRMAN, DISNEY MEDIA & ENTERTAINMENT DISTRIBUTION Age: 49 Board Tenure: 1 year Board Committees ● Compensation ● Sustainability & Corporate Responsibility | Mr. Daniel brings to our Board valuable leadership experience gained from his senior executive roles at Walt Disney, one of the world’s most well-known and admired brands. His extensive corporate development experience includes leading transformation across several Disney divisions. The knowledge Mr. Daniel has gained through leading the creation of a direct-to-consumer e-commerce business, as well as overseeing the development of new distribution and commercialization models, offers a valuable perspective to our Board’s discussions regarding strategy and business development. Professional Experience The Walt Disney Company, a global entertainment and media company ● Chairman, Disney Media & Entertainment Distribution (2020 – 2022) ● President, Consumer Products, and Chief of Staff, Office of the Chief Executive Officer (2020) ● President, Walt Disney Imagineering Operations, Product Creation, Publishing and Games (2019 – 2020) ● Executive Vice President, Global Business Operations, Walt Disney Imagineering (2017 – 2019) ● Senior Vice President, Strategy and Business Development, Disney Consumer Products and Interactive Media (2011 – 2017) Other Public Company Directorships None. | | Brand Management | | | | | Customer- Centric | | | | | Digital | | | | | Finance / Capital Markets | | | | | Global Experience | | | | | Human Capital Management | | | | | Information Technology / Cybersecurity | | | | | Marketing | | | | | Sustainability / Corporate Responsibility |
Biographical Information
| | corporate.mcdonalds.com 21 |
Biographical Information
| LLOYD DEAN | Director Qualifications | Skills & Qualifications | | | CHIEF EXECUTIVE EMERITUS AND FOUNDING EXECUTIVE, COMMONSPIRIT HEALTH Age: 73 Board Tenure: 8 years Board Committees ● Compensation (Chair since 2023) ● Governance | Mr. Dean brings to our Board over 25 years of leadership, management, and strategy experience, which contributes an important perspective to our Board’s discussions of opportunities and challenges in a constantly changing business environment. In his career in executive management at leading healthcare organizations, Mr. Dean has led significant strategic, operational, and financial transformations. Mr. Dean’s healthcare experience and knowledge of health and safety risks are particularly important and enhance his ability to oversee human capital management matters. Our Board also benefits from Mr. Dean’s finance, systems operations, service quality, human resources, customer-centric operations, community affairs and regulatory experience. Professional Experience CommonSpirit Health, a non-profit, Catholic health system ● Chief Executive Emeritus and Founding Executive (2022 – Present) ● Chief Executive Officer (2019 – 2022) Dignity Health, one of the nation’s largest healthcare systems ● President and Chief Executive Officer (2000 – 2019) Other Public Company Directorships Mr. Dean also serves on the boards of Golden Arrow Merger Corp. and Progyny, Inc. | | Brand Management | | | | | Customer- Centric | | | | | Finance / Capital Markets | | | | | Human Capital Management | | | | | Other Public Company Board | | | | | Sustainability / Corporate Responsibility |
Biographical Information
| 22 2024 proxy statement | |
Biographical Information
| CATHERINE ENGELBERT | Director Qualifications | Skills & Qualifications | | | COMMISSIONER, WOMEN’S NATIONAL BASKETBALL ASSOCIATION Age: 59 Board Tenure: 4 years Board Committees ● Audit & Finance (Chair since 2022) ● Sustainability & Corporate Responsibility ● Executive | Ms. Engelbert brings to our Board a wealth of experience in global business operations, finance, leadership, brand, customer strategy, financial reporting and internal controls, and risk management matters gained from her service as Commissioner of a professional sports league and as former chief executive officer of Deloitte LLP. Having led more than 100,000 professionals at Deloitte, she also provides our Board valuable insights on talent management and other human capital management matters. Ms. Engelbert has strong leadership and governance experience from her previous roles on the private company board of Deloitte LLP and as chairman and chief executive officer of Deloitte & Touche LLP, and valuable regulatory experience from her roles on the strategic investment, risk, regulatory & government relations, and finance & audit committees of the board of Deloitte LLP. With 33 years of previous public accounting experience as a certified public accountant, Ms. Engelbert further brings to our Board a deep understanding of accounting principles and financial reporting rules and regulations, and her qualification as an “audit committee financial expert” is an important attribute as our Audit & Finance Committee Chair. Professional Experience Women’s National Basketball Association (WNBA), a professional basketball league ● Commissioner (2019 – Present) Deloitte LLP, an industry-leading audit, consulting, tax, and advisory services firm ● Chief Executive Officer (2015 – 2019) Deloitte & Touche LLP, audit subsidiary of Deloitte LLP ● Chairman and Chief Executive Officer (2014 – 2015) ● Partner (1998 – 2019) Other Public Company Directorships Ms. Engelbert also serves on the board of Royalty Pharma plc. | | Brand Management | | | | | Customer- Centric | | | | | Digital | | | | | Finance / Capital Markets | | | | | Global Experience | | | | | Human Capital Management | | | | | Marketing | | | | | Other Public Company Board | | | | | Sustainability / Corporate Responsibility |
Biographical Information
| | corporate.mcdonalds.com 23 |
Biographical Information
| MARGARET GEORGIADIS | Director Qualifications | Skills & Qualifications | | | CO-FOUNDER AND CHIEF EXECUTIVE OFFICER, MONTAI HEALTH Age: 60 Board Tenure: 9 years Board Committees ● Audit & Finance ● Sustainability & Corporate Responsibility | Ms. Georgiadis brings to our Board valuable strategy and development, finance and leadership experience gained from her senior executive roles, including at Ancestry, Mattel and Google, and her positions at a private investment and strategic advisory firm. Her experience as a senior executive at large global businesses affords her a broad knowledge of global consumer businesses, as well as of technology and cybersecurity, digital consumer insights, e-commerce, and marketing. Her knowledge in these and other areas provides critical insights to our business, particularly as our Board considers the impact of technology, digital and cybersecurity risks. Ms. Georgiadis also has over 15 years of analytical and strategic experience at McKinsey & Company, a global management and consulting firm. In addition, Ms. Georgiadis’ qualification as an “audit committee financial expert” is an important attribute as a member of our Audit & Finance Committee. Professional Experience Montai Health, a digital medical technology company ● Co-Founder and Chief Executive Officer (2022 – Present) Flagship Pioneering, a bioplatform innovation company ● CEO-Partner (2022 – Present) Synetro Group, a private investment and strategic advisory firm ● Managing Partner (2021 – Present) General Catalyst, a venture capital firm ● Endurance Partner-in-Residence, XIR (2021 – 2022) Ancestry, a global family history and consumer genomics company ● President and Chief Executive Officer (2018 – 2020) Mattel, Inc., a leading global toy company and entertainment franchise ● Chief Executive Officer (2017 – 2018) Google Inc., a global technology company ● President, Americas (2011 – 2017) Other Public Company Directorships Ms. Georgiadis also serves on the board of AppLovin Corporation. | | Brand Management | | | | | Customer- Centric | | | | | Digital | | | | | Finance / Capital Markets | | | | | Global Experience | | | | | Human Capital Management | | | | | Information Technology / Cybersecurity | | | | | Marketing | | | | | Other Public Company Board | | | | | Sustainability / Corporate Responsibility |
Biographical Information
| 24 2024 proxy statement | |
Biographical Information
| MICHAEL HSU | Director Nominee Qualifications | Skills & Qualifications | | | CHAIRMAN AND CHIEF EXECUTIVE OFFICER, KIMBERLY-CLARK CORPORATION Age: 59 Board Tenure: N/A Board Committees Committee assignments to be determined following election to the Board | Mr. Hsu would bring to our Board extensive experience in consumer products, global supply chain, operations, e- commerce, digital and human capital management gained from his service in senior executive roles at Kimberly-Clark and Kraft Foods. His service at a leading manufacturer and consumer products retailer known for its advancement across multiple product categories would bring customer-centric experience to our Board. In addition, his experience in enhancing digital and e-commerce capabilities platforms is an important asset as our Board considers these topics and their potential impact on our Company. Mr. Hsu’s prior experience at Kraft Foods also gives him a unique perspective and expertise in the global food supply chain industry. Professional Experience Kimberly-Clark Corporation, a consumer products company ● Chairman and Chief Executive Officer (2020 – Present) ● Chief Executive Officer (2019 – 2020) ● President and Chief Operating Officer (2017 – 2019) ● Group President, Consumer Products, North America (2012 – 2017) Kraft Foods, a food service company ● Executive Vice President and Chief Commercial Officer (2012 – 2012) ● President, Sales, Customer Marketing and Logistics, USA (2010 – 2012) Other Public Company Directorships Mr. Hsu also serves as Chairman of the Board of Kimberly-Clark Corporation. He previously served on the board of Texas Instruments Incorporated. | | Brand Management | | | | | Customer- Centric | | | | | Digital | | | | | Finance / Capital Markets | | | | | Global Experience | | | | | Human Capital Management | | | | | Marketing | | | | | Other Public Company Board | | | | | Sustainability / Corporate Responsibility |
Biographical Information
| | corporate.mcdonalds.com 25 |
Biographical Information
| CHRISTOPHER KEMPCZINSKI | Director Qualifications | Skills & Qualifications | | | PRESIDENT AND CHIEF EXECUTIVE OFFICER, MCDONALD’S CORPORATION Age: 55 Board Tenure: 4 years Board Committees ● Executive (Chair since 2019) | Mr. Kempczinski is President and CEO of our Company, having previously served as President of McDonald’s USA, where he was responsible for approximately 14,000 McDonald’s restaurants. He first joined our Company in 2015, overseeing global strategy, business development and innovation. In these roles, he has been instrumental in identifying new ideas and best practices to accelerate growth to increase the overall value of the McDonald’s System. His experience leading our U.S. business and overseeing global strategy contributes an important Company perspective to our Board, and he was the architect of our Accelerating the Arches growth strategy. This experience and deep knowledge of the food industry strengthen our Board’s knowledge and understanding as it oversees our operations and strategy. Professional Experience McDonald’s Corporation ● President and Chief Executive Officer (2019 – Present) ● President, McDonald’s USA (2017 – 2019) ● Executive Vice President – Strategy, Business Development and Innovation (2015 – 2016) The Kraft-Heinz Company, a packaged food company ● Executive Vice President of Growth Initiatives and President of Kraft International (2014 – 2015) Other Public Company Directorships Mr. Kempczinski also serves on the board of The Procter & Gamble Company. | | Brand Management | | | | | Customer- Centric | | | | | Digital | | | | | Finance / Capital Markets | | | | | Global Experience | | | | | Human Capital Management | | | | | Marketing | | | | | Other Public Company Board | | | | | Real Estate | | | | | Sustainability / Corporate Responsibility |
Biographical Information
| 26 2024 proxy statement | |
Biographical Information
| JOHN MULLIGAN | Director Qualifications | Skills & Qualifications | | | STRATEGIC ADVISOR, FORMER EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER, TARGET CORPORATION Age: 58 Board Tenure: 8 years Board Committees ● Audit & Finance ● Public Policy & Strategy (Chair since 2022) ● Executive | Mr. Mulligan brings to our Board extensive experience in finance, global supply chain, operations, e-commerce, real estate, and human resources gained from his service in senior executive roles at Target. His service at a leading general merchandise retailer known for its focus on creating an exceptional guest experience brings customer-centric experience to our Board. In addition, his experience in digital and technology issues, including cybersecurity risks, is an important asset as our Board considers these topics and their potential impact on our Company. In addition, Mr. Mulligan’s qualification as an “audit committee financial expert” is an important attribute as a member of our Audit & Finance Committee. Professional Experience Target Corporation, a general merchandise retailer ● Strategic Advisor (2024 – Present) ● Executive Vice President and Chief Operating Officer (2015 – 2023) ● Executive Vice President and Chief Financial Officer (2012 – 2015) Other Public Company Directorships None. | | Brand Management | | | | | Customer- Centric | | | | | Digital | | | | | Finance / Capital Markets | | | | | Global Experience | | | | | Human Capital Management | | | | | Information Technology / Cybersecurity | | | | | Marketing | | | | | Real Estate |
Biographical Information
| | corporate.mcdonalds.com 27 |
Biographical Information
| JENNIFER TAUBERT | Director Qualifications | Skills & Qualifications | | | EXECUTIVE VICE PRESIDENT AND WORLDWIDE CHAIRMAN, INNOVATIVE MEDICINE, JOHNSON & JOHNSON Age: 60 Board Tenure: 1 year Board Committees ● Compensation ● Public Policy & Strategy | Ms. Taubert brings to our Board extensive management, marketing, finance, business development and global operations experience gained from her senior executive roles at one of the world’s largest global healthcare companies. Her experience leading a global pharmaceuticals division, and as a member of Johnson & Johnson’s executive committee, provide her with a broad understanding of the range of complex issues facing a large, global consumer business. Our Board also benefits from Ms. Taubert’s extensive regulatory and public policy knowledge, as well as her human capital management experience, including her recognized leadership in the area of diversity, equity, and inclusion. Professional Experience Johnson & Johnson, a researcher, developer and manufacturer of medical devices, and pharmaceuticals ● Executive Vice President and Worldwide Chairman, Innovative Medicine (2018 – Present) ● Company Group Chairman, The Americas, Pharmaceuticals (2015 – 2018) ● Company Group Chairman, North America, Pharmaceuticals (2012 – 2015) Other Public Company Directorships None. | | Brand Management | | | | | Customer- Centric | | | | | Finance / Capital Markets | | | | | Global Experience | | | | | Human Capital Management | | | | | Marketing | | | | | Information Technology / Cybersecurity | | | | | Sustainability / Corporate Responsibility |
Biographical Information
| 28 2024 proxy statement | |
Biographical Information
| PAUL WALSH | Director Qualifications | Skills & Qualifications | | | EXECUTIVE CHAIRMAN, MCLAREN GROUP LIMITED Age: 68 Board Tenure: 5 years Board Committees ● Governance ● Sustainability & Corporate Responsibility (Chair since 2022) ● Executive | Mr. Walsh brings to our Board substantial corporate leadership experience and knowledge of consumer-centric companies gained from his experience as former chief executive officer of a large multinational corporation. His experience at Diageo brings broader food and beverage industry perspective. He also has held executive-level finance positions, including as chief financial officer of Grand Metropolitan Foods and Intercontinental Hotels. Throughout his career, Mr. Walsh has built success and growth at his companies through the deployment of effective brand marketing strategies, which brings valuable perspective to our Board. His background as a U.K. national based in London provides international diversity on our Board. Professional Experience McLaren Group Limited, a privately owned luxury automotive and technology group ● Executive Chairman (2020 – Present) Chime Communications Limited, a marketing services company ● Non-Executive Chairman (2016 – Present) L.E.K. Consulting, a global strategy consulting firm ● Advisor (2014 – Present) TPG Capital LLP, a private investment firm ● Advisor (2014 – Present) Bespoke Capital Partners LLC, an investment company ● Operating Partner (2016 – 2021) Compass Group PLC, a leading food service and support services company ● Chairman (2014 – 2020) Avanti Communications Group plc, a leading satellite operator providing internet and data services ● Chairman (2013 – 2019) Diageo plc, a multinational beverage company ● Chief Executive Officer (2000 – 2013) Other Public Company Directorships Mr. Walsh also serves as independent lead director of the board of Vintage Wine Estates, Inc. (f/k/a Bespoke Capital Acquisition Corp.) and as a director of FedEx Corporation. He previously served on the boards of Compass Group PLC, RM2 International, S.A., and TPG Pace Holdings Corp. | | Brand Management | | | | | Customer- Centric | | | | | Digital | | | | | Finance / Capital Markets | | | | | Global Experience | | | | | Human Capital Management | | | | | Marketing | | | | | Other Public Company Board | | | | | Sustainability / Corporate Responsibility |
Biographical Information
| | corporate.mcdonalds.com 29 |
Biographical Information
| AMY WEAVER | Director Qualifications | Skills & Qualifications | | | PRESIDENT AND CHIEF FINANCIAL OFFICER, SALESFORCE, INC. Age: 57 Board Tenure: 1 year Board Committees ● Audit & Finance ● Governance | Ms. Weaver brings to our Board valuable and varied leadership experience gained from her senior executive roles at one of the world’s largest enterprise software companies. She leads Salesforce’s global finance organization, and previously led its legal and corporate affairs organizations. This contributes a unique and valuable perspective to our Board’s discussions of strategy, finance, regulatory and public policy matters. In addition, Ms. Weaver’s qualification as an “audit committee financial expert” is an important attribute as a member of our Audit & Finance Committee. Professional Experience Salesforce Inc., a cloud-based software company ● President and Chief Financial Officer (2021 – Present) ● President and Chief Legal Officer (2020 – 2021) ● President, Legal Corporate Affairs and General Counsel (2017 – 2020) ● Executive Vice President and General Counsel (2015 – 2017) ● Senior Vice President and General Counsel (2013 – 2015) Other Public Company Directorships None. | | Brand Management | | | | | Customer- Centric | | | | | Digital | | | | | Finance / Capital Markets | | | | | Global Experience | | | | | Human Capital Management | | | | | Information Technology / Cybersecurity | | | | | Sustainability / Corporate Responsibility |
Biographical Information
| 30 2024 proxy statement | |
Biographical Information
| MILES WHITE | Director Qualifications | Skills & Qualifications | | | FORMER EXECUTIVE CHAIRMAN, ABBOTT LABORATORIES Age: 69 Board Tenure: 15 years Board Committees ● Governance (Chair since 2014) ● Public Policy & Strategy ● Executive | Mr. White brings to our Board extensive knowledge of strategy and business development, global operations, finance, leadership development and succession planning, corporate governance, and regulatory and public policy matters gained from his experience as former chairman and chief executive officer of a global healthcare company. Mr. White’s healthcare experience and knowledge of healthcare technology advances has also enhanced his ability to oversee human capital management. In addition, Abbott’s focus on developing consumer products and technologies brings customer-centric, marketing, digital and healthcare knowledge to our Board. We also benefit from Mr. White’s strong experience in addressing the needs of a global public company, as well as insights into our Board’s responsibility to oversee management and operations matters. As our Governance Committee Chair, Mr. White leads our Board’s succession planning and Director candidate selection process, and he is periodically involved in shareholder engagement. Professional Experience Abbott Laboratories, a global healthcare company ● Executive Chairman (2020 – 2021) ● Chairman and Chief Executive Officer (1999 – 2020) Other Public Company Directorships Mr. White previously served as executive chairman of the board of Abbott Laboratories and as a director of Caterpillar, Inc. | | Brand Management | | | | | Customer- Centric | | | | | Digital | | | | | Finance / Capital Markets | | | | | Global Experience | | | | | Human Capital Management | | | | | Marketing | | | | | Other Public Company Board |
Biographical Information
| | corporate.mcdonalds.com 31 |
Board Leadership
Board Leadership
Board Leadership
| Upon election of the Director nominees in Proposal 1: Chairman of the Board and CEO: Christoper Kempczinski Lead Independent Director: Miles White ● While Enrique Hernandez, Jr. will continue to serve as our independent Chairman through the 2024 Annual Shareholders’ Meeting, the Board has determined that the Chairman will be Mr. Kempczinski and the Lead Independent Director will be Mr. White after the Annual Shareholders’ Meeting. ● The Board periodically reviews its leadership structure and has determined that, following the retirement of Mr. Hernandez, a combined Chairman/Chief Executive Officer structure is in the best interests of the Company and shareholders at this time. |
Board Leadership
We believe that having strong leadership is essential for our Board to perform its primary oversight functions effectively. It is also important for the Board to retain flexibility to determine its leadership structure based on the particular composition of the Board, the individuals serving in leadership positions, and the needs and opportunities of the Company at any given time. Mr. Hernandez has served as the independent Chairman of the Board since 2016 and informed the Board several months ago that he was considering retirement, as of the 2024 Annual Shareholders’ Meeting. Mr. Hernandez’ retirement is consistent with the Board’s on-going commitment to refresh its membership in service of shareholders. After thoughtful deliberation, the Board determined that our Chief Executive Officer, Mr. Kempczinski, who has served in that capacity since 2019, will assume the role of Chairman of the Board following our 2024 Annual Shareholders’ Meeting, and that Mr. White will serve as our Lead Independent Director. Our Board believes that having a combined Chairman and Chief Executive Officer as well as a Lead Independent Director – a governance structure previously utilized successfully by the Company – will allow Mr. Kempczinski to manage our business effectively; execute on our strategic growth plan; and lead the Board, while also empowering Mr. White to provide independent board leadership and oversight with a clearly defined role and set of responsibilities. The Board engaged in a robust, disciplined process in reaching this decision, as it does regularly with Board refreshment and succession planning. Prior to this leadership announcement, the Board, in collaboration with the leadership of the Governance Committee, reviewed and discussed the impending leadership transition on several occasions. The Board believes that the optimal board leadership structure depends on a variety of specific facts and circumstances relative to the Company, particularly within the context of the range of skills, qualifications, and experiences represented on the Board, as well as the opportunities and any challenges facing the Company at the time. In light of the Board’s current structure, where all but one Director is independent; all of the committees are comprised of independent Directors; and the Board has robust independent oversight, the Board determined that Mr. Kempczinski is best suited to be the Board’s Chairman. The Board believes that having the Chief Executive Officer also act as Chairman is optimal at this time in light of the critical nature of our unique business structure, with our Chief Executive Officer at the center of the three-legged stool between our franchisees, suppliers, and employees, as the proper balance of those constituencies is essential to our success. The Board believes that combining the roles will not create ambiguity about reporting relationships or inhibit the flow of information and interactions among the Board, management, and other Company personnel. The Board considered the importance of the impact that the leadership structure has on the Company’s performance and the performance of the Board, including the effectiveness of the current Board composition in ensuring strong, independent Board oversight, as well as the pending retirement of the current Chairman. In light of that analysis, the Board determined that:
Board Leadership
| ● | Mr. Kempczinski’s leadership style, deep knowledge of the food industry, and the Company’s strong financial performance under his leadership, all make him uniquely qualified to lead discussions of the Board, foster constructive interaction between the Board and management, and promote alignment of the Company’s strategy with its operational execution. |
Board Leadership
| 32 2024 proxy statement | |
Board Leadership
| ● | Mr. Kempczinski has worked closely over the past five years with the independent Directors to understand their insights and perspectives as he developed the McDonald’s long-term strategy. The guidance, oversight, and accountability provided by the Board to Mr. Kempczinski during his tenure as Chief Executive Officer has allowed him to navigate the Company successfully through multiple complex issues and align the strengths of a values-based leadership team to promote our core objectives. His success has been evidenced by the exceptional financial performance and strong growth of the Company throughout his tenure as Chief Executive Officer. |
Board Leadership
| ● | Mr. White will bring to the Lead Independent Director role a career of leading global and complex organizations from his previous roles as chairman, chief executive officer and executive chairman of a large multinational corporation, as well as his former and current roles on public company boards that operate in a variety of industries and businesses. This expertise, combined with his extensive knowledge of our business and its strategic objectives, the challenges and opportunities facing our Company, and a deep commitment to serve as Lead Independent Director, all make Mr. White well positioned to guide the Board in its oversight of the Company’s strategy and risk management. |
Board Leadership
The Board recognizes that where the positions of Chairman and Chief Executive Officer are combined, it is imperative that the Board elect a strong Lead Independent Director with a clearly defined role and robust set of responsibilities, to encourage open dialogue and constructive feedback among our independent Directors and management. Prior to the appointment of Mr. White as our Lead Independent Director, the Governance Committee and Board engaged in a thoughtful process to ensure alignment with respect to clearly-defined duties for the Lead Independent Director, as outlined below.
Board Leadership
| Agenda Setting; Board Information; and Interactions with the Chairman/CEO ● Collaborating with the Chairman/CEO regarding the agenda and schedule for Board meetings ● Providing input on meeting materials shared with the Board ● Providing feedback to the Chairman/CEO on the presentations made to and discussions with the Board ● Providing feedback to the Chairman/CEO after executive sessions of the independent Directors ● Acting as the principal liaison between independent Directors and the Chairman/CEO |
Board Leadership
| Board Leadership Responsibilities ● Presiding over all executive sessions of the Board ● Calling meetings of independent Directors ● Presiding at all meetings of the Board at which the Chairman/CEO is not present ● Together with the Compensation Committee, leading the annual CEO performance evaluation, considering performance as Chairman as well ● Overseeing the process for Chairman/CEO succession planning ● Liaising with Directors considering other public-board directorships |
Board Leadership
| Interactions with Stakeholders ● Being available for consultation and direct communication, if requested by major shareholders ● Receives information regarding the Company's communications with shareholders and other stakeholders |
Board Leadership
| | corporate.mcdonalds.com 33 |
Board Leadership
The Board will continue to monitor Board leadership in light of the foregoing, as well as the evolution of the Board and the Company’s business over time, determining the Board’s leadership structure that it believes is in the best interests of our Company and its shareholders.
Director Compensation
Director Compensation Non-management Directors are compensated for their service on our Board, as described below. Directors who are also Company employees do not receive any compensation for their service as Director. Our Governance Committee annually evaluates the compensation of our Directors. Consistent with this practice, in Spring 2023 our Board’s independent compensation consulting firm Semler Brossy Consulting Group LLC (“Semler Brossy”) performed a comprehensive review of both the structure of our non-management Director compensation program and amount of compensation, including benchmarking director compensation using the same peer group as is used for executive compensation review and described under “Compensation Discussion and Analysis” beginning on page 53. Informed by the results of this review and the base salary increase budget for employees, upon recommendation of the Governance Committee, the Board approved a $5,000 increase to the cash retainer component of the Director compensation package, effective May 25, 2023. No other changes were made to our Director compensation program in 2023. Our Director compensation program consists of: (i) an annual cash retainer of $120,000; (ii) an annual grant of common stock equivalent units with a value of $200,000 under our Board of Directors’ Deferred Compensation Plan (the “Directors’ Plan”); (iii) an annual cash retainer of $30,000 for our Audit & Finance Committee Chair; and (iv) an annual cash retainer of $25,000 for the Chairs of our Compensation, Governance, Public Policy & Strategy, and Sustainability & Corporate Responsibility Committees. We also match up to $10,000 of charitable contributions made annually by Directors to certain types of tax-exempt organizations. In recognition of his leadership as our independent Chairman, our disinterested Directors awarded Enrique Hernandez, Jr.: (i) an additional $250,000 cash retainer; and (ii) restricted stock units (“RSUs”) with a targeted grant date fair value of $250,000 in 2023. The amount of compensation for Mr. Hernandez’s service as our independent Chairman has remained unchanged since 2016 and was set at a level to reflect the significance of such role at our Company as well as his qualifications. The RSUs awarded to Mr. Hernandez are payable in either shares of our common stock or cash, at our discretion, and are scheduled to vest on the later of his retirement from our Board or the first anniversary of the grant date. Common stock equivalent units granted to Directors are credited to an account in the Directors’ Plan that reflects the gains, losses and dividends associated with a notional investment in our common stock and are settled following the Director leaving the Board. Common stock equivalent units so credited are based on a per-share price equal to the closing price of our common stock on the date the units are credited. In addition, Directors may elect to defer all or a portion of their cash retainers in the form of additional common stock equivalent units under the Directors’ Plan. Amounts Directors choose to defer from their retainer are deferred until a specified payment date, as determined by the Director in accordance with the Directors’ Plan. A Director may elect that all or a portion of the credited common stock equivalent units be paid in a lump sum or equal annual installments over a period of up to 15 years, beginning after retirement from our Board. Elections under the Directors’ Plan are irrevocable. In the event of death, amounts are paid in a lump sum. All amounts paid from the Directors’ Plan are paid in cash.
Director Compensation
| 50 2024 proxy statement | |
Director Compensation
The following table summarizes the compensation received by each non-management Director who served in 2023:
Director Compensation
| | FEES EARNED OR | STOCK | ALL OTHER | | | NAME | PAID IN CASH ($)(1) | AWARDS ($)(2) | COMPENSATION ($)(3) | TOTAL ($) | | Anthony Capuano | 117,928 | 200,000 | 10,000 | 327,928 | | Kareem Daniel | 117,928 | 200,000 | 10,000 | 327,928 | | Lloyd Dean | 122,072 | 200,000 | 10,000 | 332,072 | | Robert Eckert(4) | 46,092 | 79,452 | 10,000 | 135,544 | | Catherine Engelbert | 147,928 | 200,000 | 10,000 | 357,928 | | Margaret Georgiadis | 117,928 | 200,000 | 10,000 | 327,928 | | Enrique Hernandez, Jr. | 367,928 | 450,000 | 10,000 | 827,928 | | Richard Lenny(4) | 118,893 | 166,575 | 10,000 | 295,468 | | John Mulligan | 142,928 | 200,000 | 10,000 | 352,928 | | John Rogers, Jr.(4) | 46,092 | 79,452 | 10,000 | 135,544 | | Jennifer Taubert | 117,928 | 200,000 | 10,000 | 327,928 | | Paul Walsh | 142,928 | 200,000 | 10,000 | 352,928 | | Amy Weaver | 117,928 | 200,000 | 10,000 | 327,928 | | Miles White | 142,928 | 200,000 | 10,000 | 352,928 |
Director Compensation
| (1) As described above, Directors may defer all or a portion of their retainer earned in the form of additional common stock equivalent units under the Directors’ Plan. |
Director Compensation
| (2) These amounts represent the aggregate grant date fair value of common stock equivalent units computed in accordance with ASC 718 that were granted to each Director who served during 2023. As discussed above, this also includes 876 RSUs with an aggregate grant date fair value of $250,000 granted to Mr. Hernandez in 2023 in connection with his service as Chairman. The grant date fair value was determined based on our closing stock price on the date of grant. |
Director Compensation
| (3) Represents the amount of charitable contributions to tax-exempt organizations that the Company matched for Directors in 2023. No Director received perquisites or personal benefits in excess of $10,000 in the aggregate in 2023. |
Director Compensation
| (4) Messrs. Eckert and Rogers, who retired from our Board on May 25, 2023, and Mr. Lenny, who retired from our Board on October 31, 2023, received prorated compensation to reflect their respective service in 2023. |
Director Compensation
Cumulative Outstanding Stock Awards as of December 31, 2023
Director Compensation
| | OUTSTANDING | | NAME | STOCK AWARDS | | Anthony Capuano | 982 | | Kareem Daniel | 870 | | Lloyd Dean | 12,577 | | Robert Eckert(1) | 66,522 | | Catherine Engelbert | 3,134 | | Margaret Georgiadis | 9,103 | | Enrique Hernandez, Jr. | 92,075 | | Richard Lenny(1) | 39,612 | | John Mulligan | 8,364 | | John Rogers, Jr.(1) | 63,577 | | Jennifer Taubert | 1,401 | | Paul Walsh | 4,615 | | Amy Weaver | 870 | | Miles White | 20,882 |
Director Compensation
| (1) Messrs. Eckert and Rogers retired from our Board on May 25, 2023, and Mr. Lenny retired from our Board on October 31, 2023. |
Director Compensation
| | corporate.mcdonalds.com 51 |
Director Compensation
| PROPOSAL 2 Advisory Vote to Approve Executive Compensation Pursuant to Section 14A of the Exchange Act of 1934, as amended (the “Exchange Act”), we are asking shareholders to approve, on an advisory basis, the compensation of our named executive officers for 2023, including the Compensation Discussion and Analysis (the “CD&A”), compensation tables and related material disclosed in this Proxy Statement. Our Board unanimously recommends that you vote FOR Proposal 2. |
Director Compensation
As fully described in the CD&A, our executive compensation program is guided by the following long-standing principles: (i) pay for performance; (ii) drive business results with a focus on creating long-term shareholder value; and (iii) pay competitively. Our executives’ compensation opportunities are predominantly performance-based. Our Compensation Committee has established financial performance targets designed to be challenging, and payouts under our incentive plans can vary significantly based on Company performance. We delivered strong growth in 2023 despite a challenging macroeconomic operating environment around the world. Our ongoing momentum produced a global comparable sales increase of 9% and operating income growth of 24%. These results highlight our continued business momentum, building upon the significant growth in prior years. This strong multi-year performance demonstrates the success of our M-C-D growth pillars under our Accelerating the Arches strategy as McDonald’s continues to satisfy the evolving needs of our customers. Our broad-based momentum produced strong 2023 Systemwide sales and operating income performance resulting in a Corporate Short-Term Incentive Plan (“STIP”) payout factor for named executive officers (“NEOs”) of 141.3%. Further, this ongoing momentum produced strong, multi-year performance, resulting in a 187.5% payout factor for the performance-based restricted stock units (“PRSUs”) awarded to our executives in 2021. Our Compensation Committee’s commitment to align payouts with Company performance over different time periods has helped to drive long-term value creation for our shareholders. For the reasons expressed above and discussed in more detail in the CD&A, our Board believes that our executive compensation program effectively motivates strong performance while balancing risk, thereby aligning the interests of our executives with those of our shareholders. Although this vote is advisory and non-binding, our Compensation Committee and Board value the opinions of shareholders and will consider the outcome of the vote, along with our ongoing dialogue with shareholders and other relevant factors, when considering future executive compensation decisions. We currently hold our advisory vote on executive compensation annually, and the next such vote is expected to occur at our 2025 Annual Shareholders’ Meeting.
Director Compensation
| 52 2024 proxy statement | |
Compensation
Compensation Our broad-based momentum produced strong 2023 operating income and Systemwide sales performance resulting in a Corporate STIP payout factor for NEOs of 141.3% (inclusive of financial metrics, new restaurant openings and human capital metrics). Further, the execution of our Accelerating the Arches growth strategy produced strong, multi-year performance, resulting in a 187.5% payout factor for the PRSUs awarded to our executives in 2021 that vested in early 2024 based on performance over the 2021-2023 performance period. Since the introduction of our Accelerating the Arches growth strategy in 2020, and consistent with our pay for performance philosophy, our incentive programs have yielded Corporate STIP payouts ranging from 0 to 185% of target depending upon the Company’s performance against rigorous, pre-established, quantitative targets. As highlighted in the following graphics, the strong 2023 STIP and 2021-2023 PRSU payout factors are a result of the Company significantly exceeding its targets for the key financial metrics included in our incentive designs for both the one and three-year performance periods, emphasizing the Company’s steadfast commitment to pay for performance.
2023 STIP FINANCIAL PERFORMANCE VS TARGETS
2023 STIP FINANCIAL PERFORMANCE VS TARGETS
2023 STIP FINANCIAL PERFORMANCE VS TARGETS
| | |
3. Compensation Guiding Principles
| Our executives’ compensation opportunity is predominantly performance-based. As detailed in the below graphic, which shows target total direct compensation for 2023, using salary, target STIP payout and grant date fair values for long-term incentive awards granted in 2023, 92% of our CEO’s target total direct compensation opportunity for 2023 was performance-based. For our NEOs other than Mr. Kempczinski, approximately 83% of the target total direct compensation opportunity for 2023 was performance-based (excluding certain long-term incentive awards granted to Ms. McDonald and Mr. Banner in connection with replacing forfeited compensation from their prior employers upon joining McDonald’s, as more fully described under “New Hire Compensation” on page 66). | 92% | CEO’s total direct compensation opportunity is performance-based. |
3. Compensation Guiding Principles
| Key 2023 Metrics | | | | | STIP | PRSUs | | | | Operating Income Growth | Earnings Per Share (“EPS”) Growth | | | | Systemwide Sales Growth | Return on Invested Capital (“ROIC”) | | | | New Restaurant Openings | Total Shareholder Return (“TSR”) | | | | Human Capital Metrics | | | |
4. Aligning Compensation with Business Strategy
4. Aligning Compensation with Business Strategy The Committee annually reviews our executive compensation program to evaluate whether the program and performance metrics are designed to help drive execution of our business strategy. As part of this review, the Committee may modify the design and/or performance metrics to reflect the most significant priorities of our business strategy in a given year. 2023 Short-Term Cash Incentive (STIP) The design of our executive compensation program for 2023 is generally consistent with 2022, which the Committee believes is closely aligned with the Company’s strategic priorities and motivates our executives to produce strong business results. For the 2023 STIP, the Committee retained operating income and Systemwide sales (which together account for 70% of the award) as core metrics and added new restaurant openings as a core metric given the importance of restaurant development in driving top line growth as part of the evolution of the Company’s Accelerating the Arches growth strategy. In addition, our human capital metrics were streamlined to focus executives’ efforts towards established DEI ambitions. Further, the Committee retained the quantitative performance modifier that was introduced in 2022 and focused on converting applicants in our franchisee program into new restaurant owners and the diversity of such new restaurant owners, which was only applicable to business leaders with direct oversight of this process, including Ms. McDonald and Mr. Erlinger. The Committee believes this combination of metrics reflects the appropriate balance of driving both top- and bottom-line growth and motivating leaders to achieve key business objectives that are deemed critical to our Accelerating the Arches growth strategy. Refer to “Short-Term Cash Incentive (STIP)” on page 60 for more information on the details. 2023 Performance-Based Restricted Stock Units (PRSUs) The Company’s 2023 PRSU design is also closely tied to the Accelerating the Arches growth strategy and drives long-term, sustainable growth. The 2023 PRSU design, which includes EPS growth and ROIC as core metrics, as well as a TSR modifier, is the same as the 2022 PRSU design. The Committee believes the program appropriately incentivizes executives to drive long-term shareholder value. Refer to “Long-Term Incentive Compensation” on page 62 for more information on the details of our PRSU awards.
Weightings of Performance Metrics
Weightings of Performance Metrics
Weightings of Performance Metrics
| | |
Weightings of Performance Metrics
*If EPS and ROIC performance results in a payout, a +/-25 point modifier based on TSR over the performance period is triggered
Weightings of Performance Metrics
| 56 2024 proxy statement | |
Weightings of Performance Metrics
2024 Program Design Our program design for 2024 will be largely consistent with the 2023 design, as the metrics included in our 2023 design continue to be closely aligned with our Accelerating the Arches growth strategy. The 2024 STIP design will retain the core metrics of operating income growth, Systemwide sales growth and new restaurant openings, with the weightings consistent with the 2023 design. The 2024 design will also introduce a strategic scorecard that will represent 15% of the STIP and will reflect management’s efforts towards key strategic initiatives, including the Company’s franchising strategy, employee engagement and established DEI ambitions. The design of the 2024-2026 PRSUs will remain the same as the prior year design.
Input from our compensation consultant
Input from our compensation consultant The Committee’s independent compensation consultant reviews and provides input on overall compensation design and NEO target compensation opportunities.
Role of management
Internal Pay Equity The Committee considers the following in determining our executives’ direct compensation opportunities: competitive pay levels; relative scope of responsibilities; individual performance; tenure in position; and the effect on our general and administrative expenses. In addition, as circumstances warrant, we may provide compensation to executives outside of our regular compensation structure in connection with their hiring, promotion, or retention (see “New Hire Compensation” below for more information related to sign-on long-term incentive awards received by Ms. McDonald and Mr. Banner). This approach permits us to meet specific business objectives without distorting pay equity. In line with our core values, our global pay principles emphasize the importance of compensation that is competitive, non-discriminatory, performance-based, transparent, and compliant with legal and regulatory standards. Independent Compensation Consultant The Committee has the sole authority to retain and dismiss an independent compensation consultant. The Committee has engaged Semler Brossy Consulting Group LLC (“Semler Brossy”) as its independent compensation consultant. Consistent with its Charter, the Committee regularly considers its compensation consultant’s independence. In October 2023, the Committee concluded that Semler Brossy is independent and that its work for the Committee did not raise any conflicts of interest. Management may not engage the Committee’s consultant for any purpose. Peer Companies Consistent with our goal of providing competitive compensation to motivate and retain executive talent, we review compensation practices and levels for a group of peer companies that we believe best reflect our business. In setting target compensation levels for our executives, we use the market median for each compensation element as a reference point; however, we do not specifically target any element of compensation at a particular percentile. Annually, based on input from Semler Brossy and management, the Committee selects a peer group comprised of 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, based on the following screens:
Role of management
The following table sets forth our 2023 peer group, which was the same peer group used to evaluate executive compensation decisions for 2022. The graphic below compares the market capitalization of these companies to McDonald’s.
Short-Term Cash Incentive (STIP)
Short-Term Cash Incentive (STIP) In setting individual STIP targets, the Committee considers a variety of factors, including individual performance, experience, market competitiveness, retention, succession, and internal equity considerations. Taking into consideration all of these factors, the Committee increased the 2023 STIP targets for each of the NEOs other than Mr. Kempczinski, reflecting an increase in peer group market median short-term incentive targets and the Company’s commitment to a pay for performance philosophy. These increases are detailed in the chart below, which shows the target STIP payment as a percent of salary for all NEOs in 2022 and 2023.
Short-Term Cash Incentive (STIP)
| NAMED EXECUTIVE OFFICER | 2022 STIP (%) | 2023 STIP (%) | | Christopher Kempczinski | 200 | 200 | | Ian Borden | 120 | 125 | | Gillian McDonald | 100 | 120 | | Jonathan Banner | 80 | 90 | | Joseph Erlinger | 110 | 120 |
Short-Term Cash Incentive (STIP)
| 60 2024 proxy statement | |
Short-Term Cash Incentive (STIP)
| For 2023, the STIP design was aligned with our Accelerating the Arches strategy and rewarded growth in operating income, Systemwide sales, new restaurant openings and performance against human capital metrics. Operating income growth requires us to balance increases in revenue with financial discipline to produce strong margins and cash flow. Systemwide sales is an important metric in a franchise business as income generation is closely correlated to sales growth and it is a measure of the financial health of our franchisees. New restaurant openings was introduced as a new metric for 2023 given the importance of restaurant development in driving top-line growth as part of the evolution of our Accelerating the Arches strategy. The new restaurant openings metric measures restaurants opened in our U.S. and International Operated Markets (“IOM”) segments. Human capital metrics align with our strategic aspirations and hold executives accountable for efforts towards the Company’s DEI ambitions. To further our franchising strategy, the STIP design includes a modifier that is focused on converting registered applicants to our franchisee program into new restaurant owners and the diversity of such new restaurant owners, as detailed below. |
Short-Term Cash Incentive (STIP)
The chart below provides the operating income growth, Systemwide sales growth, and new restaurant openings necessary to achieve threshold, target, and maximum payouts under the 2023 STIP for the Corporate segment:
Short-Term Cash Incentive (STIP)
| 2023* | THRESHOLD | TARGET* | MAXIMUM | | Operating income growth | 0% | 9.5% | 19.7% | | Systemwide sales growth | 0% | 8.3% | 16.2% | | New restaurant openings | 382 | 449 | 477 |
Short-Term Cash Incentive (STIP)
| * Payout percentage interpolated for results that fall between each of the performance levels specifically identified. The maximum payout as a percentage of target was 240% for the operating income growth and Systemwide sales growth metrics and 133% for the new restaurant openings metric. |
Performance vs. 2023 STIP Targets
Performance vs. 2023 STIP Targets The following table shows the operating income, Systemwide sales, and new restaurant opening targets and results under the 2023 STIP for the Corporate, U.S. and IOM segments. STIP payouts are capped at 200% of the target award.
Performance vs. 2023 STIP Targets
| | OPERATING INCOME (“OI”)* (40% WEIGHTING) | | | | SYSTEMWIDE SALES (“SWS”) (30% WEIGHTING) | | | | NEW RESTAURANT OPENINGS (“NRO”) (15% WEIGHTING) | | | | | TARGET 2023 | | 2023 | | TARGET 2023 | | 2023 | | | | | | OI GROWTH | 2023 | ADJUSTED | | SWS GROWTH | 2023 | ADJUSTED | | | | | TARGET | OVER | ADJUSTED | OI GROWTH | TARGET | OVER | ADJUSTED | SWS GROWTH | TARGET | | | | 2023 OI | 2022 | OI | OVER 2022 | 2023 SWS | 2022 | SWS | OVER 2022 | 2023 NRO | 2023 NRO | | | ($B) | (%) | ($B) | (%) | ($B) | (%) | ($B) | (%) | (#) | (#) | | Corporate | 11.4 | 9.5 | 12.0 | 16.0 | 128.0 | 8.3 | 131.5 | 11.2 | 449 | 410 | | U.S. | 5.4 | 5.6 | 5.8 | 12.3 | 51.0 | 4.7 | 53.1 | 9.0 | 120 | 112 | | IOM | 5.6 | 7.7 | 5.9 | 12.8 | 42.9 | 8.0 | 43.6 | 9.8 | 329 | 298 |
Performance vs. 2023 STIP Targets
| * The 2023 operating income target and results above have been adjusted in accordance with the Committee’s pre-established guidelines. See page 64 for further information on the Committee’s guidelines as well as 2023 STIP adjustments. |
Performance vs. 2023 STIP Targets
| | corporate.mcdonalds.com 61 |
Performance vs. 2023 STIP Targets
For 2023, our human capital metrics focused on the diversity of women and underrepresented groups in leadership roles and represented 15% weighting in the STIP at target, with the opportunity to earn from 0 to 20 STIP points. In early 2024, the Committee reviewed our performance with respect to the human capital metrics under the 2023 STIP and determined that we continued to make progress in this area. The following was awarded for our achievements against these metrics:
Performance vs. 2023 STIP Targets
| HUMAN CAPITAL METRICS | STIP Points Awarded | Performance Factor (%) | | Diverse representation in leadership roles | 13.9 | 92.7 |
Performance vs. 2023 STIP Targets
With respect to the modifier applicable to certain NEOs’ 2023 STIP payouts, the Committee established metrics to measure the conversion of registered applicants into new restaurant owners, and the diversity of such new restaurant owners. This modifier applied to the IOM segment results for Ms. McDonald and the U.S. segment results for Mr. Erlinger. Target-level achievement has a neutral impact on STIP results, with upside and downside opportunity ranging from +/- 15 STIP points, which impacts the IOM segment results for Ms. McDonald and the U.S. segment results for Mr. Erlinger. In early 2024, the Committee reviewed the performance of each of the IOM and U.S. segments relative to the pre-established goals, with the performance detailed below:
Performance vs. 2023 STIP Targets
| MODIFIER | Segment | STIP Points Applied to Segment Results | | Conversion of registered applicants into new restaurant owners and diversity of such new owners | IOM | 4.4 | | | U.S. | (6.4) |
Individual 2023 STIP Payouts
Individual 2023 STIP Payouts The 2023 STIP target and actual payouts for our NEOs are shown in the following table.
Individual 2023 STIP Payouts
| | | | TARGET | | | | | | | | 2023 STIP | | | 2023 STIP | | | | | PAYMENT AS | 2023 | | PAYMENT AS | | | APPLICABLE TEAM | PERFORMANCE | PERCENT OF | TARGET STIP | 2023 STIP | PERCENT OF | | NAMED EXECUTIVE OFFICER | FACTORS | FACTORS (%)(1) | SALARY (%) | PAYOUT ($) | PAYOUT ($)(1) | TARGET (%)(1) | | Christopher Kempczinski | Corporate (85%) | 149.9 | 200 | 2,850,000 | 4,027,620 | 141.3 | | | Human Capital (15%) | 92.7 | | | | | | Ian Borden | Corporate (85%) | 149.9 | 125 | 1,125,000 | 1,589,850 | 141.3 | | | Human Capital (15%) | 92.7 | | | | | | Gillian McDonald(2) | IOM (63.75%) | 137.9 | 120 | 970,038 | 1,296,651 | 133.7 | | | Corporate (21.25%) | 149.9 | | | | | | | Human Capital (15%) | 92.7 | | | | | | Jonathan Banner | Corporate (85%) | 149.9 | 90 | 630,000 | 890,316 | 141.3 | | | Human Capital (15%) | 92.7 | | | | | | Joseph Erlinger | U.S. (63.75%) | 183.2 | 120 | 1,008,000 | 1,638,492 | 162.5 | | | Corporate (21.25%) | 149.9 | | | | | | | Human Capital (15%) | 92.7 | | | | |
Individual 2023 STIP Payouts
| (1) The Performance Factors, the 2023 STIP Payout and 2023 STIP Payment as Percent of Target each include the impact of the modifier that is focused on converting registered applicants to our franchisee program into new restaurant owners and the diversity of such restaurant owners for Ms. McDonald for the IOM segment and Mr. Erlinger for the U.S. segment, as further described in the Performance vs. 2023 STIP Target section starting on page 61. The final performance factor for the IOM segment was 133.5%, and the performance factor for Ms. McDonald for the IOM segment reflects the increase of 4.4 STIP points, based on the modifier. The final performance factor for the U.S. segment was 189.6%, and the performance factor for Mr. Erlinger for the U.S. segment reflects the decrease of 6.4 STIP points, based on the modifier. |
Individual 2023 STIP Payouts
| (2) Ms. McDonald’s 2023 target STIP payout has been converted to USD based on the average monthly exchange rate for 2023 of 1 GBP = 1.243639 USD. |
Long-Term Incentive Compensation
Long-Term Incentive Compensation Consistent with prior years, our long-term incentive compensation in 2023 consisted 50% of PRSUs and 50% of stock options. The Committee believes this mix of awards supports our pay-for-performance philosophy. Executives are motivated by PRSUs to achieve robust financial performance targets over a three-year period, and stock options focus executives on actions that create shareholder value over the long term.
Long-Term Incentive Compensation
| 62 2024 proxy statement | |
Setting 2023 lONG-tERM iNCENTIVE Award Values
Setting 2023 lONG-tERM iNCENTIVE Award Values In determining the long-term incentive awards, the Committee considers several factors, including market practices, scope of responsibilities, individual performance, tenure in position, internal pay equity and the effect on our general and administrative expenses. In the case of Mr. Kempczinski, to further align his interests with the Company’s shareholders, the Committee elected to deliver the majority of Mr. Kempczinski’s 2023 total compensation increase in the form of additional long-term incentive awards rather than cash compensation. Additionally, Mr. Kempczinski’s increase was intended to further the Committee’s goal of aligning his compensation more competitively within our peer group. The Committee approved an increase for Mr. Borden in connection with his promotion to CFO. In the case of Mr. Erlinger, the Committee approved an increase to better reflect market competitiveness. The following table illustrates the 2022 and 2023 target annual long-term incentive award values for our NEOs, including the approved increases as described above. This table does not reflect sign-on long-term incentive awards approved for Ms. McDonald and Mr. Banner in connection with the commencement of their employment with the Company in 2022, but which were granted in 2023. Please refer to the New Hire Compensation section below for more details on these sign-on awards.
Setting 2023 lONG-tERM iNCENTIVE Award Values
| NAMED EXECUTIVE OFFICER | 2022 AWARD VALUE ($) | 2023 AWARD VALUE ($) | | Christopher Kempczinski | 11,500,000 | 13,000,000 | | Ian Borden | 3,250,000 | 4,000,000 | | Gillian McDonald | - | 2,750,000 | | Jonathan Banner | - | 2,000,000 | | Joseph Erlinger | 3,500,000 | 3,750,000 |
Setting 2023 lONG-tERM iNCENTIVE Award Values
Performance-Based Restricted Stock Units (PRSUs)
2023 PRSUs
2023 PRSUs Consistent with prior years, 50% of the target annual long-term incentive award values for our NEOs were granted in the form of PRSUs. PRSUs provide the right to receive a share of our common stock, subject to certain vesting requirements, and accrue dividend equivalent rights that are reinvested in additional PRSUs and earned in proportion to and only to the extent the underlying PRSUs vest. These awards also align the interests of our NEOs with those of our shareholders by delivering payouts in the form of our common stock. PRSUs granted in 2023 will vest on the third anniversary of the grant date, subject to our achievement of two key financial metrics, EPS growth (weighted 75%) and ROIC (weighted 25%). The Committee incorporated the planned level of share repurchases in setting the EPS targets. The PRSUs are also subject to a modifier based on our relative TSR measured over the three-year performance period vs. the S&P 500 Index. The Committee believes this balanced set of metrics encourages executives to increase profitability and efficiently and effectively use capital, which will enhance shareholder value. The PRSUs are also subject to a cap of 100% of target if our absolute TSR for the three-year performance period is negative, which further supports our commitment to ensuring that the interests of executives are aligned with those of our shareholders. Maximum payout of PRSUs is limited to 200% of the target award (subject to a modifier of up to an additional 25 percentage points based on our relative TSR vs. the S&P 500 Index over the performance period), plus any dividend equivalents earned on the PRSUs.
2023 PRSUs
| * Payout percentage interpolated for results that fall between each of the performance levels specifically identified. |
2023 PRSUs
| * Payouts between 19th and 79th percentiles will be interpolated. |
2021 PRSUs
2021 PRSUs In 2021, the Committee granted PRSUs to our executives, which were subject to EPS, ROIC and relative TSR performance metrics for the 2021–2023 performance period. Driven by the execution of our Accelerating the Arches growth strategy, the Company achieved the maximum performance level for both our EPS growth and ROIC and our TSR was at the 67th percentile compared to the S&P 500 Index, resulting in the PRSUs vesting at 187.5% of the target amount in early 2024. Stock Options The remaining 50% of the target annual long-term incentive award values for our NEOs were granted in the form of options. Options granted to our NEOs 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, subject to continued service. Options provide value only if our share price increases, thereby closely aligning executive pay with shareholder interests.
9. Other Compensation Elements
NEOs also participate in the broad-based benefit and welfare plans available to Company staff. We maintain a Global Assignment Policy, covering employees who temporarily relocate to another country but remain subject to their home country’s terms of employment; a Localization Policy, covering employees who transition from a global assignment to local employment in another country; and domestic and international relocation policies, covering employees who relocate in connection with their employment. These policies provide certain relocation and expatriate benefits, which are intended to equalize cost of living differences between the home and assignment country, as well as to facilitate the transition associated with an international assignment or domestic relocation. During 2023, Messrs. Borden and Erlinger received trailing tax equalization benefits from prior international assignments. See footnote 4 to the “2023 Summary Compensation Table” beginning on page 69 for additional details on the costs of the benefits provided to our NEOs. Severance & Change in Control Arrangements We have a U.S. severance plan that covers all U.S.-based officers, including our NEOs. Benefits under the U.S. severance plan are described under “Potential Payments Upon Termination of Employment or Change in Control” beginning on page 73. Ms. McDonald is not covered by the U.S. Severance Plan, and pursuant to the terms of her offer letter, Ms. McDonald is entitled to 26 weeks’ advanced written notice of a termination of her employment (or a payment in lieu of such notice) for any reason other than her gross misconduct or persistent and continued misconduct. We do not have any change in control agreements, and we do not provide for any single-trigger change of control benefits or Section 280G tax gross-up payments. Refer to the “Potential Payments Upon Termination of Employment or Change in Control” for further information regarding the severance benefits payable to our NEOs in the event of a termination of employment.
10. New Hire Compensation
10. New Hire Compensation Gillian McDonald In September 2022, the Company hired Ms. McDonald as President, International Operated Markets. In connection with the commencement of her employment, the Committee approved a sign-on long-term incentive grant consisting of time-based RSUs, PRSUs and stock options, which were granted in February 2023 at the same time as the Company’s annual long-term incentive awards. These sign-on long-term incentive awards were granted to replace long-term incentive awards Ms. McDonald forfeited at her previous employer upon her joining the Company. The time-based RSUs granted to Ms. McDonald had a grant value of $2 million and vest in equal installments on each of the first two anniversaries of the grant date. The PRSUs awarded to Ms. McDonald had a grant value of $750,000 and vest on the third anniversary of the grant date, subject to the achievement of performance goals approved in connection with the 2023 annual PRSUs, as described on page 63. The options granted to Ms. McDonald had a grant value of $750,000 and vest in equal installments on each of the first four anniversaries of the grant date. Jonathan Banner In September 2022, the Company hired Mr. Banner as Executive Vice President and Chief Global Impact Officer. In connection with the commencement of his employment, the Committee approved a sign-on long-term incentive grant consisting of time-based RSUs and PRSUs, which was granted in February 2023 at the same time as the Company’s annual long-term incentive awards. These sign-on long-term incentive awards were granted to replace long-term incentive awards Mr. Banner forfeited at his previous employer upon joining the Company. The time-based RSUs granted to Mr. Banner had a grant value $2.4 million, and vest in equal installments on each of the first two anniversaries of the grant date. The PRSUs awarded to Mr. Banner had a grant value of $1.35 million, and vest on the third anniversary of the grant date, subject to the achievement of performance goals approved in connection with the 2023 annual PRSUs, as described on page 63.
11. Compensation Policies & Practices
11. Compensation Policies & Practices Policy Regarding Management’s Stock Ownership We maintain stock ownership requirements because we believe executives will more effectively pursue the long-term interests of shareholders if they are shareholders themselves. Executives have five years to achieve their required ownership level. This five-year period restarts when an executive is promoted to a position with a higher ownership requirement. An executive who is not on track to meet his or her ownership requirements following the third year of the five-year period is required to retain the lesser of 50% of the net after-tax shares received upon the vesting of an RSU or PRSU award or such percentage of net after-tax shares necessary to satisfy the applicable requirement. If an executive has not achieved the requisite stock ownership within five years, they must retain 100% of the net after-tax shares received upon the vesting of an RSU or PRSU award and/or a stock option exercise until the required ownership level is attained. The following table illustrates our stock ownership requirements.
11. Compensation Policies & Practices
The Committee reviews compliance with these stock ownership requirements annually. Based on the most recent annual evaluation, all of our NEOs are in compliance. Policy Regarding Prohibition on Pledging & Hedging We have adopted restrictions that prohibit executives from engaging in pledging and/or derivative transactions to hedge the economic risk associated with their ownership of our common stock. Further, executives may not enter into any agreement that has the effect of transferring or exchanging economic interest in any award. Compensation Recoupment & Forfeiture Provisions The Company has adopted a clawback policy intended to comply with the SEC rules and NYSE listing standards that require the Company to recoup certain incentive-based compensation erroneously awarded to current and former executive officers of the Company in the event the Company is required to file certain financial restatements. In addition, our STIP awards and long-term incentive grant agreements for executives provide that we may terminate awards and/or recapture previously paid awards if a participant engages in willful fraud that (i) causes harm to our Company or (ii) is intended to manipulate performance goals either during employment, or after employment has terminated. Furthermore, our executives have executed restrictive covenants. An executive who violates the restrictive covenants to which they are subject will forfeit outstanding long-term incentive awards, whether or not vested, and may be required to repay awards that have previously been paid. Policies & Practices Regarding Long-Term Incentive Awards We do not grant long-term incentive awards when in possession of material non-public information. While we generally make broad-based long-term incentive grants at approximately the same time each year following our release of full-year financial results, we may choose to make long-term incentive grants outside of the annual broad-based grant (e.g., as part of a new hire package or as a retention or promotional incentive). Stock options may be granted only with an exercise price at or above the closing market price of our common stock on the date of grant.
12. Mitigating Risk in Executive Compensation
| ● | balance of short- and long-term incentives; |
12. Mitigating Risk in Executive Compensation
| ● | objective performance metrics related to various measures of operational performance; |
12. Mitigating Risk in Executive Compensation
| ● | diverse time horizons for incentive awards; |
12. Mitigating Risk in Executive Compensation
| ● | caps on all incentive payouts; |
Median Employee Methodology
| | PAY VS. PERFORMANCE | | | | | | | | | | | | | | VALUE OF INITIAL | | | | | | | | | | FIXED $100 | | | | | | | | | | INVESTMENT BASED ON:(5) | | | | | | | | AVERAGE | | | | | | | | | | SUMMARY | AVERAGE | | PEER | | | | | SUMMARY | | COMPENSATION | COMPENSATION | | GROUP | | | | | COMPENSATION | COMPENSATION | TABLE | ACTUALLY | TOTAL | TOTAL | | ANNUAL | | | TABLE | ACTUALLY | TOTAL FOR | PAID TO | SHAREHOLDER | SHAREHOLDER | NET | EPS | | | TOTAL FOR PEO | PAID TO PEO | NON-PEO NEOs | NON-PEO NEOs | RETURNS | RETURN | INCOME | GROWTH | | YEAR(1) | ($)(2) | ($)(3) | ($)(2) | ($)(4) | ($) | ($)(6) | ($) | (%)(7) | | 2023 | 19,155,001 | 27,482,762 | 7,265,484 | 9,156,146 | 164 | 144 | 8,469 | 18.0 | | 2022 | 17,770,514 | 21,900,032 | 6,075,626 | 6,875,284 | 143 | 124 | 6,177 | 15.0 | | 2021 | 20,028,132 | 37,719,393 | 8,029,832 | 13,484,955 | 142 | 133 | 7,545 | 50.0 | | 2020 | 10,847,032 | 7,952,323 | 5,126,870 | 3,870,736 | 111 | 110 | 4,731 | (23.0) |
Median Employee Methodology
| (3) Amounts reported in this column represent the compensation actually paid to Mr. Kempczinski as our President and CEO in the indicated fiscal years, based on his total compensation reported in the SCT for the indicated fiscal years and adjusted as shown in the following table: |
Median Employee Methodology
| (4) Amounts reported in this column represent the compensation actually paid to our NEOs other than Mr. Kempczinski in the indicated fiscal year, based on the average total compensation for such NEOs reported in the SCT for the indicated fiscal year and adjusted as shown in the following table. See footnote 1 for our NEOs included in the average for each indicated fiscal year: |