SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[Amendment No...........]
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
McDonald's Corporation
(Name of Registrant as Specified in its Charter)
Gloria Santona
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box)
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
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*Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ____________________________________
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4) Date Filed: ________________________________________________
COVER:
McDONALD'S CORPORATION
PROXY STATEMENT AND NOTICE
OF 1995 ANNUAL MEETING OF SHAREHOLDERS
Graphic of: Big Mac, Large Fry with McDonald's logo on fry box and Large
Drink
<Page 1>
HIGHLIGHTS
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THESE HIGHLIGHTS ARE A SUMMARY. PLEASE READ THIS PROXY STATEMENT
COMPLETELY FOR ALL OF THE INFORMATION WHICH YOU NEED TO VOTE YOUR PROXY.
YOUR VOTE IS IMPORTANT. To ensure that your shares will be represented at
the Annual Meeting, please complete, sign, date and mail your proxy card to
the independent inspectors of election, First Chicago Trust Company of New
York, in the enclosed postage-paid envelope or use the toll-free telephone
number set forth on the proxy card to vote your shares. If your shares are
held in the name of a broker, bank or other holder of record, you may
attend the Annual Meeting, but may not vote at the meeting unless you have
first obtained a proxy, executed in your favor, from the holder of record.
THIS YEAR, SHAREHOLDERS OF RECORD CAN VOTE THEIR SHARES VIA A TOLL-FREE
TELEPHONE CALL FROM THE U.S. AND CANADA OR BY MAILING A SIGNED PROXY CARD.
THE COMPANY'S VOTING PROCEDURES, INCLUDING VOTING VIA TELEPHONE, ARE
DESCRIBED ON PAGES 42 AND 43 OF THIS PROXY STATEMENT AND ON THE ENCLOSED
PROXY CARD.
- - McDonald's Corporation's 1995 Annual Meeting of Shareholders will be
held at 10:00 a.m. on Friday, May 26, 1995, in Oak Brook, Illinois.
See page 2.
- - Shareholders will be asked to elect six Directors to serve until the
1998 Annual Meeting of Shareholders. The nominees for Director are:
Jack M. Greenberg, Donald G. Lubin, Andrew J. McKenna, Edward H.
Rensi, Roger W. Stone and Robert N. Thurston. The Board recommends a
vote FOR all nominees. Information about the nominees is on pages 4
through 9.
- - Shareholders will also be asked to act on proposals to approve the
McDonald's Corporation Non-Employee Director Stock Option Plan and the
Amended and Restated McDonald's Corporation 1992 Stock Ownership
Incentive Plan. The Board recommends a vote FOR both proposals in
order to further align the interests of the Company's employees and
Directors with the interests of shareholders. Information about these
plans is on pages 18 through 41.
- - The Board's corporate governance guidelines which incorporate
principles by which the Board has been operating for years are
described on page 3.
- - This Proxy Statement includes information about the pay of McDonald's
executive management, as well as a report on executive compensation
prepared by the Board's Compensation Committee. To read about how
McDonald's executives are compensated, refer to pages 10 through 12
and 14 through 16.
- - The Company's cumulative total return to common shareholders for five-
and ten-year periods is compared with returns for the Standard &<PAGE>
Poor's 500 Stock Index (S&P) & Dow Jones Industrial Average (DJIA)
companies on page 13.
- - A description of the Company's confidential voting policy is found on
page 43.
<Page 2>
CHAIRMAN'S MESSAGE TO SHAREHOLDERS AND ANNUAL MEETING NOTICE AND AGENDA
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DEAR FELLOW SHAREHOLDERS:
It is our pleasure to invite you to McDonald's 1995 Annual Meeting. During
the meeting, we will report on McDonald's past year and our prospects for
the future. Also, you will be asked to elect six Directors to serve until
the 1998 Annual Meeting of Shareholders.
The Board is asking for your support in approving a new stock option plan
for the Company's non-employee Directors, which we believe will promote the
long-term financial success of the Company by affording an additional
opportunity to align the interests of non-employee Directors with the
interests of shareholders. We are also recommending that shareholders
approve an amended and restated McDonald's Corporation 1992 Stock Ownership
Incentive Plan, which will assist in furthering an important business goal-
- -strengthening the community of interest between McDonald's employees and
shareholders by encouraging employee stock ownership.
Your vote is important. I urge you to consider the issues and to vote your
shares as promptly as possible.
Cordially,
/s/ Michael R. Quinlan
- -------------------------
Michael R. Quinlan
Chairman and Chief Executive Officer
TO SHAREHOLDERS OF MCDONALD'S CORPORATION:
The 1995 McDonald's Corporation Annual Meeting of Shareholders will be held
on Friday, May 26, 1995, at 10:00 a.m., local time, in the Prairie Room at
The Lodge at McDonald's Office Campus, corner of Kroc Drive and Ronald
Lane, Oak Brook, Illinois. The meeting will consider the following items of
business:
1. The election of six Directors to serve until the 1998 Annual Meeting
of Shareholders or until their successors are elected and qualified;
2. The adoption of the McDonald's Corporation Non-Employee Director Stock
Option Plan; and
3. The approval of the Amended and Restated McDonald's Corporation 1992
Stock Ownership Incentive Plan.
The Annual Meeting of Shareholders will also act upon such other business
as may properly come before the meeting or any adjournment thereof.
By order of the Board of Directors,
/s/ Shelby Yastrow
- -------------------------<PAGE>
Shelby Yastrow
Secretary
April 12, 1995
<Page 3>
BOARD OF DIRECTORS
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RESPONSIBILITIES
The Board's primary responsibilities are:
- - Evaluating the performance of the Company and its executive
management;
- - Reviewing and, where appropriate, approving fundamental operating,
financial and other corporate strategies, as well as major plans and
objectives;
- - Providing advice and counsel to the Chief Executive Officer and
executive management;
- - Overseeing management to ensure that the Company's assets are
safeguarded and business is conducted in compliance with laws and
regulations; and
- - Evaluating the overall effectiveness of the Board, as well as
selecting and recommending to shareholders for election an appropriate
slate of candidates.
CORPORATE GOVERNANCE GUIDELINES
The Board's corporate governance guidelines incorporate principles by which
the Board has been operating for many years. Among other things, the
guidelines provide that:
- - A majority of Directors should come from the outside and independence
is increasingly important in the selection of new candidates. The
Board itself is responsible for selecting candidates for membership
and for extending invitations to join the Board.
- - The Board retains the right to exercise its discretion in combining or
separating the offices of Chairman and Chief Executive Officer.
- - On matters relating to the selection, compensation and succession of
the Chief Executive Officer, decisions are made by the outside
Directors. The Chief Executive Officer receives a performance review
conducted by the Chairman of the Compensation Committee annually.
- - The Board meets on a bi-monthly basis. The agenda is set by the
Chairman and the Chief Executive Officer, and Directors may suggest
items for inclusion. Information is made available to the Board a
reasonable period before each meeting.
- - Outside Directors meet in executive session with the Chief Executive
Officer at each Board meeting and, at least once each year, evaluate
the performance of executive management and discuss matters of
succession planning and management development with the Chief
Executive Officer.
- - Outside Directors meet in executive session without members of
management twice each year.<PAGE>
COMMITTEES OF THE BOARD
THE AUDIT COMMITTEE recommends to the Board independent auditors to audit
the Company's financial statements; reviews the audit with the auditors and
management; reviews the Company's dealings with Directors and their
affiliates; reviews the Company's legal affairs; and consults with the
auditors and management regarding risk management and the adequacy of
financial and accounting procedures and controls. In carrying out its
responsibilities, the Committee regularly meets with the independent
auditors in executive session, without members of management present.
THE COMPENSATION COMMITTEE evaluates, in consultation with all non-employee
Directors, the performance of the Company's Chief Executive Officer and
recommends his compensation to the Board annually; reviews and approves all
other officers' compensation; and recommends to the Board the fees of non-
employee Directors. The Committee administers the 1975 Option Plan, the
Incentive Plan and the Deferred Incentive Plan. The Committee's report on
executive compensation can be found on pages 9 through 11.
THE NOMINATING COMMITTEE establishes criteria for Board membership,
searches for and screens candidates to fill vacancies on the Board,
recommends an appropriate slate of candidates for election each year and,
in this regard, evaluates the performance of individual Directors, assesses
the overall performance of the Board and considers issues regarding the
composition and size of the Board. The Nominating Committee will consider
nominations by shareholders made in accordance with the information and
timely notice requirements of the Company's By-Laws, a copy of which may be
obtained from the Secretary at McDonald's Plaza, Oak Brook IL 60521.
<Page 4>
In addition, the Board of Directors has an EXECUTIVE COMMITTEE which may
exercise the broad powers and authority granted to it under the Company's
By-Laws. The chart below sets forth the composition of the Board's
committees as of March 1, 1995, as well as the number of meetings each
Committee held in 1994.
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Committee Member Number of meetings in 1994
- ---------------------------------------------------------------------
Audit Gordon C. Gray 4
Robert N. Thurston
B. Blair Vedder, Jr.
Donald G. Lubin,
Non-voting Secretary
- ---------------------------------------------------------------------
Compensation Terry L. Savage 4
Ballard F. Smith
Robert N. Thurston
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Executive Donald G. Lubin 0
Michael R. Quinlan
Fred L. Turner
- ---------------------------------------------------------------------
Nominating Hall Adams, Jr. 1
Donald G. Lubin
Andrew J. McKenna
Roger W. Stone
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In 1994, the Board met seven times. During 1994, all the Directors attended
all the meetings of the Board of Directors and of the committees of which
they were members except that three of the Company's Directors were absent<PAGE>
from one Board meeting each and one Director was absent from one committee
meeting.
COMPENSATION OF THE BOARD
In 1994, each non-employee Director earned an annual retainer of $35,000
plus a fee of $2,000 for each Board meeting and $1,000 for each committee
meeting attended. At the election of the recipient, all or any part of
these fees may be deferred under the McDonald's Corporation Directors'
Stock Plan (Stock Plan) formerly known as the Directors' Deferred
Compensation Plan. The Stock Plan provides a vehicle for non-employee
Directors to align their interests with those of shareholders since
deferred fees and the benefits described in the next paragraph are credited
to a phantom Common Stock account which is adjusted to reflect changes in
the market price of the Common Stock and dividends paid. Distributions
under the Stock Plan are payable to participants or their beneficiaries in
cash upon death or retirement.
In January 1995, the account of each non-employee Director in the Stock
Plan was credited with an amount equal to $17,500 for each year of service
as a non-employee Director (up to ten years of service). These amounts
were credited in lieu of benefits formerly available under the Stock Plan.
After January 1995, an amount equal to $17,500 shall be credited to the
account of each non-employee Director at the end of each full year of
service (up to a maximum of ten years). Pursuant to plan provisions, a
maximum of $175,000 shall be credited to the account of any non-employee
Director.
The Company has elected to make contributions to a grantor trust
administered by an independent trustee in order to provide a source of
funds to assist the Company in the meeting of its liabilities under the
Stock Plan. Trust assets, however, remain subject to the claims of the
Company's general creditors. Subject to certain limited restrictions, all
trust assets are invested in Common Stock. Participating Directors are
entitled to direct the trustee in the voting of shares of Common Stock held
in the trust.
Directors who are Company employees are not paid for their services as
Directors and are not eligible to participate in the Stock Plan. As with
its employees, the Company does not offer a pension plan to its non-
employee Directors.
DIVERSITY
Presently, one female and one minority male serve on the Board, and 24
minority men and women are officers. Also, more than 50% of middle
management employees and over 60% of franchisees in training are female and
minorities.
BIOGRAPHICAL INFORMATION
Biographical information as of March 1, 1995 regarding each Director
nominated for election and each Director whose term of office will continue
after the Annual Meeting is set forth on the next page.
<Page 5>
HALL ADAMS, JR. Business Consultant. Formerly, Chief Executive Officer of
Leo Burnett Company, Inc. Director of The Dun & Bradstreet Corporation and
Sears, Roebuck & Co. Class of 1996. Age: 61. Director since 1993.<PAGE>
ROBERT M. BEAVERS, JR. Senior Vice President. Director of NICOR
Corporation. Class of 1996. Age: 51. Director since 1984.
JAMES R. CANTALUPO. President and Chief Executive Officer--International
since 1991. Previously, President and Chief Operating Officer--
International. Class of 1997. Age: 51. Director since 1987.
GORDON C. GRAY. Chairman of Rio Algom Limited, a Canadian mining company
and metals distributor, since 1991. Previously, Chairman of Royal LePage
Ltd. Director of CGC, Inc., Markborough Properties Ltd., Omers Realty
Corporation, Rogers Communications, Inc., A.E. LePage Investments Ltd.,
and Stone-Consolidated Corporation. Class of 1996. Age: 67. Director since
1982.
JACK M. GREENBERG. Nominee. Vice Chairman and Chief Financial Officer
since 1992. Previously, Senior Executive Vice President and Chief
Financial Officer. Director of Arthur J. Gallagher & Company and Harcourt
General, Inc. Class of 1995. Age: 52. Director since 1982.
DONALD R. KEOUGH. Chairman of Allen & Company, Inc., investment bankers,
and advisor to the Board of Directors of The Coca-Cola Company since 1993.
Previously, President, Chief Operating Officer, and a Director of The Coca-
Cola Company. Director of H.J. Heinz Company, The Home Depot, Inc.,
National Services Industries, Inc., and The Washington Post Company. Class
of 1997. Age: 68. Director since 1993.
DONALD G. LUBIN. Nominee. Partner, and since 1991, Chairman, of the law
firm of Sonnenschein Nath & Rosenthal, which provides legal services to the
Company on a regular basis. Director of Molex Incorporated. Class of
1995. Age: 61. Director since 1967.
ANDREW J. McKENNA. Nominee. Chairman, President and Chief Executive
Officer of Schwarz Paper Company, a printer, converter and distributor of
packaging and promotional materials. Director of Aon Corporation, Dean
Foods Company, First Chicago Corporation, The First National Bank of
Chicago, Skyline Corporation, and The Tribune Company. Class of 1995. Age:
65. Director since 1991.
MICHAEL R. QUINLAN. Chairman and Chief Executive Officer. Director of The
Dun & Bradstreet Corporation and The May Department Stores Company. Class
of 1997. Age: 50. Director since 1979.
EDWARD H. RENSI. Nominee. President and Chief Executive Officer--U.S.A.
since 1991. Previously, Chief Operations Officer and President and Chief
Operating Officer--U.S.A. Director of Snap-On Tools Corporation. Class of
1995. Age: 50. Director since 1982.
TERRY L. SAVAGE. Financial journalist, author, and President of Terry
Savage Productions, Ltd., which provides speeches, columns and videos on
personal finance for corporate and association meetings and publications.
Prior to 1991, commentator for CBS Inc. (WBBM-TV) in Chicago. Director of
Broadway Stores, Inc. Class of 1996. Age: 50. Director since 1990.
PAUL D. SCHRAGE. Senior Executive Vice President, Chief Marketing Officer.
Director of Safety-Kleen Corporation. Class of 1997. Age: 60. Director
since 1988.
BALLARD F. SMITH. President and Chief Executive Officer of Sun Mountain
Broadcasting, a company operating radio stations. Also, Chairman of
Premier Food Services, Inc., a foodservice company. Class of 1997. Age:
48. Director since 1983.
ROGER W. STONE. Nominee. Chairman, President and Chief Executive Officer
of Stone Container Corporation, a multinational paper company primarily
producing and selling pulp, paper and packaging products. Director of First
Chicago Corporation, The First National Bank of Chicago, Morton<PAGE>
International,
Option Care, Inc., and Stone Container Corporation. Class of 1955. Age: 60.
Director since 1989.
ROBERT N. THURSTON. Nominee. Business consultant. Director of Jiffy Lube
International, Inc. Class of 1995. Age: 62. Director since 1974.
FRED L. TURNER. Senior Chairman since 1990. Previously, Chairman.
Director of Aon Corporation, Baxter International Inc., and W.W. Grainger,
Inc. Class of 1996. Age: 62. Director since 1968.
B. BLAIR VEDDER, JR. Business consultant. Class of 1997. Age: 70.
Director since 1988.
<Page 6>
Photos of Directors and Nominated Directors:
[Photo] [Photo]
Greenberg, Beavers, Quinlan, Lubin,
Gray, Cantalupo McKenna, Smith
[Photo] [Photo]
Keough, Schrage, Rensi, Vedder, Stone
Savage, Turner Thurston, Adams
<Page 7>
SECURITY OWNERSHIP INFORMATION
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SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
MANAGEMENT BELIEVES THAT THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS
MORE EFFECTIVELY REPRESENT McDONALD'S SHAREHOLDERS, WHOSE INTERESTS THEY
ARE CHARGED WITH PROTECTING, IF THEY ARE SHAREHOLDERS THEMSELVES. BY
ENCOURAGING OUR EXECUTIVES TO HAVE A SIGNIFICANT STOCK OWNERSHIP IN THE
COMPANY, WE BELIEVE THAT WE FOCUS THEIR ATTENTION ON MANAGING McDONALD'S AS
OWNERS OF THE BUSINESS AND THAT THIS LEADS TO ENHANCED VALUE FOR ALL
SHAREHOLDERS. OUR EXECUTIVE OFFICER GROUP BENEFICIALLY OWNED (DIRECTLY AND
THROUGH EMPLOYEE BENEFIT PLANS) APPROXIMATELY 5.1 MILLION SHARES OF COMMON
STOCK ON MARCH 1, 1995.
Directors and Executive Officers have sole voting and investment power over
shares held directly, except for 426,790 shares held in joint accounts,
over which they have shared voting and investment power. They also have
sole voting and dispositive power over the shares credited or allocated to
their accounts under the various benefit plans. No Director or Executive
Officer owns more than 1.0% of any class of stock.
Pursuant to plan provisions, participants in the Profit Sharing Program and
related equalization plans may direct the voting of unallocated and unvoted
plan shares. In addition, Directors may vote shares credited to their
accounts pursuant to the Stock Plan. All such shares over which Directors
and Executive Officers have voting power are shown as beneficially owned,
except for unvoted shares, which are not shown because the number cannot be
determined at this time.
The following table details the stock ownership of the named individuals
and group as of March 1, 1995.
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Beneficial Beneficial ownership
ownership of of Preferred Stock
Common Stock -----------------------
Beneficial owner (a,b,c,d,e,f) Series B(g) Series C(g)
- ----------------------------------------------------------------------
Hall Adams, Jr. 2,536 0 0
Robert M. Beavers, Jr. 296,580 9,727 12,533
James R. Cantalupo 587,918 2,069 1,627
Gordon C. Gray 10,115 0 0
Jack M. Greenberg 282,961 2,912 2,827
Donald R. Keough 5,724 0 0
Donald G. Lubin 39,303 0 0
Andrew J. McKenna 13,284 0 0
Michael R. Quinlan 1,123,194 20,161 27,390
Edward H. Rensi 440,442 3,387 3,504
Terry L. Savage 11,999 0 0
Paul D. Schrage 391,460 5,382 6,676
Ballard F. Smith 46,253 0 0
Roger W. Stone 18,694 0 0
Robert N. Thurston 65,520 0 0
Fred L. Turner 1,138,185 6,826 8,808
B. Blair Vedder, Jr. 23,505 0 0
Directors and Executive
Officers as a group
(the Group) (21 persons) 5,339,182 62,710 75,526
- ----------------------------------------------------------------------
(a) Included are shares of Common Stock as to which beneficial ownership
is disclaimed, as follows: Mr. Greenberg, 1,426; Mr. Keough, 200; Mr.
Lubin, 186; Mr. McKenna, 320; Mr. Quinlan, 489; Mr. Rensi, 39,191; Mr.
Schrage, 18,000; Mr. Turner, 64,778; and the Group, 145,258. The
disclaimed shares are owned by spouses or in a custodial capacity for
children or grandchildren.
(b) Excluded are 22,000 shares held of record by Mr. McKenna in his
capacity as Trustee of the Schwarz Paper Company Profit Sharing Trust.
(c) Included, pursuant to SEC rules, are shares of Common Stock which may
be received on conversion of Preferred Stock, Series B and C (at
conversion ratios of .7692 and .8 common share per preferred share,
respectively), as follows: Mr. Beavers, 17,508; Mr. Cantalupo, 2,893;
Mr. Greenberg, 4,502; Mr. Quinlan, 37,420; Mr. Rensi, 5,408; Mr.
Schrage, 9,481; Mr. Turner, 12,297; and the Group, 108,657. In order
for these shares of Common Stock to be issued to any such person, his
shares of Preferred Stock, Series B and C, shown in this table would
have to be converted and would therefore no longer be outstanding.
<Page 8>
(d) Included are shares of Common Stock over which the following have
voting power pursuant to employee benefit plan provisions, as follows:
Mr. Beavers, 12,039; Mr. Cantalupo, 709; Mr. Greenberg, 1,955;
Mr. Quinlan, 27,476; Mr. Rensi, 2,659; Mr. Schrage, 6,200;
Mr. Turner, 8,499; and the Group, 68,245.
(e) Included are shares of Common Stock which could be acquired within 60
days after March 1, 1995, pursuant to stock options in the following
amounts: Mr. Beavers, 90,400; Mr. Cantalupo, 438,752; Mr. Greenberg,
190,500; Mr. Quinlan, 736,500; Mr. Rensi, 310,284; Mr. Schrage, 183,150;
Mr. Turner, 176,000; and the Group, 2,762,888.
(f) Included are shares of Common Stock over which the following have
voting power pursuant to provisions of the Stock Plan and related trust:
Mr. Adams, 1,136; Mr. Gray, 5,986; Mr. Keough, 2,524; Mr. Lubin, 10,575;
Mr. McKenna, 8,964; Ms. Savage, 10,499; Mr. Smith, 19,205; Mr. Stone,<PAGE>
14,694; Mr. Thurston, 17,595; and Mr. Vedder, 18,655. The terms of the
Stock Plan and related trust are set forth on page 4.
(g) Included are shares of Preferred Stock, Series B and C, over which
the following have voting power pursuant to employee benefit plan
provisions, in the respective amounts indicated: Mr. Beavers, 8,138 and
11,588; Mr. Cantalupo, 479 and 682; Mr. Greenberg, 1,322 and 1,882;
Mr. Quinlan, 18,571 and 26,445; Mr. Rensi, 1,797 and 2,559;
Mr. Schrage, 4,190 and 5,967; Mr. Turner, 5,745 and 8,181; and the
Group, 46,128 and 65,686.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 1, 1995, with
respect to the only persons known to the Company to be the beneficial
owners of more than 5% of any class of the Company's stock.
- ----------------------------------------------------------------------
Amount and
nature of
Name and address beneficial Percent
Title of class of beneficial owner(a) ownership(a,b) of class
- ----------------------------------------------------------------------
Preferred Stock Burton D. Cohen, 11,174,347 98.3%
G. Lowell Dixon, and
Stanley R. Stein, as
Trustees of the Profit
Sharing Program
McDonald's Corporation
McDonald's Plaza
Oak Brook, IL 60521
- ----------------------------------------------------------------------
(a) Under SEC rules, the Trustees of the Profit Sharing Program, all of
whom are Company officers, may be deemed to share with Program
participants beneficial ownership of Preferred Stock held in the
Program for the benefit of such participants.
(b) Under certain circumstances, the Preferred Stock, Series B and C (at
conversion ratios of .7692 and .8 common share per preferred share,
respectively), is convertible into 8,776,306 shares of Common Stock
(1.25% of the class). Also, the Trustees may be deemed to be the
owners of an additional 25,592,122 shares of Common Stock (3.64% of
the class) held for the Program and related equalization plans.
<Page 9>
PROPOSAL ONE. ELECTION OF DIRECTORS
- ----------------------------------------------------------------------
At the 1995 Annual Meeting, in accordance with the Company's Restated
Certificate of Incorporation and By-Laws, six Directors are to be elected,
each to serve a three-year term until the 1998 Annual Meeting of
Shareholders or until his successor is elected and qualified.
The Company's Restated Certificate of Incorporation currently provides that
the Board of Directors shall consist of not less than 11 nor more than 24
members, with the exact number fixed by resolution of the Board. Currently,
the number of Directors is 17, and there are two classes of six Directors
and one class of five Directors.
NOMINEES
The six persons nominated by the Board of Directors for election at the
1995 Annual Meeting are:<PAGE>
JACK M. GREENBERG
DONALD G. LUBIN
ANDREW J. MCKENNA
EDWARD H. RENSI
ROGER W. STONE
ROBERT N. THURSTON
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR ALL SIX
NOMINEES.
VOTING INFORMATION FOR PROPOSAL ONE
A proxy cannot be voted for more than six persons. Unless otherwise
directed, the shares represented by the enclosed proxy, when signed and
returned to the independent inspectors of election or voted via telephone,
will be voted FOR the election of the six nominees. All elections for
Directors shall be decided by a plurality of the votes of the shares of
Common and Preferred Stock represented in person or by proxy, and entitled
to vote on the election of Directors at the 1995 Annual Meeting. If any
nominee becomes unable to serve for any reason (which is not anticipated),
the shares represented by the enclosed proxy may be voted for such
substituted nominee as may be designated by the Board of Directors, unless
before the meeting the directorship has been eliminated by a reduction in
the size of the Board.
<Page 10>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
- ----------------------------------------------------------------------
DEAR FELLOW SHAREHOLDERS:
We, the Compensation Committee of the Board of Directors, are all
independent, non-employee Directors. Our responsibilities include: (a)
developing compensation policies consistent with and linked to the
Company's strategies; (b) together with the other non-employee Directors,
assessing the performance of the Chief Executive Officer and other
executive officers; and (c) ensuring that compensation is appropriate in
light of both individual, team and Company performance. We are responsible
for approving officers' compensation, recommending the compensation of
executive management to the Board of Directors, and administering the
Company's employee stock option and incentive plans.
OUR PHILOSOPHY
WE BELIEVE THAT THE INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS ARE BEST
SERVED BY RUNNING OUR BUSINESS WITH A LONG-TERM PERSPECTIVE WHILE STRIVING
TO DELIVER CONSISTENTLY GOOD ANNUAL RESULTS. McDONALD'S RECORD OF
PERFORMANCE ILLUSTRATES THAT THIS APPROACH HAS, BOTH IN THE SHORT- AND THE
LONG-TERM, BEEN ADVANTAGEOUS TO SHAREHOLDERS. Accordingly, in making
compensation decisions, we evaluate management's vision in recognizing
opportunities which will benefit the Company and its shareholders over the
long term, the strategies which are put in place to capitalize on these
opportunities, and management's ability to motivate and develop talent to
execute these strategies. In addition, because the unique relationship and
culture which McDonald's has nurtured among its employees, franchisees and
suppliers distinguishes us from other companies, the ability of our
management to direct this balance of independent and interdependent
entities is of great importance in enhancing shareholder value over the<PAGE>
long term and is therefore also a significant factor in compensation
decisions.
McDonald's executive compensation program is designed to attract, energize,
reward and retain executive talent that will produce superior results over
the long term and enhance the Company's leadership position in a highly
competitive global business. Compensation for our executives is based on
the following principles:
- - Variable, at-risk compensation should comprise a significant part of
an executive's compensation, with the percentage at risk increasing at
increased levels of responsibility.
- - Changes in compensation must be driven by individual, team and Company
performance.
- - Stock ownership fosters a mutual interest between employees and
shareholders.
- - Compensation must be competitive with other high-performing companies
and alternative careers in the McDonald's System, such as a McDonald's
franchisee or supplier, in order to motivate and retain the talent
needed to produce superior results.
EXECUTIVE COMPENSATION
THE PROCESS OF SETTING COMPENSATION IS NOT MECHANICAL; OUR DECISIONS ARE
BASED ON OUR JUDGMENTS, AS WELL AS INDIVIDUAL, TEAM AND COMPANY
PERFORMANCE, AND SHAREHOLDER RETURNS.
Our Committee conducts an overall review of executive compensation
annually, and in that context, we review five- and ten-year shareholder
returns for the Company and its peer group as illustrated on the graphs set
forth on page 13 of this Proxy Statement. Financial results and long-term
shareholder returns are important considerations in determining executive
compensation. While we review survey data and information supplied by
independent consultants to determine the competitiveness of McDonald's
total executive compensation package, we do not seek to position
compensation within any particular range. In 1994, we reviewed survey
information about companies comprising the Dow Jones Industrial Average
(DJIA). Based on the most recent survey information reviewed by our
Committee, each element of annual cash compensation for Executive Officers,
including the Chief Executive Officer, approximates the middle of the range
relative to annual cash compensation paid by the companies comprising the
DJIA. Long-term incentives awarded to Executive Officers, including the
Chief Executive Officer, approximates the higher end of the range relative
to long-term incentives awarded by the companies comprising the DJIA.
<Page 11>
ANNUAL CASH COMPENSATION
ANNUAL CASH COMPENSATION FOR OUR EXECUTIVES, AS FOR ALL EMPLOYEES, CONSISTS
OF BASE SALARY AND A VARIABLE, AT-RISK INCENTIVE UNDER THE TARGET INCENTIVE
PLAN (TIP).
The primary factors in setting an executive's base salary, which is subject
to adjustment annually, are (in order of importance): the executive's level
of responsibility and individual performance, the performance of the
Company as a whole, and the Company's position as an industry leader. We
gauge individual performance in many areas, including: the development and
execution of strategies, leadership, development of staff and contributions
to programs which affect the performance of the Company and the McDonald's
System. In 1994, base salaries for executives were favorably impacted by<PAGE>
the following corporate and System achievements in 1993: improved market
share and return on assets; excellent sales and operating income gains; and
double-digit growth in earnings per share and net income.
Under TIP, at the beginning of the year, each executive is assigned a
target incentive; the greater an individual's responsibility, the higher
the percentage of target incentive to salary. In order to determine this
annual incentive, a target incentive is initially adjusted by an overall
Company performance factor (how well the Company did vs. target). A team
performance factor, reflecting the overall results of the organizational
unit for which the executive is responsible, is then applied and finally an
individual performance factor is applied as described above.
In determining annual incentives for 1994, our Committee reviewed overall
corporate performance during 1994. In particular, these incentives were
favorably impacted by significant gains in worldwide operating income,
improved return on assets, and sizable growth in earnings per share.
Moreover, we considered the progress in implementing the Company's key
strategies--increasing the gap between McDonald's and its competitors in
execution, convenience and value.
LONG-TERM INCENTIVES
OUR COMMITTEE BELIEVES THAT STOCK OPTIONS ARE PRESENTLY THE BEST VEHICLE BY
WHICH TO LINK EMPLOYEES' INTERESTS WITH THOSE OF SHAREHOLDERS.
Accordingly, long-term incentives consist of a broad-based stock option
plan--more than 22,000 employees are currently eligible to receive option
grants. Options generally have a life of ten years, vest over seven years
and have an exercise price equal to the fair market value of the Common
Stock on the grant date.
In establishing guidelines for the size of stock option awards, we consider
the following criteria (in order of importance): level of responsibility,
achievement of plan objectives, contributions to the near- and long-term
planning process and the Company's accomplishment of major strategies.
Stock option awards were favorably impacted by the 1993 corporate and
System achievements described above as well as progress in the Company's
execution, convenience and value strategies in 1993. Awards are dependent
primarily upon current individual performance and, to some extent, on
potential for influencing future results. We also consider the number of
options granted in previous years.
PROFIT SHARING
THE COMPANY HAS NEVER OFFERED A PENSION PLAN; RATHER, ELIGIBLE EMPLOYEES
PARTICIPATE IN PROFIT SHARING, WITH CONTRIBUTIONS LINKED TO THE COMPANY'S
FINANCIAL PERFORMANCE. In addition, employees, including executives, have
been encouraged to build stock ownership in McDonald's by allowing
investment of their profit sharing accounts in a Common Stock fund and
through participation in the two other components of the Profit Sharing
Program: McDESOP, which is a 401(k) plan, and the Leveraged ESOP.
Generally, executives participate in the Program on the same terms as
eligible, non-executive employees. For all participants, amounts in excess
of applicable tax limitations are credited to related equalization plans.
<Page 12>
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Quinlan participates in the compensation program provided to the other
Executive Officers described in this report. Mr. Quinlan's total
compensation in 1994 reflects his outstanding performance, his emphasis on
constructive change, his significant contributions in leading the Company's<PAGE>
long-term strategic growth, and his influence on improved financial results
which were reflected in enhanced returns to shareholders. Based on these
factors, for 1994, Mr. Quinlan was awarded an annual incentive for
performance of $950,000, compared with $800,000 for the previous year, and
options to purchase 350,000 shares of Common Stock, 50,000 of which were
granted on March 29, 1994, as a special grant in recognition of his
exceptional performance and leadership in 1993. In addition, Mr. Quinlan's
salary was increased from $980,000 to $998,875. Stock options represented
the predominant portion of the increase in Mr. Quinlan's total compensation
package for 1994, reflecting our Committee's emphasis on variable, at-risk
compensation and increased stock ownership. This grant is consistent with
our philosophy that at-risk compensation should comprise a significant part
of an executive's overall total compensation.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
Section 162(m) of the Code, which generally limits the tax deductibility of
annual compensation paid to certain Executive Officers to $1 million,
provides an exception for "performance-based" compensation meeting
specified requirements. Assuming shareholder approval of proposed changes
to the Incentive Plan and continued deferral of compensation by certain
Executive Officers, we expect that most, if not all, compensation paid to
these Executive Officers will qualify as a tax deductible expense. However,
it is possible that at some point in the future, circumstances may cause
our Committee to authorize compensation that is not entirely deductible.
IN CONCLUSION
Our Committee believes that a significant portion of executive compensation
should be at risk, that performance should be rewarded, that the financial
interests of Executive Officers should be aligned with shareholders through
stock ownership, and that compensation should be competitive. We have
structured compensation at McDonald's to meet these criteria.
Respectfully submitted,
/s/ Robert N. Thurston
- ------------------------
Robert N. Thurston
Chairman
/s/ Terry L. Savage
- -------------------------
Terry L. Savage
/s/ Ballard F. Smith
- -------------------------
Ballard F. Smith
<Page 13>
COMPARISON OF TOTAL SHAREHOLDER RETURNS
- ----------------------------------------------------------------------
McDonald's Corporation is unique; accordingly, we do not have readily
identifiable investment peers. Our operating characteristics and the
marketing of branded products around the world place McDonald's among
global food and beverage companies in the minds of many investors. For
others, our recognizable brand and the retail nature of our business place
McDonald's among global consumer products companies. Also, our strong
financial position, growing cash flow, solid international presence and<PAGE>
global brand power may cause investors to view McDonald's as a global
branded growth company. Finally, our capitalization, trading volume and
importance in an industry that is vital to the U.S. economy have resulted
in McDonald's inclusion in the DJIA since 1985.
Although McDonald's is included in published restaurant indices, we believe
that a presentation of a performance graph relative to such indices would
not be meaningful since by virtue of our size, McDonald's inclusion in
those indices tends to skew the results. Also, unlike most other companies
included in these indices, which have no or limited international
operations, McDonald's does business in 79 countries and about 50 percent
of our operating income comes from outside the U.S.
Thus, in the absence of any readily identifiable industry peer group for
McDonald's, we believe use of the companies comprising the DJIA as the
group for comparison is appropriate. Like McDonald's, many DJIA companies
generate meaningful sales and revenues outside the U.S. and some manage
global brands. Also, investors who are looking for an investment in blue
chip stocks often look at the DJIA as a benchmark.
The two performance graphs which follow depict McDonald's cumulative total
shareholder returns (i.e., price appreciation and reinvestment of
dividends) relative to the S&P and a group made up of the companies
comprising the DJIA (including McDonald's) for the five- and ten-year
periods ended December 31, 1994. Returns shown are for years ended
December 31, and for the DJIA companies, returns are weighted for market
capitalization as of the beginning of each year.
WE BELIEVE THAT THE TEN-YEAR GRAPH IS ESPECIALLY MEANINGFUL AS McDONALD'S
BUSINESS FOCUS AND GROWTH STRATEGIES HAVE BEEN, AND CONTINUE TO BE, LONG
TERM.
FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURNS
[GRAPH]
89 90 91 92 93 94
- -------------------------------------------------------------
McDonald's $100 85 113 146 172 178
S&P $100 97 126 136 150 152
DJIA companies $100 102 129 135 150 158
- -------------------------------------------------------------
Source: S&P Compustat
TEN-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURNS
[GRAPH]
84 85 86 87 88 89 90 91 92 93 94
- ----------------------------------------------------------------------
McDonald's $100 159 181 198 220 318 272 358 464 547 565
S&P $100 132 156 165 192 253 245 319 344 378 383
DJIA companies $100 130 147 156 180 232 237 299 313 348 366
- ----------------------------------------------------------------------
Source: S&P Compustat
<Page 14>
EXECUTIVE COMPENSATION
- ----------------------------------------------------------------------
SUMMARY COMPENSATION TABLE<PAGE>
The following table summarizes total compensation earned by or paid for
services rendered in all capacities to the named Executive Officers during
each of the years ended December 31, 1994, 1993 and 1992.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Annual compensation Long-term compensation
--------------------------
Awards Payouts
-------------------------- ----------
Restricted Securities All other
Name and stock underlying LTIP* compensation
principal position Year Salary($) Bonus($) awards($) options(#)(a,b) payouts($) ($)(c)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael R. Quinlan 1994 $998,875 $950,000 0 350,000 0 $167,055
Chairman of the Board, 1993 980,000 800,000 0 292,000 0 299,176
Chief Executive Officer 1992 880,000 700,000 0 302,000 0 321,355
Edward H. Rensi 1994 711,375 485,462 0 176,000 0 129,056
President, 1993 669,983 469,638 0 170,000 0 180,870
Chief Executive Officer- 1992 645,000 405,000 0 132,000 0 205,941
U.S.A.
James R. Cantalupo 1994 684,025 499,194 0 176,500 0 124,100
President, 1993 631,667 446,446 0 170,000 0 173,862
Chief Executive Officer- 1992 590,000 385,000 0 152,000 0 188,679
International
Jack M. Greenberg 1994 668,875 473,478 0 176,000 0 121,337
Vice Chairman, 1993 606,833 434,850 0 170,000 0 175,447
Chief Financial Officer 1992 516,000 375,000 0 152,000 0 167,311
Paul D. Schrage 1994 493,725 262,147 0 72,600 0 99,401
Senior Executive 1993 466,517 262,064 0 72,600 0 116,427
Vice President, 1992 444,100 229,000 0 62,000 0 131,890
Chief Marketing Officer
- ---------------------------------------------------------------------------------------------------------
*Long-Term Incentive Plan
</TABLE>
(a) The securities underlying the options are shares of Common Stock.
(b) All options have been adjusted to reflect the two-for-one stock split
in 1994 which was effected in the form of a stock dividend.
(c) These amounts represent 1994 Company contributions and allocations to,
respectively: (i) the Profit Sharing Program and related equalization
plans; (ii) the Deferred Incentive Plan; and (iii) premiums on group
term life insurance, as follows: Mr. Quinlan, $155,316, $0, and
$11,739; Mr. Rensi, $120,677, $0, and $8,379; Mr. Cantalupo, $106,380,
$9,641, and $8,079; Mr. Greenberg, $104,025, $9,390, and $7,922; and
Mr. Schrage, $90,081, $0, and $9,320. Amounts which have been
included with respect to the unfunded equalization plans and Deferred
Incentive Plan represent the Company's obligation to pay such amounts
to participants.
<Page 15>
STOCK OPTION GRANTS IN 1994
Options granted to the named Executive Officers were about 7% of the total
number of options granted in 1994. All options granted will expire on the
tenth anniversary of their respective grant dates and become exercisable<PAGE>
over a seven-year period. Option exercise prices were in all cases equal to
the fair market value of a share of Common Stock on the date the option was
granted. The options have no value unless the Company's stock price
appreciates and the recipient satisfies the applicable vesting
requirements.
The following table shows the stock options granted to the named Executive
Officers during 1994 and the potential realizable value of those grants (on
a pre-tax basis) determined in accordance with SEC rules. The information
in this table shows how much the named Executive Officers may eventually
realize in future dollars under two hypothetical situations: if the stock
gains 5% or 10% in value per year, compounded over the ten-year life of the
options. These are assumed rates of appreciation and are not intended to
forecast future appreciation of the Company's Common Stock. Also included
in this table is the increase in value to all common shareholders using the
same assumed rates of appreciation. All information has been adjusted to
reflect the two-for-one stock split in 1994 which was effected in the form
of a stock dividend.
For a perspective, in ten years one share of Common Stock valued at $29.937
on May 26, 1994 would be worth $48.76, assuming the hypothetical 5%
compounded growth rate, or $77.66, assuming the hypothetical 10% compounded
growth rate.
Another way to look at this is to express these amounts in today's dollars
by applying a present value approach to the hypothetical appreciation
rates. These results are shown in the last two columns of the table.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Individual grants
-----------------------------------------------------
Number of % of
securities total
underlying options
options granted to Exercise
granted employees price Expiration
(#)(a) in 1994(b) ($/Sh) date
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael R. Quinlan 50,000 0.4% $28.875 3/29/04
300,000 2.2 29.937 5/26/04
Edward H. Rensi 176,000 1.3 29.937 5/26/04
James R. Cantalupo 176,000 1.3 29.937 5/26/04
500 0.0 26.250 9/20/04
Jack M. Greenberg 176,000 1.3 29.937 5/26/04
Paul D. Schrage 72,600 0.5 29.937 5/26/04
Potential realizable value at Present value at assumed
assumed rates of stock price rates of stock price
appreciation for option term(c) appreciation(c,d)
-------------------------------- ------------------------------
5% 10% 5% 10%
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael R. Quinlan $ 907,967 $ 2,300,966 $ 461,996 $1,170,788
5,648,166 14,313,560 2,778,990 7,042,505
Edward H. Rensi 3,313,590 8,397,289 1,630,340 4,131,603
James R. Cantalupo 3,313,590 8,397,289 1,630,340 4,131,603
8,254 20,918 3,870 9,806
Jack M. Greenberg 3,313,590 8,397,289 1,630,340 4,131,603
Paul D. Schrage 1,366,856 3,463,882 672,515 1,704,286
- -----------------------------------------------------------------------------------<PAGE>
INCREASE IN VALUE
TO ALL COMMON
SHAREHOLDERS(e) $13.2 billion $33.5 billion $6.5 billion $16.5 billion
- -------------------------------------------------------------------------------------
</TABLE>
(a) The securities underlying the options are shares of Common Stock.
(b) Based on the total number of options granted to employees under the
1975 Option Plan and the Incentive Plan.
(c) Calculated over a ten-year period, representing the life of the
options.
(d) Calculated assuming an investment in a ten-year, zero coupon U.S.
Treasury note made at the time the options were granted (6.99% on
3/29/94, 7.35% on 5/26/94 and 7.87% on 9/20/94).
(e) Calculated using a Common Stock price of $29.937, the closing market
price on 5/26/94, which is the exercise price of substantially all of
the options granted in 1994, and the total weighted average number of
common shares outstanding for 1994.
<Page 16>
AGGREGATED OPTION EXERCISES IN 1994 AND FISCAL YEAR-END OPTION VALUES TABLE
The following table shows information concerning the exercise of stock
options by each of the named Executive Officers during 1994, and the value
of all remaining exercisable and unexercisable options at December 31,
1994, on a pre-tax basis. All information has been adjusted to reflect the
two-for-one stock split in 1994 which was effected in the form of a stock
dividend.
- ----------------------------------------------------------------------
Number of
securities Value of
underlying unexercised
unexercised in-the-money
Shares options at options at
acquired l2/31/94 12/31/94
on Value (#)(b) ($)(c)
exercise realized Exercisable/ Exercisable/
Name (#) ($)(a) unexercisable unexercisable
- ----------------------------------------------------------------------
Michael R. Quinlan 0 0 724,000/ $10,408,492/
995,000 5,031,721
Edward H. Rensi 0 0 310,284/ 4,232,737/
527,000 2,812,954
James R. Cantalupo 0 0 438,752/ 6,154,262/
592,000 3,663,476
Jack M. Greenberg 10,000 $122,754 190,500/ 1,890,075/
540,500 2,866,587
Paul D. Schrage 0 0 183,150/ 2,545,581/
250,050 1,577,750
- ----------------------------------------------------------------------
(a) Calculated by subtracting the exercise price from the market value of
the Common Stock as of the exercise date.
(b) The securities underlying the options are shares of Common Stock.
(c) Calculated using the market value of the Common Stock at December 31,
1994 ($29.25 per share) less the per share option exercise price
multiplied by the number of exercisable or unexercisable options, as
the case may be.<PAGE>
<Page 17>
OTHER INFORMATION
- ----------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Executive Officers and Directors to file reports of ownership and changes
in ownership with the SEC and the New York Stock Exchange. The Company
believes that during the period from January 1, 1994 through December 31,
1994, its Executive Officers and Directors complied with all applicable
Section 16(a) filing requirements, except that Mr. Keough and Mr. McKenna
each inadvertently filed one late report covering one transaction. This
conclusion is based solely on a review of copies of such forms furnished to
the Company in accordance with SEC regulations and certain written
representations received by the Company.
RELATED PARTY TRANSACTIONS
In 1994, the Company and its subsidiaries purchased approximately $2.8
million worth of products (principally premiums and gift items) from Group
II Communications, Inc., comprising more than 5% of Group II's gross
revenues for its last fiscal year. Mr. McKenna, a Director of the Company,
is the holder of 51% of the stock of Group II. The Company believes that
such purchases were made on terms at least as favorable as would have been
available from other parties and expects to continue its dealings with
Group II in 1995 on similar terms.
In 1994, as part of its ongoing share repurchase program, the Company
purchased shares of Common Stock, in each case at the New York Stock
Exchange composite closing price on the date of purchase, from Directors
and Executive Officers at the following prices: James R. Cantalupo,
$387,563; Michael L. Conley, $141,923; Thomas W. Glasgow, Jr., $292,500;
and Fred L. Turner, $1,759,328. Messrs. Cantalupo and Conley acquired these
shares within two years prior to their sales through the exercise of stock
options at the following prices, respectively: $62,868 and $22,975.
1996 ANNUAL MEETING - RECEIPT OF SHAREHOLDER PROPOSALS
Any shareholder proposal must be submitted in writing to the Secretary of
the Company at McDonald's Plaza, Oak Brook IL 60521 and received by
December 14, 1995, if it is to be considered for inclusion in the Company's
1996 proxy materials.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
The Company will provide, without charge, a copy of McDonald's
Corporation's Annual Report on Form 10-K for the year ended December 31,
1994, (including any financial statements and schedules, and a list
describing any exhibits not contained therein) upon written request
addressed to: Investor Relations Service Center, McDonald's Corporation,
Kroc Drive, Oak Brook IL 60521. The exhibits to the 10-K are available upon
payment of charges which approximate the Company's cost of reproduction.
<Page 18>
PROPOSAL TWO. ADOPTION OF NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
- ----------------------------------------------------------------------<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR ADOPTION OF
THE NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
PURPOSE
The Board believes that the success of the Company depends largely on its
continued ability to attract and retain highly qualified Directors who are
motivated to exert their best efforts on behalf of the Company and its
shareholders. The Board has reviewed the Company's current arrangements
for compensation of Directors and, upon the recommendation of management
and the Board's Compensation Committee, believes that a program that
permits the grant of stock options to the Company's non-employee Directors
(Non-Employee Directors) will promote the long-term financial success of
the Company by affording an additional opportunity to align the interests
of the Non-Employee Directors with the interests of shareholders.
On January 19, 1995, the Board of Directors adopted, subject to approval by
the Company's shareholders, the Company's Non-Employee Director Stock
Option Plan (Option Plan).
A summary of the Option Plan follows. Shareholders should refer to Exhibit
A for a detailed statement of the terms and conditions of the Option Plan.
KEY FEATURES OF THE OPTION PLAN
- - INITIAL OPTION GRANTS
1,000 options granted to Non-Employee Directors upon Board approval of
the Option Plan (contingent on shareholder approval) and to new Non-
Employee Directors upon first appointment or election
- - ANNUAL GRANTS
1,000 options granted to Non-Employee Directors at each annual
shareholder meeting
- - ADJUSTMENT
Grants automatically adjusted for future stock splits
- - OPTION PRICE
Fair market value on the date of grant
- - VESTING
Equal installments over a period of three years
- - TERM
Ten years
- - AUTHORIZED SHARES
150,000 shares of Common Stock
BRIEF DESCRIPTION OF THE OPTION PLAN
The Option Plan will be administered by the Board or a committee of the
Board. The Board (or such committee) will have the authority to adopt,
alter and repeal such administrative rules, guidelines and practices
governing the Option Plan, to interpret the Option Plan and any stock
option issued under the Option Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Option Plan, but will
have no discretion with respect to the selection of Directors to receive
options, the number of shares subject to the Option Plan or to each grant,
or the purchase price for shares subject to any options.
Subject to certain adjustments, options for a total of 150,000 shares of
Common Stock may be granted to Non-Employee Directors under the Option <PAGE>
Plan. On January 19, 1995, each Non-Employee Director was granted
options to purchase 1,000 shares of Common Stock, subject to shareholder
approval of the Option Plan.
<Page 19>
If such approval is not obtained, all outstanding options shall become void,
no further grants shall be made and the Option Plan shall immediately
terminate.
NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN BENEFITS
- ----------------------------------------------------------------------
Name Dollar value ($)* Number of stock options
- ----------------------------------------------------------------------
Hall Adams, Jr. $ 4,375 1,000
Gordon C. Gray 4,375 1,000
Donald R. Keough 4,375 1,000
Donald G. Lubin 4,375 1,000
Andrew J. McKenna 4,375 1,000
Terry L. Savage 4,375 1,000
Ballard F. Smith 4,375 1,000
Roger W. Stone 4,375 1,000
Robert N. Thurston 4,375 1,000
B. Blair Vedder, Jr. 4,375 1,000
Non-Employee
Director Group
(10 persons) 43,750 10,000
- ----------------------------------------------------------------------
* The dollar value shown above reflects the increase of $4.375 in the
Fair Market Value of the Common Stock between January 19, 1995, the
date of grant, and March 1, 1995.
Each Non-Employee Director shall, on the first meeting of the Board
following his or her first appointment or election as a Director of the
Company, and on the date of the Company's Annual Meeting of Shareholders
each year thereafter during such Director's term, automatically be granted
an option to purchase 1,000 shares of Common Stock, having an exercise
price of 100% of the Fair Market Value of the Common Stock on the date of
grant. The term of a stock option shall be 10 years, subject to extension
(but not beyond 13 years) or earlier termination by reason of death,
disability, retirement or termination of Director status. Generally, stock
options vest in equal installments over three years and may not be assigned
or transferred except by will or by applicable laws of descent and
distribution so long as required by Rule 16b-3 under the Securities
Exchange Act of 1934. Payment of the option price may be made in cash,
Common Stock held for at least six months, or through a broker-assisted
exercise.
The Board may amend, alter or discontinue the Option Plan, but no
amendment, alteration or discontinuation may be made which would (i) impair
the rights of an optionee without the optionee's consent, except such an
amendment which would cause the Option Plan to qualify for the exemption
provided by Rule 16b-3 under the Exchange Act or (ii) disqualify the Option
Plan from exemption the provided by Rule 16b-3 under the Exchange Act;
provided, however, certain amendments may not be made without shareholder
approval.
Only Non-Employee Directors are eligible to participate in the Option Plan.
As of March 1, 1995, 10 Non-Employee Directors were eligible to participate
in the Option Plan.<PAGE>
FEDERAL TAX CONSEQUENCES
These options are non-qualified stock options for Code purposes. The grant
of non-qualified stock options does not result in any taxable income to the
participant or any tax deduction to the Company. Upon the exercise of a
non-qualified stock option, the excess of the market value of the shares
acquired over their cost to the participant is taxable to the participant
as ordinary income and is deductible by the Company. The participant's tax
basis for the shares is their Fair Market Value at the time of exercise.
In addition, the participant's holding period for the shares will commence
on the exercise date.
VOTING INFORMATION FOR THE PROPOSAL
The affirmative vote of the holders of a majority of the shares of Common
and Preferred Stock represented in person or by proxy and entitled to vote
at the Annual Meeting is required to approve the Proposal.
RECOMMENDATION
THE BOARD BELIEVES THAT THE ADOPTION OF THE OPTION PLAN WILL PROMOTE THE
LONG-TERM FINANCIAL SUCCESS OF THE COMPANY BY AFFORDING AN ADDITIONAL
OPPORTUNITY TO ALIGN THE INTERESTS OF NON-EMPLOYEE DIRECTORS WITH THOSE OF
SHAREHOLDERS.
THE BOARD RECOMMENDS A VOTE FOR THE ADOPTION OF THE NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN.
<Page 20>
PROPOSAL THREE. APPROVAL OF THE AMENDED AND RESTATED 1992 STOCK OWNERSHIP
INCENTIVE PLAN
- ----------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE AMENDED AND RESTATED 1992 STOCK OWNERSHIP INCENTIVE PLAN.
The Company's management believes that McDonald's future success and
profitability will depend in large measure on its ability to continue to
attract, retain and motivate highly qualified individuals and that an
effective compensation policy for these individuals includes not only a
competitive annual salary, but also long-term incentives linked to
shareholder returns and Company performance. The Company is convinced of
the important role played by stock-based incentives in retaining the
services of outstanding personnel and in encouraging such employees to have
a greater personal financial investment and stock ownership in the Company.
The McDonald's Corporation 1992 Stock Ownership Incentive Plan (Incentive
Plan) was adopted by the Board of Directors of the Company and approved by
its shareholders effective as of June 1, 1992. The Board has amended and
restated the Incentive Plan as described below, subject to shareholder
approval at the Annual Meeting.
The following is a summary of the principal provisions of the amended and
restated Incentive Plan (Restated Incentive Plan). Capitalized terms used
in this summary which are not defined herein have the meanings ascribed to
them in the Restated Incentive Plan. The full text of the Restated
Incentive Plan is set forth in Exhibit B to this Proxy Statement.
PURPOSE<PAGE>
The primary purposes of the Restated Incentive Plan are to advance the
Company's interests by encouraging and enabling employees to acquire a
larger personal financial interest in the Company through the acquisition
and ownership of Common Stock and to encourage identification with
shareholders through employee stock ownership.
GENERAL INFORMATION
The Restated Incentive Plan provides for the granting of stock options,
restricted stock awards, stock appreciation rights, performance units and
stock bonuses (collectively, Awards). The Company presently intends to use
the non-qualified stock option feature of the Restated Incentive Plan, and
will consider the grant of other types of Awards in the future.
Awards may be granted to any full-time employee (including officers) of the
Company or any of its domestic Subsidiaries, or to any employee, officer or
director of any of the Company's foreign Subsidiaries. More than 22,000
employees are currently eligible to participate in the Restated Incentive
Plan.
PROPOSED AMENDMENTS
The proposed amendments to the Incentive Plan are designed to:
- - increase the number of shares of Common Stock reserved for the grant
of Awards in order to insure sufficient amounts of shares available
for future Awards;
- - allow the transfer of Awards to certain family members and charitable
institutions for estate planning purposes; and
- - incorporate Code Section 162(m) requirements in order to maximize the
tax deductibility of compensation relating to certain Awards to be
granted by the Committee pursuant to the Restated Incentive Plan.
SCOPE OF THE RESTATED INCENTIVE PLAN
Five percent of the issued and outstanding shares of Common Stock as of the
plan's effective date in 1992 were initially authorized by Shareholders for
the issuance of Awards under the Incentive Plan (subject to appropriate
adjustment to reflect stock dividends, stock splits, share combinations,
recapitalizations and other extraordinary corporate events). As of
March 27, 1995, approximately 1.9 million shares of Common Stock remained
available for future grants under the Incentive Plan. In order to ensure
sufficient amounts of shares available for Awards, the Restated Incentive
Plan authorizes an additional 32 million shares of Common Stock to be
reserved for the grant of Awards. If any Award expires or terminates
without having been exercised in full or is forfeited, the shares of Common
Stock associated with such expired or terminated Award shall become
available for other Awards.
Common Stock issued under the Restated Incentive Plan may be either newly
issued shares, treasury shares or any combination thereof. The Company
presently intends to use treasury shares purchased pursuant to the
Company's share repurchase program in connection with the issuance of
Common Stock under the Restated Incentive Plan. As of February 28, 1995,
approximately 136 million shares of Common Stock were held in treasury
<Page 21>
and an additional $500 million in share repurchase has been authorized for
completion through 1996.<PAGE>
As of March 1, 1995, the closing price for the Common Stock on the New York
Stock Exchange Composite Tape was $33.125.
PLAN ADMINISTRATION
Except for certain duties and responsibilities expressly reserved by the
Board or delegated to another committee, the Restated Incentive Plan is
administered by a committee of the Board of Directors (Committee). The
Board's Compensation Committee of outside Directors currently acts in this
capacity. The requirements prescribed by Code Section 162(m) for
membership on the Committee are incorporated into the Restated Incentive
Plan.
Among other things, the Committee has exclusive discretion (subject to the
provisions of the Restated Incentive Plan): to select the persons to whom,
and the times when, Awards are to be granted, as well as the type, size and
terms of such Awards; to interpret the Restated Incentive Plan and
prescribe rules and regulations thereunder; to authorize foreign
Subsidiaries to adopt stock incentive plans providing for the granting of
Awards which will be treated as grants under the Restated Incentive Plan;
and to accelerate the exercisability of, and to waive the restrictions and
conditions applicable to, Awards; subject to certain restrictions, to
extend the time during which Awards may be exercised (but not beyond 15
years); and to prescribe rules and regulations concerning the
transferability of any Awards. In addition, subject to the provisions of
the Restated Incentive Plan and within certain limits, the Committee has
the discretion to modify the terms of or replace any Award which has been
granted under the Restated Incentive Plan, however, no such replacement has
ever taken place under the Incentive Plan.
AWARDS UNDER THE RESTATED INCENTIVE PLAN
STOCK OPTIONS. The Restated Incentive Plan provides both for incentive
stock options (Incentive Options) specifically tailored to the provisions
of the Code and for options not qualifying as Incentive Options (Non-
Qualified Options), each of which may (but need not) be granted in
conjunction with other Awards. Incentive Options and Non-Qualified Options
are sometimes referred to herein collectively as "Options."
Pursuant to the Restated Incentive Plan, the Option Price cannot be less
than 100% of the Fair Market Value of the Common Stock on the Grant Date.
Payment of the Option Price may be made in cash, through the exchange of
Common Stock held by the grantee for at least six months, or through a
broker-assisted exercise. The Committee may allow a grantee to pay the
Option Price with restricted stock held by the grantee for at least six
months, or to defer payment of the Option Price, on terms the Committee may
determine, or may cause the Company to guarantee all or a portion of a loan
to the grantee in an amount equal to the Option Price.
The Committee shall determine when an Option may be exercised, which shall
be no more than 15 years after the Grant Date (ten years in the case of
Incentive Options), and the manner in which each Option will become
exercisable. Generally, Options are not exercisable less than one year
after their respective Grant Dates. The Committee may, in its discretion,
direct that shares issued upon exercise of Options be restricted and
non-transferable.
RESTRICTED STOCK. Up to five million of the shares of Common Stock
authorized for the Restated Incentive Plan may be awarded to eligible
individuals by the Committee as shares of restricted stock. At the
Committee's option, restricted stock may be made subject to forfeiture upon
termination of employment, if the Company or the grantee fails to meet
specified performance goals (if any) or upon failure to satisfy such other
restrictions as the Committee may specify (if any). Generally, restricted<PAGE>
stock is forfeitable at least until the first anniversary of its Grant
Date.
The Committee may specify the price, if any, to be paid by the grantee for
restricted stock, except that the grantee must pay at least the Minimum
Consideration for any shares other than treasury shares. Such amount shall
be paid in cash or the Committee may allow the grantee to defer payment, on
such terms as it may determine, or may cause the Company to guarantee all
or a portion of a loan to the grantee in an amount equal to the purchase
price of the restricted stock.
If a share of restricted stock is forfeited and if the grantee paid an
amount for such share or acquired such share by Option exercise, upon
forfeiture the Company shall pay the grantee the lesser of: (a) the amount
paid or the Option Price, as the case may be, or (b) the Fair Market Value
of a share of Common Stock on the date of forfeiture.
<Page 22>
STOCK APPRECIATION RIGHTS. A stock appreciation right (SAR) may be granted
alone or in conjunction with another Award. A SAR is exercisable only on
or after the first anniversary of its Grant Date and otherwise on
conditions established by the Committee. A SAR related to another Award
generally terminates upon the expiration, termination, forfeiture or
exercise of the related Award, and is exercisable only to the extent that
such other Award is exercisable and on such other conditions as may be
established by the Committee.
Upon exercise of a SAR, the grantee must surrender the SAR and any related
Award and will receive in exchange cash or, in the discretion of the
Committee, Common Stock equal in value to the excess of the Fair Market
Value of a share of Common Stock on the date the SAR is exercised over the
Fair Market Value of a share of Common Stock on the date the SAR was
granted or, if the SAR is related to an Option, the Option Price. At the
time of grant, the Committee may place a limitation on the amount payable
upon exercise of a SAR.
PERFORMANCE UNITS. Performance units may be granted alone or they may be
granted in conjunction with other Awards. Before the grant of any
performance unit, the Committee will establish performance goals and
designate a period (Measuring Period) of not less than one year nor more
than seven years for the measurement of attainment of such goals. The
value of a performance unit (Unit Value) will be established by the
Committee and may be a fixed dollar amount or an amount which varies from
time to time in relation to the Fair Market Value of a share of Common
Stock plus, at the Committee's option, dividends on Common Stock. The
benefit realized by the grantee upon exercise of a performance unit will be
the Unit Value multiplied by the Performance Percentage established by the
Committee for each level of attainment of the established performance goals
during the Measuring Period. Performance goals may be based on earnings
per share, net income, return on equity, and/or any other measure of
performance which the Committee deems appropriate. The Committee may, in
its discretion, modify performance goals for any reason it may deem
appropriate.
Generally, a performance unit becomes exercisable on the later of the first
anniversary of its Grant Date or the first day after the end of the
applicable Measuring Period and, if not issued in conjunction with another
Award, is deemed exercised on the date it first becomes exercisable. A
performance unit related to another Award may be exercised by giving notice
to the Company and, unless otherwise provided in the applicable Award
agreement, the related Award shall be cancelled.
STOCK BONUSES. The Committee is authorized, in its discretion, to grant up
to an aggregate of 200,000 shares of Common Stock as stock bonuses or<PAGE>
incentives to eligible employees, which shall not include Executive
Officers.
AMENDMENT AND TERMINATION
The Restated Incentive Plan shall terminate on June 1, 2002. The Board of
Directors may before that time terminate the Restated Incentive Plan and
may amend or modify the Restated Incentive Plan without shareholder
approval, except as may be advisable for purposes of compliance with
federal securities laws or listing requirements of a national securities
exchange. Termination of the Restated Incentive Plan will not affect any
Awards then outstanding.
ESTIMATE OF BENEFITS
It is impossible to determine the amount of Awards that will be received by
any of the grantees since the grant of Awards pursuant to the Restated
Incentive Plan is within the discretion of the Committee. Information
regarding Awards to the Company's Chief Executive Officer and the other
four most highly compensated Executive Officers in 1994 is provided on page
14 of this Proxy Statement. In addition, in 1994, 1,237,000 options were
granted to all current Executive Officers as a group under the Incentive
Plan and over 11,020,000 options were granted to approximately 6,600
employees, including all current officers who are not Executive Officers.
No Awards were made to Directors who are not Executive Officers.
OTHER TERMS AND CONDITIONS
In order to comply with a requirement of Code Section 162(m), the Restated
Incentive Plan provides that the maximum Award payable to any participant
during any three-year period shall be 2,500,000 shares of Common Stock,
subject to adjustments for stock splits and other events described in the
Restated Incentive Plan. Awards granted under the Incentive Plan to the
Company's five highest paid executives during the last three fiscal years
are described on page 14.
Awards granted under the Incentive Plan (other than shares of restricted
stock) are generally non-transferable
<Page 23>
other than by will or the laws of descent and may be exercised, during a
grantee's lifetime, only by the grantee. The Restated Incentive Plan allows
the Committee to grant transferable Awards under limited circumstances for
estate planning purposes. Restricted stock is non-transferable until it
becomes non-forfeitable.
The Restated Incentive Plan contains special rules concerning the
exercisability and forfeitability of Awards upon termination of employment.
For a complete description of these rules, shareholders should refer to
Exhibit B of this Proxy Statement.
Adjustments in the amount of Awards issuable under the Restated Incentive
Plan and in any Awards outstanding may be made in order to preserve the
benefits or potential benefits intended to be made available to
participants, in the event of merger, consolidation, reorganization, the
sale of all or substantially all the assets of the Company,
recapitalization, reclassification, stock splits, stock dividends or
similar events.
The Company may make such provisions as it deems appropriate to withhold
any taxes due in connection with any Award and may require the grantee to
satisfy any relevant tax requirements before authorizing any issuance of<PAGE>
shares to a grantee or its transferee. Grantees may elect, subject to
Committee approval, to have shares of Common Stock otherwise issuable to
them withheld to satisfy federal, state and local withholding tax liability
with respect to the exercise of Awards in the year such exercise becomes
taxable.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS
The following is a brief description of the principal United States federal
income tax consequences related to Options granted under the Restated
Incentive Plan.
NON-QUALIFIED OPTIONS. In general: (a) a grantee will not be subject to
tax at the time a Non-Qualified Option is granted; (b) an amount equal to
the difference between the Option Price and the fair market value of the
shares acquired on the date of exercise will be included in the grantee's
ordinary income in the taxable year in which the Non-Qualified Option is
exercised by the grantee or its transferee; (c) the Company will be
entitled to deduct such amount in the taxable year in which such grantee
includes such amount in income; and (d) upon disposition of shares acquired
upon exercise, appreciation or depreciation after the date of exercise will
be treated as either capital gain or capital loss.
Where an Option provides for issuance of stock subject to restrictions, the
grantee receiving such restricted stock upon exercise will not recognize
income for tax purposes until the restrictions lapse. In these situations,
the grantee will generally have taxable income upon lapse of the
restriction equal to the amount by which the Fair Market Value of the
shares at the time the restriction lapses exceeds the Option Price.
Proceeds from the sale of stock sold after the restriction period will be
taxable as a capital gain or capital loss, depending upon the amount by
which the sale price exceeds or is less than the Fair Market Value of the
stock at the end of the restriction period.
Alternatively, a grantee who received stock subject to restrictions on
transfer can elect to recognize income immediately upon exercise of the
Option, in which case taxable income is generally determined at the time of
Option exercise and the time of the sale of the stock as explained in the
first paragraph of this section. However, if a grantee who has elected to
recognize income immediately upon exercise of Options for restricted stock
subsequently sells the stock to the Company as required by the terms of the
restriction, any loss on the sale will be limited to the amount (if any) by
which the Option Price exceeds the amount paid by the Company on such sale.
Generally, the Company will be entitled to a tax deduction in the amount of
the ordinary income realized by the employee in the year the Option is
exercised or the restrictions lapse, whichever is applicable.
If the grantee pays the Option Price, in whole or in part, with previously
acquired shares, the exchange will not affect the tax treatment of the
exercise. Upon such exchange, no gain or loss is recognized upon delivery
of the previously acquired shares to the Company, and the shares received
by the grantee equal in number to the previously acquired shares exchanged
therefor will have the same basis and holding period for capital gain
purposes as the previously acquired shares.
Shares received by the grantee in excess of the number of previously
acquired shares will have a basis equal to the fair market value of such
additional shares as of the date ordinary income equal to such fair market
value is realized and a holding period which commences as of such date.
INCENTIVE OPTIONS. In general, a grantee will not be subject to tax at the
time an Incentive Option is granted or exercised. However, the excess of
the Fair Market Value of the<PAGE>
<Page 24>
shares received upon exercise of the Incentive Option over the Option Price
is potentially subject to the alternative minimum tax. Upon disposition of
the shares acquired upon exercise of an Incentive Option, capital gain or
capital loss will be recognized in an amount equal to the difference
between the sale price and the Option Price, provided that the grantee has
not disposed of the shares within two years of the date of grant or within
one year from the date of exercise and further provided that the grantee
has been employed by the Company at all times from the Grant Date until the
date three months before the date of exercise (one year in the case of
permanent disability). If the grantee disposes of the shares without
satisfying both the holding period and employment requirements (a
Disqualifying Disposition), the grantee will recognize ordinary income at
the time of such Disqualifying Disposition to the extent of the difference
between the Option Price and the lesser of the Fair Market Value of the
shares on the date the Incentive Option is exercised or the amount realized
on such Disqualifying Disposition. Any remaining gain or loss is treated
as a capital gain or capital loss.
If the grantee pays the Option Price, in whole or in part, with previously
acquired shares, the exchange will not affect the tax treatment of the
exercise. Upon such exchange, and except for Disqualifying Dispositions,
no gain or loss is recognized upon the delivery of the previously acquired
shares to the Company, and the shares received by the grantee equal in
number to the previously acquired shares exchanged therefor will have the
same basis and holding period for capital gain or capital loss purposes as
the previously acquired shares. Shares received by the grantee in excess
of the number of previously acquired shares will have a basis of zero and a
holding period which commences as of the date the shares are issued to the
grantee upon exercise of the Incentive Option. If such an exercise is
effected using shares previously acquired through the exercise of an
Incentive Option, the exchange of the previously acquired shares will be
considered a disposition of such shares for the purpose of determining
whether a Disqualifying Disposition has occurred. The Company is not
entitled to a tax deduction upon either the exercise of an Incentive Option
or upon disposition of the shares acquired pursuant to such exercise,
except to the extent that the grantee recognized ordinary income in a
Disqualifying Disposition.
SECTION 162(m). Subject to certain exceptions, Section 162(m) of the Code
places a $1 million annual limit on a company's tax deduction for
compensation paid to a "covered employee". A "covered employee" is defined
as the company's chief executive officer and the other four highest paid
officers named in its proxy statement. Compensation in excess of $1
million will, however, continue to be tax deductible by the company if such
compensation satisfies the applicable requirements for the "performance-
based compensation" exception (Performance Exception).
The Restated Incentive Plan incorporates the requirements for the
Performance Exception that are applicable to its stock option and stock
appreciation right features and, where appropriate, it is expected that the
Committee will administer the Restated Incentive Plan in order to satisfy
any other requirements for the Performance Exception. Changes in the
Restated Incentive Plan include a cap on the Awards that may be made to any
grantee over a three-year period and the adoption of requirements contained
in Section 162(m) for membership on the Committee. As a result, it is
anticipated that the Company will be able to maximize the tax deductibility
of the compensation attributable to non-qualified stock options.
Compensation received by a covered employee which is attributable to the
other Award features contained in the Restated Incentive Plan will not
qualify for the Performance Exception unless additional requirements are
satisfied, including the proper establishment of performance goals,
shareholder approval of these goals and certification by the Committee that
the goals have been attained.<PAGE>
VOTING INFORMATION FOR THE PROPOSAL
The affirmative vote of the holders of a majority of the shares of Common
and Preferred Stock represented in person or by proxy and entitled to vote
at the Annual Meeting is required to approve the Proposal.
RECOMMENDATION
THE BOARD BELIEVES THAT THE APPROVAL OF THE RESTATED INCENTIVE PLAN WILL
FURTHER ALIGN EMPLOYEE INTERESTS WITH THOSE OF SHAREHOLDERS AND MAXIMIZE
THE TAX DEDUCTIBILITY OF COMPENSATION PAYABLE TO CERTAIN OF THE COMPANY'S
EXECUTIVE OFFICERS.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE AMENDED
AND RESTATED 1992 STOCK OWNERSHIP INCENTIVE PLAN.
<Page 25>
EXHIBIT A. McDONALD'S CORPORATION NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
- ----------------------------------------------------------------------
SECTION 1. PURPOSE; DEFINITIONS
The purposes of the Plan are to promote the long-term success of the
Company by enhancing the long-term mutuality of interests between the Non-
Employee Directors and shareholders of the Company and to provide a means
through which the Company may attract able persons as directors of the
Company.
For purposes of the Plan, the following terms are defined as set forth
below:
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
"Common Stock" means the common stock of the Company, without par
value.
"Company" means McDonald's Corporation, a Delaware corporation.
"Disability" with respect to a Participant means a physical or mental
condition that prevents the Participant from performing his or her duties
as a member of the Board, and which is expected to be permanent or for an
indefinite duration exceeding one year.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
"Fair Market Value" means, as of any applicable date, the closing
price, regular way, of the Common Stock as reported on the New York Stock
Exchange Composite Tape or, if no such reported sale of the Common Stock
shall have occurred on such date, on the next preceding date on which there
was a such reported sale.
"Non-Employee Director" means a person who as of any applicable date
is a member of the Board and is not an officer or employee of the Company
or any subsidiary of the Company.
"Optionee" means a Participant or any permissible transferee as
described in Section 5(e)(v).<PAGE>
"Participant" means a Non-Employee Director who is granted a Stock
Option hereunder.
"Plan" means the McDonald's Corporation Non-Employee Director Stock
Option Plan as set forth herein and as hereafter amended from time to time.
"Retirement" means termination of an individual's directorship with at
least ten years of service as a member of the Board or after age 70.
"Stock Option" means a non-qualified option to purchase shares of
Common Stock.
"Termination of Directorship" means the date upon which any
Participant ceases to be a member of the Board for any reason whatsoever.
In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.
SECTION 2. ADMINISTRATION
The Plan shall be administered by the Board or by a duly appointed
committee of the Board having such powers as shall be specified by the
Board. The Board (or such committee) shall have the authority to adopt,
alter and repeal such administrative rules, guidelines and practices
governing the Plan as it shall, from time to time, deem advisable, to
interpret the terms and provisions of the Plan and any Stock Option issued
under the Plan (and any agreement relating thereto) and to otherwise
supervise the administration of the Plan.
Notwithstanding the foregoing, the selection of the Non-Employee
Directors to whom Stock Options are to be granted, the timing of such
grants, the number of shares subject to any Stock Option, the exercise
price of any Stock Option, the periods during which any Stock Option may be
exercised and the term of any Stock Option shall be as hereinafter
provided, and the Board (or such committee) shall have no discretion as to
such matters. The Plan is intended to allow Non-Employee Directors to
receive Stock Options without such Stock Options causing them to cease to
be "disinterested persons" (within the meaning of Rule 16b-3 under the
Exchange Act) with respect to other stock plans of the Company. To the
extent that any provision of the Plan or action by the Board (or such
committee) with respect thereto would be inconsistent with such intent,
such provision or action shall be null and void.
The determination of the Board (or such committee) on all matters
relating to the Plan or any agreement relating thereto shall be conclusive
and final. No member of the Board (or such committee) shall be liable for
any action or determination made in good faith with respect to the Plan or
any Stock Option.
<Page 26>
SECTION 3. STOCK SUBJECT TO PLAN
Subject to adjustment as provided herein, the total number of shares of
Common Stock of the Company available for grant under the Plan while it is
in effect shall not exceed 150,000. Such shares may be treasury shares or
newly issued shares, as may be determined from time to time by the Board
(or the designated committee). The shares of Common Stock related to the
unexercised or undistributed portion of any terminated, expired or
forfeited Stock Option shall be made available in connection with future
Stock Option grants under the Plan.
In the event of any stock dividend, stock split, reverse stock split,
share combination, recapitalization, merger, consolidation, acquisition of<PAGE>
property or shares, separation, asset spin-off, reorganization, stock
rights offering, liquidation or similar event, of or by the Company, the
aggregate number of shares of Common Stock reserved for issuance under the
Plan, the number and option price of shares of Common Stock subject to
outstanding Stock Options and the Grant Amounts specified in Section 5
shall be appropriately adjusted to the extent that such adjustment is
necessary to preserve the economic value of the unexercised Stock Options
and of any future Stock Option grants; provided, however, that the number
of shares subject to any Stock Option shall always be a whole number.
Share amounts shall be rounded up to the nearest whole number.
SECTION 4. ELIGIBILITY
Only individuals who are Non-Employee Directors are eligible to be granted
Stock Options under the Plan.
SECTION 5. STOCK OPTIONS
(a) Initial grants. As of the effective date of the Plan, a Stock
Option to purchase 1,000 shares of Common Stock (the "Initial Grant
Amount") is granted to each person who on that date is an incumbent Non-
Employee Director.
(b) Subsequent grants. With respect to each person who first becomes
a Non-Employee Director after the effective date of the Plan, a Stock
Option to purchase 1,000 shares of Common Stock (the "Subsequent Grant
Amount") is granted as of the date such person is elected or appointed as a
Non-Employee Director. Such subsequent grant shall be in addition to any
annual grants of Stock Options as described in Section 5(c) below.
(c) Annual grants. On the date of each annual meeting of the
Company's shareholders following the effective date of the Plan, each
person who is a Non-Employee Director immediately following such meeting
(regardless of whether elected, re-elected or retained as a Non-Employee
Director at such meeting) shall automatically be granted a Stock Option to
purchase 1,000 shares of Common Stock (the "Annual Grant Amount") as of
such meeting date. (The Initial Grant Amount, the Subsequent Grant Amount
and the Annual Grant Amount shall sometimes be referred to herein
collectively as the "Grant Amounts".)
(d) Available shares. In the event that the number of shares of
Common Stock available for future grant under the Plan is insufficient to
make all automatic grants required to be made on a given date, then all
Non-Employee Directors entitled to a grant on such date shall share ratably
in the number of Stock Options on shares available for grant under the
Plan.
(e) Terms. Stock Options granted under the Plan shall be subject to
the following terms and conditions in addition to those set forth above.
(i) Option term. The term of each Stock Option shall be 10
years from the date the Stock Option is granted, subject to extension or
earlier termination as provided herein.
(ii) Exercisability. Subject to the express provisions of this
Section 5(e), Stock Options shall be exercisable as follows:
(A) beginning on the first anniversary of the date of
grant, for whole shares up to one-third of the shares
of Common Stock covered by the Stock Option;
(B) beginning on the second anniversary of the date of
grant, for whole shares up to two-thirds of such
shares; and<PAGE>
(C) beginning on the third anniversary of the date of grant
and thereafter until the expiration of the term of the
Stock Option, for whole shares up to 100% of such
shares.
Notwithstanding any of the provisions of this Section 5(e), no Stock
Option shall be exercisable during the first six months after the grant
date (or the date of shareholder approval in the case of the Initial
Grants), unless compliance
<Page 27>
with such holding period is not required to qualify for an exemption from
potential liability under Section 16 of the Exchange Act.
Notwithstanding the foregoing, upon approval by the shareholders of
the Company of a plan of liquidation for the Company, any unexercised
options theretofore granted shall thereupon become exercisable.
(iii) Option price. The option price per share of Common Stock
covered by a Stock Option shall be the Fair Market Value of Common Stock as
of the date of grant. Such price shall be subject to adjustment as
provided in Section 3.
(iv) Methods of exercise. Subject to the provisions of this
Section 5, Stock Options may be exercised, in whole or in part, at any time
during the option term by giving written notice of exercise to the Company
specifying the number of shares of Common Stock subject to the Stock Option
to be purchased. Such notice shall be accompanied by payment in full of
the purchase price. Payment of the purchase price may, at the election of
the Optionee, be made in any one or any combination of the following: (A)
cash, (B) Common Stock held for at least six months prior to exercise of
the Stock Option, valued at its Fair Market Value on the date of exercise,
(C) through simultaneous sale through a broker of shares acquired on
exercise, as permitted under Regulation T of the Federal Reserve Board.
No shares of Common Stock shall be issued until full payment
therefor has been made. An Optionee shall have all rights as a shareholder
of the Company holding Common Stock as soon as practicable following
written notice of exercise, payment in full for such shares and the
Company's receipt of the representation described in Section 7(a), if
applicable.
(v) Non-transferability of stock options. No Stock Option shall
be transferable by the Participant other than by will or by the laws of
descent and distribution. All Stock Options shall be exercisable during
the Participant's lifetime, only by the Participant or by the guardian or
legal representative of the Participant.
The foregoing restrictions on transferability shall not apply to
Stock Options granted after the Board (or such committee) has determined
that such restrictions are not then required for grants under the Plan to
satisfy the requirements for the exemption provided by Rule 16b-3 under the
Exchange Act (in the form then applicable to the Company) or for Non-
Employee Directors to qualify as "disinterested persons" for purposes of
such Rule; provided, however, that (i) any transfer of a Stock Option is to
be made for no consideration to any of the following permissible
transferees: (w) any member of the Immediate Family of the Participant to
whom such Stock Option was granted, (x) any trust solely for the benefit of
members of the Participant's Immediate Family, (y) any partnership whose
only partners are members of the Participant's Immediate Family or (z)
Ronald McDonald Children's Charities or any Ronald McDonald House, and (ii)
the transferee shall remain subject to all of the terms and conditions
applicable to such Stock Option prior to such transfer. "Immediate Family"<PAGE>
means, with respect to a particular Participant, such Participant's spouse,
children and grandchildren.
(vi) Termination for cause. If a Termination of Directorship
occurs for cause pursuant to Article Thirteenth (c) of the Company's
Restated Certificate of Incorporation, any unexercised Stock Option shall
thereupon terminate.
(vii) Termination by reason of death or disability. If a
Termination of Directorship occurs by reason of the death or Disability of
a Participant, any unexercised option, whether or not exercisable on the
date of such Termination of Directorship, may be exercised, in whole or in
part, at any time within three years after such Termination of Directorship
by the Participant, a permissible transferee (as such term is described in
Section 5(e)(v) above) or by the Participant's personal representative
after the Participant's death.
(viii) Termination on account of retirement. If a Termination of
Directorship occurs by reason of Retirement, any unexercised option,
whether or not exercisable on the date of such Termination of Directorship,
may be exercised, in whole or in part, for a period of three years from the
Participant's Retirement or until the expiration of the stated term of such
Stock Option, whichever period is the shorter.
(ix) Other termination. If a Termination of Directorship occurs
for any reason other than for cause (as described in Section 5(e)(vi)
above) or the death, Disability or Retirement of a Participant, any
unexercised option to the extent exercisable on the date of Termination
<Page 28>
of Directorship, may be exercised, in whole or in part, at any time within
one year after the Participant's Termination of Directorship.
(x) Extension of term. Upon Termination of Directorship by
reason of death or Disability, the term of any Stock Option which by its
terms would otherwise expire after the Participant's Termination of
Directorship but prior to the end of the period following the Participant's
Termination of Directorship described in Section 5(e)(vii) above for
exercise of Stock Options shall be extended so as to permit any unexercised
portion thereof to be exercised at any time within such period; provided,
however, that in no event may the term of any Stock Option expire more than
13 years after the grant date of such Stock Option.
SECTION 6. TERM, AMENDMENT AND TERMINATION
The Plan will terminate on the tenth anniversary of the effective date or
at such earlier date as the Board may determine. Termination of the Plan
shall not affect any Stock Options then outstanding under the Plan.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would (a) impair the
rights of an Optionee under a Stock Option without the Optionee's consent,
except such an amendment made to cause grants and other transactions under
the Plan to qualify for the exemption provided by Rule 16b-3; or (b)
disqualify grants and other transactions under the Plan from the exemption
provided by Rule 16b-3; provided, however, no amendment to the Plan may be
made by the Board without approval of shareholders which (i) changes the
criteria for Non-Employee Directors who can receive Stock Options under the
Plan, (ii) changes vesting conditions, term of exercisability, timing,
amount or exercise price of Stock Options under the Plan, or (ii)
materially increases the aggregate number of shares of Common Stock which
may be issued under the Plan. In addition, (a) no amendment shall be made
without the approval of the Company's shareholders to the extent such<PAGE>
approval is required by law or agreement and (b) if required, the Plan
shall not be materially amended more often than once every six months other
than to comport with changes in the Code or the rules and regulations
promulgated thereunder.
SECTION 7. GENERAL PROVISIONS
(a) Unless the shares have been registered under the Securities Act
of 1933, as amended, each person purchasing or receiving shares of Common
Stock pursuant to a Stock Option shall represent to and agree with the
Company in writing that such person is acquiring the shares of Common Stock
without a view to the distribution thereof. Any certificates for such
shares of Common Stock shall include an appropriate legend to reflect the
restrictions on transfer.
(b) Nothing contained in the Plan shall prevent the Company or any
subsidiary from adopting other or additional compensation arrangements for
its Non-Employee Directors.
(c) The Plan and all Stock Options awarded and actions taken with
respect thereto shall be governed by and construed in accordance with the
laws of the State of Illinois except its law with respect to choice of law.
(d) Benefits payable under the Plan to any person shall be paid
directly by the Company. The Company shall not be required to fund, or
otherwise segregate assets to be used for payment of, benefits under the
Plan.
(e) Nothing in the Plan, or any Stock Option granted under the Plan,
shall confer any right to any person to continue as a director of the
Company or interfere in any way with the rights of the shareholders of the
Company or the Board to elect and remove directors.
SECTION 8. EFFECTIVE DATE OF PLAN
The Plan has been adopted by the Board and has become effective on January
19, 1995, subject to approval of the Plan by the shareholders of the
Company at the Company's Annual Meeting to be held on or about May 26, 1995
or any adjournment thereof. Notwithstanding any other provision of this
Plan, no Stock Option may be exercised before such shareholder approval is
obtained and, if such approval is not obtained, all outstanding Stock
Options shall become void, no further grants shall be made, and the Plan
shall immediately terminate.
<Page 29>
EXHIBIT B. McDONALD'S CORPORATION 1992 STOCK OWNERSHIP INCENTIVE PLAN
AS AMENDED AND RESTATED AS OF JUNE 1, 1995
- ----------------------------------------------------------------------
THE PLAN
McDonald's Corporation, a Delaware corporation (the "Company"), first
established the McDonald's Corporation 1992 Stock Ownership Incentive Plan
(the "Prior Plan" ) on June 1, 1992. The following provisions constitute
an amendment and restatement of the Prior Plan, effective as of June 1,
1995. The provisions of this Plan do not apply to or affect any Awards
heretofore granted under the Prior Plan or under any other stock option
plan of the Company, and all such Awards continue to be governed by and
subject to the applicable provisions of the Prior Plan or any other stock
option plan of the Company.
1. PURPOSE<PAGE>
The purpose of this Plan is to advance the interest of the Company by
encouraging and enabling the acquisition of a larger personal financial
interest in the Company by those employees upon whose judgment and efforts
the Company is largely dependent for the successful conduct of its
operations. An additional purpose of this Plan is to provide a means by
which employees of the Company and its Subsidiaries can acquire and
maintain Stock ownership, thereby strengthening their commitment to the
success of the Company and their desire to remain employed by the Company
and its Subsidiaries. It is anticipated that the acquisition of such
financial interest and Stock ownership will stimulate the efforts of such
employees on behalf of the Company, strengthen their desire to continue in
the service of the Company and encourage shareholder and entrepreneurial
perspectives through employee stock ownership. It is also anticipated that
the opportunity to obtain such financial interest and Stock ownership will
prove attractive to promising new employees and will assist the Company in
attracting such employees.
2. DEFINITIONS
As used in this Plan, terms defined parenthetically immediately after their
use shall have the respective meanings provided by such definitions and the
terms set forth below shall have the following meanings (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):
(a) "Award" means options, shares of restricted stock, stock
appreciation rights, performance units or stock bonuses granted under this
Plan.
(b) "Award Agreement" has the meaning specified in Section 4(c)(v).
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" includes termination based on the commission of any act
or acts involving dishonesty, fraud, illegality or moral turpitude.
(e) "Code" means the Internal Revenue Code of 1986, as amended, and
regulations and rulings thereunder. References to a particular section of
the Code shall include references to successor provisions.
(f) "Committee" means the committee of the Board appointed pursuant
to Section 4.
(g) "Company" has the meaning set forth in the introductory
paragraph.
(h) "Disability" means, as relates to the exercise of an incentive
stock option after termination of employment, a disability within the
meaning of Section 22(e)(3) of the Code, and for all other purposes, a
mental or physical condition which, in the opinion of the Committee,
renders a Grantee unable or incompetent to carry out the job
responsibilities which such Grantee held or the tasks to which such Grantee
was assigned at the time the disability was incurred, and which is expected
to be permanent or for an indefinite duration exceeding one year.
(i) "Effective Date" means June 1, 1992.
(j) "Fair Market Value" of any security of the Company means, as of
any applicable date the closing price, regular way, of the security as
reported on the New York Stock Exchange Composite Tape, or if no such
reported sale of the security shall have occurred on such date, on the next
preceding date on which there was such a reported sale.
(k) "Grant Date" means the date on which an Award shall be duly
granted, as determined in accordance with Section 6(a)(i).<PAGE>
(l) "Grantee" means an individual who has been granted an Award.
(m) "including" or "includes" means "including, without limitation,"
or "includes, without limitation."
(n) "Measuring Period" has the meaning specified in Section
6(f)(i)(B).
(o) "Minimum Consideration" means $.01 per share or such larger
amount determined pursuant to resolution of the Board to be capital within
the meaning of Section 154 of the Delaware General Corporation law.
<Page 30>
(p) "1934 Act" means the Securities Exchange Act of 1934, as amended.
References to a particular section of, or rule under, the 1934 Act shall
include references to successor provisions.
(q) "Option Price" means the per share purchase price of Stock
subject to an option.
(r) "Performance Percentage" has the meaning specified in
Section 6(f)(i)(C).
(s) "Plan" means the McDonald's Corporation 1992 Stock Ownership
Incentive Plan, as amended and restated in the manner set forth in the
introductory paragraph.
(t) "Retirement" means a termination of employment with the Company
and its Subsidiaries any time after attaining age 60 with at least 20 years
of Company service (excluding any termination of employment to become an
owner-operator of a McDonald's restaurant).
(u) "SEC" means the Securities and Exchange Commission.
(v) "Section 16 Grantee" means a person subject to potential
liability under Section 16(b) of the 1934 Act with respect to transactions
involving equity securities of the Company.
(w) "Stock" means the common stock of the Company, without par value.
(x) "Subsidiary" means (i) with respect to incentive stock options, a
corporation as defined in Section 424(f) of the Code with the Company being
treated as the employer corporation for purposes of this definition, and
(ii) for all other purposes any entity in which the Company directly or
through intervening subsidiaries owns twenty-five percent (25%) or more of
the total combined voting power or value of all classes of stock or, in the
case of an unincorporated entity, a twenty-five percent (25%) or more
interest in the capital and profits.
(y) "10% Owner" means a person who owns stock (including stock
treated as owned under Section 424(d) of the Code) possessing more than 10%
of the total combined voting power of all classes of stock of the Company.
3. SCOPE OF THIS PLAN
(a) The number of shares of Stock which represented five percent (5%)
of the number of issued and outstanding shares of Stock as of June 1, 1992
was made available and reserved for delivery on account of the exercise of
Awards and payment of benefits in connection with Awards. Effective
June 1, 1995, an additional 32 million shares of Stock are made available
and are reserved for delivery on account of the exercise of Awards and
payment of benefits in connection with Awards. Such shares may be treasury<PAGE>
shares or newly issued shares, as may be determined from time to time by
the Board or the Committee.
(b) Subject to adjustment as provided in Section 23, the maximum
number of Shares of Stock for which Awards may be granted to any Grantee in
any three-year period shall not exceed 2,500,000.
(c) Subject to Section 3(a) and (b) (as to the maximum number of
shares of Stock available for delivery in connection with Awards) and to
Section 3(d), up to 5,000,000 shares of restricted stock, and up to 200,000
bonus shares of Stock may be granted under this Plan.
(d) If and to the extent an Award shall expire or terminate for any
reason without having been exercised in full (including a cancellation and
re-grant of an option pursuant to Section 16), or shall be forfeited,
without, in either case, the Grantee having enjoyed any of the benefits of
stock ownership (other than voting rights or dividends that are likewise
forfeited), the shares of Stock (including restricted stock) associated
with such Award shall become available for other Awards.
4. ADMINISTRATION
(a) Subject to Section 4(b), this Plan shall be administered by a
committee ("Committee") of the Board of Directors. All members of the
Committee shall be "Outside Directors" as defined or interpreted for
purposes of Section 162(m) of the Code. The composition of the Committee
shall also be subject to such limitations as the Board deems appropriate to
permit transactions in Stock pursuant to this Plan to be exempt from
liability under Rule 16b-3 under the 1934 Act.
(b) The Board may, in its discretion, reserve to itself or delegate
to another committee of the Board any or all of the authority and
responsibility of the Committee with respect to Awards to Grantees who are
not Section 16 Grantees at the time any such delegated authority or
responsibility is exercised. Such other committee may consist of two or
more directors who may, but need not be, officers or employees of the
Company or of any of its Subsidiaries. To the extent that the Board has
reserved to itself or delegated to such other committee the authority and
responsibility of the Committee, all references to the Committee in this
Plan shall be to the Board or such other committee.
<Page 31>
(c) The Committee shall have full and final authority, in its
discretion, but subject to the express provisions of this Plan, as follows:
(i) to grant Awards,
(ii) to determine (A) when Awards may be granted, and (B) whether
or not specific Awards shall be identified with other specific Awards, and
if so whether they shall be exercisable cumulatively with or alternatively
to such other specific Awards,
(iii) to interpret this Plan and to make all determinations
necessary or advisable for the administration of this Plan,
(iv) to prescribe, amend, and rescind rules and regulations
relating to this Plan, including rules with respect to the exercisability
and nonforfeitability of Awards upon the termination of employment of a
Grantee,
(v) to determine the terms and provisions and any restrictions
or conditions (including specifying such performance criteria as the
Committee deems appropriate, and imposing restrictions with respect to
stock acquired upon exercise of an option, which restrictions may continue<PAGE>
beyond the Grantee's termination of employment) of the written agreements
by which all Awards shall be evidenced ("Award Agreements") which need not
be identical and, with the consent of the Grantee, to modify any such Award
Agreement at any time,
(vi) to cancel, with the consent of the Grantee, outstanding
Awards and to grant new Awards in substitution therefor,
(vii) to authorize foreign Subsidiaries to adopt plans as
provided in Section 15,
(viii) to delegate its duties and responsibilities under this
Plan with respect to such foreign Subsidiary plans, except its duties and
responsibilities with respect to Section 16 Grantees, and (A) the acts of
such delegates shall be treated hereunder as acts of the Committee and (B)
such delegates shall report to the Committee regarding the delegated duties
and responsibilities,
(ix) to accelerate the exercisability of, and to accelerate or
waive any or all of the restrictions and conditions applicable to, any
Award, or any group of Awards for any reason,
(x) subject to Section 6(a)(ii), to extend the time during which
any Award or group of Awards may be exercised,
(xi) to make such adjustments or modifications to Awards to
Grantees working outside the United States as are necessary and advisable
to fulfill the purposes of this Plan,
(xii) to impose such additional conditions, restrictions, and
limitations upon the grant, exercise or retention of Awards as the
Committee may, before or concurrently with the grant thereof, deem
appropriate, including requiring simultaneous exercise of related
identified Awards, and limiting the percentage of Awards which may from
time to time be exercised by a Grantee, and
(xiii) to prescribe rules and regulations concerning the
transferability of any Awards granted on or after June 1, 1995.
The determination of the Committee on all matters relating to this
Plan or any Award Agreement shall be conclusive and final. No member of
the Committee shall be liable for any action or determination made in good
faith with respect to this Plan or any Award.
5. ELIGIBILITY
Awards may be granted to any full-time employee (including any officer) of
the Company or any of its domestic Subsidiaries, or any employee, officer
or director of any of the Company's foreign Subsidiaries. In selecting the
individuals to whom Awards may be granted, as well as in determining the
number of shares of Stock subject to, and the other terms and conditions
applicable to, each Award, the Committee shall take into consideration such
factors as it deems relevant in promoting the purposes of this Plan.
6. CONDITIONS TO GRANTS
(a) General conditions.
(i) The Grant Date of an Award shall be the date on which the
Committee grants the Award or such later date as specified in advance by
the Committee.
(ii) The term of each Award (subject to Section 6(c) with respect
to incentive stock options) shall be a period of not more than 15 years
from the Grant Date, and shall be subject to earlier termination as herein
provided.<PAGE>
(iii) A Grantee may, if otherwise eligible, be granted additional
Awards in any combination.
(b) Grant of options and option price. No later than the Grant Date
of any option, the Committee shall determine
<Page 32>
the Option Price of such option. The Option Price of an option shall not
be less than 100% of the Fair Market Value of the Stock on the Grant Date.
Such price shall be subject to adjustment as provided in Section 23. The
Award Agreement may provide that the option shall be exercisable for
restricted stock.
(c) Grant of incentive stock options. At the time of the grant of
any option, the Committee may designate that such option shall be made
subject to additional restrictions to permit it to qualify as an "incentive
stock option" under the requirements of Section 422 of the Code. Any
option designated as an incentive stock option:
(i) shall not be granted to a 10% Owner;
(ii) shall be for a period of not more than 10 years from the
Grant Date, and shall be subject to earlier termination as provided herein
or in the applicable Award Agreement;
(iii) shall not have an aggregate Fair Market Value (determined
for each incentive stock option at its Grant Date) of Stock with respect to
which incentive stock options are exercisable for the first time by such
Grantee during any calendar year (under this Plan and any other employee
stock option plan of the Grantee's employer or any parent or Subsidiary
thereof ("Other Plans")), determined in accordance with the provisions of
Section 422 of the Code, which exceeds $100,000 (the "$100,000 Limit");
(iv) shall, if the aggregate Fair Market Value of Stock
(determined on the Grant Date) with respect to all incentive stock options
previously granted under this Plan and any Other Plans ("Prior Grants") and
any incentive stock options under such grant (the "Current Grant") which
are exercisable for the first time during any calendar year would exceed
the $100,000 Limit, be exercisable as follows:
(A) the portion of the Current Grant exercisable for the
first time by the Grantee during any calendar year which would, when added
to any portions of any Prior Grants, be exercisable for the first time by
the Grantee during such calendar year with respect to Stock which would
have an aggregate Fair Market Value (determined as of the respective Grant
Date for such options) in excess of the $100,000 Limit shall,
notwithstanding the terms of the Current Grant, be exercisable for the
first time by the Grantee in the first subsequent calendar year or years in
which it could be exercisable for the first time by the Grantee when added
to all Prior Grants without exceeding the $100,000 Limit; and
(B) if, viewed as of the date of the Current Grant, any
portion of a Current Grant could not be exercised under the provisions of
the immediately preceding sentence during any calendar year commencing with
the calendar year in which it is first exercisable through and including
the last calendar year in which it may by its terms be exercised, such
portion of the Current Grant shall not be an incentive stock option, but
shall be exercisable as a separate option at such date or dates as are
provided in the Current Grant;
(v) shall be granted within 10 years from the earlier of the
date this Plan is adopted or the date this Plan is approved by the
stockholders of the Company;<PAGE>
(vi) shall require the Grantee to notify the Committee of any
disposition of any Stock issued pursuant to the exercise of the incentive
stock option under the circumstances described in Section 421(b) of the
Code (relating to certain disqualifying dispositions), within 10 days of
such disposition; and
(vii) shall by its terms not be assignable or transferable other
than by will or the laws of descent and distribution and may be exercised,
during the Grantee's lifetime, only by the Grantee; provided, however, that
the Grantee may, to the extent provided in this Plan and in a manner
specified by the Committee, designate in writing a beneficiary to exercise
his incentive stock option after the Grantee's death.
Notwithstanding the foregoing and Section 4(c)(v), the Committee may,
without the consent of the Grantee, at any time before the exercise of an
option (whether or not an incentive stock option), take any action
necessary to prevent such option from being treated as an incentive stock
option.
(d) Grant of Shares of Restricted Stock.
(i) The Committee may, in its discretion grant shares of
restricted stock to any individual eligible under Section 5 to receive
Awards.
(ii) The Committee shall, in its discretion, determine the
amount, if any, that a Grantee shall pay for shares of restricted stock,
subject to the following sentence. Except with respect to shares of
restricted stock that are treasury shares, for which no payment need be
required, the
<Page 33>
Committee shall require the Grantee to pay at least the Minimum
Consideration for each share of restricted stock granted to such Grantee.
Such payment shall be made in full by the Grantee before the delivery of
the shares and in any event no later than 10 days after the Grant Date for
such shares. In the discretion of the Committee and to the extent
permitted by law, payment may also be made in accordance with Section 10.
(iii) The Committee may, but need not, provide that all or any
portion of a Grantee's Award of restricted stock, or restricted stock
acquired upon exercise of an option shall be forfeited:
(A) except as otherwise specified in the Award Agreement,
upon the Grantee's termination of employment for reasons other than death,
disability or any other reason specified in the Award Agreement within a
specified time period after the Grant Date, or
(B) if the Company or the Grantee does not achieve
specified performance goals (if any) within a specified time period after
the Grant Date and before the Grantee's termination of employment, or
(C) upon failure to satisfy such other restrictions as the
Committee may specify in the Award Agreement; provided that subject to
Sections 4(c)(ix) and 14, in no case shall such Award become nonforfeitable
before the first anniversary of the Grant Date.
(iv) If a share of restricted stock is forfeited, then (A) if the
Grantee was required to pay for such share or acquired such restricted
stock upon the exercise of an option, the Grantee shall be deemed to have
resold such share of restricted stock to the Company at the lesser of
(1) the amount paid or, if the restricted stock was acquired on exercise of
an option, the Option Price paid by the Grantee for such share of<PAGE>
restricted stock, or (2) the Fair Market Value of a share of Stock on the
date of such forfeiture; (B) the Company shall pay to the Grantee the
amount determined under clause (A) of this sentence as soon as is
administratively practical; and such share of restricted stock shall cease
to be outstanding, and shall no longer confer on the Grantee thereof any
rights as a stockholder of the Company, from and after the later of the
date the event causing the forfeiture occurred or the date of the Company's
tender of the payment specified in clause (B) of this sentence, whether or
not such tender is accepted by the Grantee.
(v) The Committee may provide that any share of restricted stock
shall be held (together with a stock power executed in blank by the
Grantee) in escrow by the Secretary of the Company until such shares become
nonforfeitable or are forfeited. Any share of restricted stock shall bear
an appropriate legend specifying that such share is non-transferable and
subject to the restrictions set forth in this Plan and the Award Agreement.
If any shares of restricted stock become nonforfeitable, the Company shall
cause certificates for such shares to be issued or reissued without such
legend.
(e) Grant of stock appreciation rights. When granted, stock
appreciation rights may, but need not, be identified with shares of Stock
subject to a specific option, specific shares of restricted stock, or
specific performance units of the Grantee (including any option, shares of
restricted stock, or performance units granted on or before the Grant Date
of the stock appreciation rights) in a number equal to or different from
the number of stock appreciation rights so granted. If stock appreciation
rights are identified with shares of Stock subject to an option, with
shares of restricted stock, or with performance units, then, unless
otherwise provided in the applicable Award Agreement, the Grantee's
associated stock appreciation rights shall terminate upon (i) the
expiration, termination, forfeiture or cancellation of such option, shares
of restricted stock, or performance units, (ii) the exercise of such option
or performance units, or (iii) the date such shares of restricted stock
become nonforfeitable.
(f) Grant of performance units.
(i) Before the grant of any performance unit, the Committee
shall:
(A) determine performance goals applicable to such grant,
(B) designate a period, of not less than one year nor more
than seven years, for the measurement of the extent to which performance
goals are attained, which period may begin prior to the Grant Date (the
"Measuring Period"), and
(C) assign a "Performance Percentage" to each level of
attainment of performance goals during the Measuring Period, with the
percentage applicable to minimum attainment being zero percent (0%) and the
percentage applicable to maximum attainment to be determined by the
Committee from time to time.
<Page 34>
(ii) In establishing performance goals, the Committee may
consider any performance factor or factors it deems appropriate, including
net income, growth in net income, earnings per share, growth of earnings
per share, return on equity or return on capital, remaining employed for a
specified period, or any other factor. The Committee may, at any time, in
its discretion, modify performance goals in order to facilitate their
attainment for any reason, including recognition of unusual or nonrecurring
events affecting the Company or a Subsidiary or changes in applicable laws,
regulations or accounting principles. If a Grantee is promoted, demoted or<PAGE>
transferred to a different business unit of the Company during a Measuring
Period, then, to the extent the Committee determines the performance goals
or Measuring Period are no longer appropriate, (A) the Committee may
adjust, change or eliminate the performance goals or the applicable
Measuring Period as it deems appropriate in order to make them appropriate
and comparable to the initial performance goals or Measuring Period; or (B)
make a cash payment to the Grantee in an amount determined in accordance
with the method described in Section 14(b)(iii), substituting the effective
date of such promotion, demotion or transfer for the termination of
employment referred to in Section 14(b)(iii).
(iii) When granted, performance units may, but need not, be
identified with shares of Stock subject to a specific option, specific
shares of restricted stock, or specific stock appreciation rights of the
Grantee granted under this Plan in a number equal to or different from the
number of the performance units so granted. If performance units are
identified with shares of Stock subject to an option, shares of restricted
stock, or stock appreciation rights, then, unless otherwise provided in the
applicable Award Agreement, the Grantee's associated performance units
shall terminate upon (A) the expiration, termination, forfeiture or
cancellation of such option, shares of restricted stock, or stock
appreciation rights, (B) the exercise of such option or stock appreciation
rights, or (C) the date such shares of restricted stock become
nonforfeitable.
(g) Grant of stock bonuses. The Committee may, in its discretion,
grant shares of Stock to any individual eligible under Section 5 to receive
Awards, other than executive officers of the Company.
7. GRANTEE'S AGREEMENT TO SERVE
Each Grantee who is granted an Award shall, by executing such Grantee's
Award Agreement, agree that such Grantee will remain in the employ of the
Company or any of its Subsidiaries for at least one year after the Grant
Date. No obligation of the Company or any of its Subsidiaries as to the
length of any Grantee's employment shall be implied by the terms of this
Plan, any grant of an Award hereunder or any Award Agreement. The Company
and its Subsidiaries reserve the same rights to terminate employment of any
Grantee as existed before the Effective Date.
8. NON-TRANSFERABILITY
Each Award (other than restricted stock) granted hereunder shall not be
assignable or transferable other than by will or the laws of descent and
distribution; provided, however, that a Grantee may, in a manner specified
by the Committee and to the extent provided in this Plan: (a) designate in
writing a beneficiary to exercise his Award after the Grantee's death; (b)
transfer an option (other than an incentive stock option), stock
appreciation right or performance unit to a revocable inter vivos trust as
to which the Grantee is both the settlor and the trustee; and (c) if the
Award Agreement expressly permits, transfer an Award (other than restricted
stock or an incentive stock option) for no consideration to any of the
following permissible transferees (each a "Permissible Transferee"): (w)
any member of the Immediate Family of the Grantee to whom such Award was
granted, (x) any trust solely for the benefit of members of the Grantee's
Immediate Family, (y) any partnership whose only partners are members of
the Grantee's Immediate Family or (z) Ronald McDonald Children's Charities
or any Ronald McDonald House; and further provided that (i) the transferee
shall remain subject to all of the terms and conditions applicable to such
Award prior to such transfer; and (ii) any such transfer shall be subject
to and in accordance with the rules and regulations prescribed by the
Committee in accordance with Section 4(c)(xiii). For purposes of this
Section 8, "Immediate Family" means, with respect to a particular Grantee,
such Grantee's spouse, children and grandchildren.<PAGE>
Notwithstanding the foregoing, each Award (other than restricted stock)
granted hereunder to a Section 16 Grantee shall not be assignable or
transferable other than by will or the laws of descent and distribution
unless the Board (or such committee) has determined that such restrictions
are not then required for grants under this Plan
<Page 35>
to satisfy the requirements for the exemption provided by Rule 16b-3 under
the Exchange Act (in the form then applicable to the Company), in which
event the restrictions set forth in clause (c) of the preceding paragraph
shall apply to any such transfer. Notwithstanding the foregoing, a Section
16 Grantee may, in a manner specified by the Committee and to the extent
provided by this Plan, designate a beneficiary to exercise an Award after
the Grantee's death.
Each share of restricted stock shall be non-transferable until such share
becomes nonforfeitable.
9. EXERCISE
(a) Exercise of options. Subject to Sections 4(c)(ix) and 14 and
such terms and conditions as the Committee may impose, each option shall be
exercisable in one or more installments commencing not earlier than the
first anniversary of the Grant Date of such option.
Each option shall be exercised by delivery to the Company of written
notice of intent to purchase a specific number of shares of Stock subject
to the option. The Option Price of any shares of Stock or shares of
restricted stock as to which an option shall be exercised shall be paid in
full at the time of the exercise. Payment may, at the election of the
Grantee, be made in any one or any combination of the following:
(i) cash,
(ii) Stock held by the Grantee for at least 6 months prior to
exercise of the option, valued at its Fair Market Value on the date of
exercise,
(iii) with the approval of the Committee, shares of restricted
stock held by the Grantee for at least 6 months prior to exercise of the
option, each valued at the Fair Market Value of a share of Stock on the
date of exercise, or
(iv) through simultaneous sale through a broker of shares
acquired on exercise, as permitted under Regulation T of the Federal
Reserve Board.
In the discretion of the Committee and to the extent permitted by law,
payment may also be made in accordance with Section 10.
If restricted stock ("Tendered Restricted Stock") is used to pay the
Option Price for Stock subject to an option, then the Committee may, but
need not, specify that (i) all the shares of Stock acquired on exercise of
the option shall be subject to the same restrictions as the Tendered
Restricted Stock, determined as of the date of exercise of the option, or
(ii) a number of shares of Stock acquired on exercise of the option equal
to the number of shares of Tendered Restricted Stock shall, unless the
Committee provides otherwise, be subject to the same restrictions as the
Tendered Restricted Stock, determined as of the date of exercise of the
option.
(b) Exercise of stock appreciation rights. Subject to Sections
4(c)(ix) and 14 and such terms and conditions as the Committee may impose,
each stock appreciation right shall be exercisable not earlier than the<PAGE>
first anniversary of the Grant Date of such stock appreciation right, to
the extent the option with which it is identified, if any, may be exercised
to the extent the restricted stock with which it is identified, if any, is
nonforfeitable, or to the extent the performance unit with which it is
identified, if any, may be exercised unless otherwise provided by the
Committee. Stock appreciation rights shall be exercised by delivery to the
Company of written notice of intent to exercise a specific number of stock
appreciation rights. Unless otherwise provided in the applicable Award
Agreement, the exercise of stock appreciation rights which are identified
with shares of Stock subject to an option, shares of restricted stock or
performance units shall result in the cancellation or forfeiture of such
option, shares of restricted stock or performance units, as the case may
be, to the extent of such exercise.
The benefit for each stock appreciation right exercised shall be equal
to:
(i) the Fair Market Value of a share of Stock on the date of
such exercise, reduced by
(ii) an amount equal to:
(A) for any stock appreciation right identified with shares
of Stock subject to an option, the Option Price of such option, unless the
Committee in the grant of the stock appreciation right specified a higher
amount or
(B) for any other stock appreciation right, the Fair Market
Value of a share of Stock on the Grant Date of such stock appreciation
right, unless the Committee in the grant of the stock appreciation right
specified a higher amount; provided that the Committee, in its discretion,
may provide that the benefit for any stock appreciation right shall not
exceed such percentage of the Fair Market Value of a share of Stock on such
Grant Date as the Committee shall specify. The benefit upon the exercise
of a stock appreciation right shall be payable in cash, except that the
Committee, may, in its discretion, provide in the
<Page 36>
Award Agreement that benefits, with respect to any particular exercise, may
be paid wholly or partly in Stock.
(c) Exercise of performance units.
(i) Subject to Section 14 and such terms and conditions as the
Committee may impose, if, with respect to any performance unit, the minimum
performance goals have been achieved during the applicable Measuring
Period, then such performance unit shall be exercisable commencing on the
later of (A) the first anniversary of the Grant Date or (B) the first day
after the end of the applicable Measuring Period. Performance units shall
be exercised by delivery to the Company of written notice of intent to
exercise a specific number of performance units; provided, however, that
performance units not identified with shares of Stock subject to an option,
shares of restricted stock or stock appreciation rights shall be deemed
exercised on the date on which they first become exercisable. Unless
otherwise provided in the applicable Award Agreement, the exercise of
performance units which are identified with shares of Stock subject to an
option, shares of restricted stock or stock appreciation rights shall
result in the cancellation or forfeiture of such shares of Stock subject to
option, shares of restricted stock or stock appreciation rights as the case
may be, to the extent of such exercise.
(ii) The benefit for each performance unit exercised shall be an
amount equal to the product of:<PAGE>
(A) the Unit Value (as defined below) multiplied by
(B) the Performance Percentage attained during the
Measuring Period for such performance unit.
(iii) The Unit Value shall be, as specified by the Committee,
(A) a dollar amount,
(B) an amount equal to the Fair Market Value of a share of
Stock on the Grant Date,
(C) an amount equal to the Fair Market Value of a share of
Stock on the exercise date of the performance unit, including, if so
provided in the Award Agreement, an amount ("Dividend Equivalent Amount")
equal to the value that would result if dividends paid on a share of Stock
on or after the Grant Date and on or before the exercise date were invested
in shares of Stock as of each respective dividend payment date, or
(D) an amount equal to the Fair Market Value of a share of
Stock on the exercise date of the performance unit (plus, if so specified
in the Award Agreement a Dividend Equivalent Amount), reduced by the Fair
Market Value of a share of Stock on the Grant Date of the performance unit.
(iv) The benefit upon the exercise of a performance unit shall be
payable as soon as is administratively practicable after the later of
(A) the date the Grantee exercises or is deemed to exercise such
performance unit, or (B) the date (or dates in the event of installment
payments) as provided in the applicable Award Agreement. Such benefit
shall be payable in cash, except that the Committee, may, in its
discretion, provide in the Award Agreement that benefits, with respect to
any particular exercise, may be paid wholly or partly in Stock. In the
event the Award Agreement provides that the benefit may be paid wholly in
Stock unless the Committee, in its discretion, specifies at the time of
exercise that the benefit shall be paid partly or wholly in cash, the
number of shares of Stock payable in lieu of cash shall be determined by
valuing the Stock at its Fair Market Value on the date such benefit is to
be paid.
(d) Special rules for Section 16 grantees. No stock appreciation
right, option or performance unit (if the benefit payable with respect to
such performance unit is to be determined by reference to the Fair Market
Value of the Stock on the date the performance unit is exercised) shall be
exercisable by a Section 16 Grantee during the first six months after its
Grant Date, except as exempted from Section 16 of the 1934 Act under
Rule 16a-2(d) under the 1934 Act.
10. LOANS AND GUARANTEES
The Committee may, in its discretion:
(a) allow a Grantee to defer payment to the Company of all or any
portion of (i) the Option Price of an option, (ii) the purchase price of a
share of restricted stock, or (iii) any taxes associated with a benefit
hereunder which is not a cash benefit at the time such benefit is so
taxable, or
(b) cause the Company to guarantee a loan from a third party to the
Grantee, in an amount equal to all or any portion of such Option Price,
purchase price, or any related taxes.
Any such payment deferral or guarantee by the Company pursuant to this
Section 10 shall be on such terms and conditions as the Committee may
determine; provided that the interest rate applicable to any such payment
deferral shall be not more favorable to the Grantee<PAGE>
<Page 37>
than the terms applicable to funds borrowed by the Company.
Notwithstanding the foregoing, a Grantee shall not be entitled to defer the
payment of such Option Price, purchase price or any related taxes unless
the Grantee (i) enters into a binding obligation to pay the deferred amount
and (ii) except with respect to treasury shares, pays upon exercise of an
option or grant of shares of restricted stock, as the case may be, an
amount equal to or greater than the Minimum Consideration thereof. If the
Committee has permitted a payment deferral or caused the Company to
guarantee a loan pursuant to this Section 10, then the Committee may, in
its discretion, require the immediate payment of such deferred amount or
the immediate release of such guarantee upon the Grantee's termination of
employment or if the Grantee sells or otherwise transfers the Grantee's
shares of Stock purchased pursuant to such deferral or guarantee.
11. NOTIFICATION UNDER SECTION 83(b)
The Committee may, on the Grant Date or any later date, prohibit a Grantee
from making the election described below. If the Committee has not
prohibited such Grantee from making such election, and the Grantee shall,
in connection with the exercise of any option, or the grant of any share of
restricted stock, make the election permitted under Section 83(b) of the
Code (i.e., an election to include in such Grantee's gross income in the
year of transfer the amounts specified in Section 83(b) of the Code), such
Grantee shall notify the Company of such election within 10 days of filing
notice of the election with the Internal Revenue Service, in addition to
any filing and notification required pursuant to regulations issued under
the authority of Section 83(b) of the Code.
12. MANDATORY WITHHOLDING TAXES
(a) Whenever under this Plan, cash or shares of Stock are to be
delivered upon exercise or payment of an Award or upon a share of
restricted stock becoming nonforfeitable, or any other event with respect
to rights and benefits hereunder, the Company shall be entitled to require
as a condition of delivery (i) that the Grantee remit an amount sufficient
to satisfy all federal, state, and local withholding tax requirements
related thereto, (ii) the withholding of such sums from compensation
otherwise due to the Grantee or from any shares of Stock due to the Grantee
under this Plan or (iii) any combination of the foregoing provided,
however, that no amount shall be withheld from any cash payment or shares
of Stock relating to an Award which was transferred by the Grantee in
accordance with this Plan.
(b) If any disqualifying disposition described in Section 6(c)(vi) is
made with respect to shares of Stock acquired under an incentive stock
option granted pursuant to this Plan or any election described in
Section 11 is made, then the person making such disqualifying disposition
or election shall remit to the Company an amount sufficient to satisfy all
federal, state, and local withholding taxes thereby incurred; provided
that, in lieu of or in addition to the foregoing, the Company shall have
the right to withhold such sums from compensation otherwise due to the
Grantee or from any shares of Stock due to the Grantee under this Plan.
13. ELECTIVE SHARE WITHHOLDING
(a) Subject to Section 13(b), a Grantee may elect the withholding
("Share Withholding") by the Company of a portion of the shares of Stock
otherwise deliverable to such Grantee upon the exercise or payment of an
Award or upon a share of restricted stock becoming nonforfeitable (each a
"Taxable Event") having a Fair Market Value equal to:
(i) the minimum amount necessary to satisfy required federal,
state, or local withholding tax liability attributable to the Taxable Event<PAGE>
(in 1995, the minimum amount required by federal tax withholding rules is
28% of the Grantee's taxable income); or
(ii) with the Committee's prior approval, a greater amount, not
to exceed the estimated total amount of such Grantee's tax liability with
respect to the Taxable Event.
(b) Each Share Withholding election by a Grantee shall be subject to
the following restrictions:
(i) any Grantee's election shall be subject to the Committee's
right to revoke such election of Share Withholding by such Grantee at any
time before the Grantee's election if the Committee has reserved the right
to do so in the Award Agreement;
(ii) if the Grantee is a Section 16 Grantee, such Grantee's
election shall be subject to the disapproval of the Committee at any time,
whether or not the Committee has reserved the right to do so;
(iii) the Grantee's election must be made before the date (the
"Tax Date") on which the amount of tax to be withheld is determined;
<Page 38>
(iv) the Grantee's election shall be irrevocable;
(v) a Section 16 Grantee may not elect Share Withholding within
six months after the grant of the related option or stock appreciation
rights (except if the Grantee dies or incurs a Disability before the end of
the six-month period);
(vi) except to the extent such condition may be waived by the
General Counsel of the Company a Section 16 Grantee must elect Share
Withholding either six months before the Tax Date or during the ten
business day period beginning on the third business day after the release
of the Company's quarterly or annual summary statement of sales and
earnings; and
(vii) provided, however, that no election to have shares of Stock
withheld from any Award shall be effective with respect to an Award which
was transferred by the Grantee in accordance with this Plan.
14. TERMINATION OF EMPLOYMENT
(a) For cause. If a Grantee has a termination of employment for
Cause,
(i) the Grantee's shares of restricted stock that are
forfeitable shall thereupon be forfeited, subject to the provisions of
Section 6(d)(iv) regarding repayment of certain amounts to the Grantee; and
(ii) any unexercised option, stock appreciation right, or
performance unit shall thereupon terminate.
(b) On account of death or disability. If a Grantee has a
termination of employment on account of the Grantee's death or Disability,
then, except as otherwise provided in the Award Agreement,
(i) the Grantee's shares of restricted stock that were
forfeitable shall thereupon become nonforfeitable;
(ii) any unexercised option or stock appreciation right, whether
or not exercisable on the date of such termination of employment may be
exercised, in whole or in part, at any time within three years after such
termination of employment by the Grantee, or after the Grantee's death, by<PAGE>
(A) his personal representative or by the person to whom the option or
stock appreciation right is transferred by will or the applicable laws of
descent and distribution, (B) the Grantee's beneficiary designated in
accordance with Sections 6(c)(vii) or 8, (C) the then-acting trustee of the
trust described in clause (b) in the first paragraph of Section 8 (the
"Trust") (but, in the case of a Section 16 Grantee, only if the conditions
set forth in the second paragraph of Section 8 (the "Conditions") have been
satisfied); or (D) a Permissible Transferee of an Award assigned or
transferred in accordance with Section 8; and
(iii) any unexercised performance unit may be exercised in whole
or in part, at any time within three years after such termination of
employment by the Grantee or, after the Grantee's death, by (A) his
personal representative or by the person to whom the performance unit is
transferred by will or the applicable laws of descent and distribution, (B)
the Grantee's beneficiary designated in accordance with Section 8, (C) the
Trust (but, in the case of a Section 16 Grantee, only if the Conditions
have been satisfied), or (D) a Permissible Transferee of an Award assigned
or transferred in accordance with Section 8; provided that the benefit
payable with respect to any performance unit with respect to which the
Measuring Period has not ended as of the date of such termination of
employment shall be equal to the product of the Unit Value multiplied
successively by each of the following:
(1) a fraction, the numerator of which is the number of
months (including as a whole month any partial month) that have elapsed
since the beginning of such Measuring Period until the date of such
termination of employment and the denominator of which is the number of
months (including as a whole month any partial month) in the Measuring
Period (the "Time Proration Factor"); and
(2) a percentage equal to the greater of the target
percentage, if any, specified in the applicable Award Agreement, or the
maximum percentage, if any, that would be earned under the terms of the
applicable Award Agreement assuming that the rate at which the performance
goals have been achieved as of the date of such termination of employment
would continue until the end of the Measuring Period (the "Performance
Percentage Factor").
(c) On account of retirement. If a Grantee has a termination of
employment on account of Retirement, any unexercised option or stock
appreciation right (other than a stock appreciation right identified with a
share of restricted stock or a performance unit) which is then exercisable
or which would become exercisable within three years of such Retirement if
the Grantee remained employed by the Company or a Subsidiary throughout
<Page 39>
such three-year period, may be exercised, in whole or in part, by the
Grantee or Permissible Transferee of an Award assigned or transferred in
accordance with Section 8, at any time within three years after the
Grantee's Retirement. The nonforfeitability and exercisability of the
Grantee's restricted stock and performance units (and any stock
appreciation rights identified therewith) shall be determined under Section
14(e).
(d) On account of termination of employment after age 60. If a
Grantee has a termination of employment after attaining age 60, other than
a termination of employment on account of death, Disability or Retirement
and other than to become an owner-operator of a McDonald's restaurant, any
unexercised option or stock appreciation right (other than a stock
appreciation right identified with a share of restricted stock or a
performance unit) to the extent exercisable on the date of such termination
of employment, may be exercised, in whole or in part by the Grantee or
Permissible Transferee of an Award assigned or transferred in accordance<PAGE>
with Section 8, at any time within one year after the Grantee's termination
of employment. The nonforfeitability and exercisability of the Grantee's
restricted stock and performance units (and any stock appreciation rights
identified therewith) shall be determined under Section 14(e).
(e) Any other reason. If a Grantee has a termination of employment
for a reason other than for Cause, death of the Grantee, the Grantee's
Disability, and, with respect to options and stock appreciation rights
(other than stock appreciation rights identified with a share of restricted
stock or a performance unit) the termination of employment is for reasons
other than the Grantee's Retirement or the Grantee's termination of
employment after attaining age 60,
(i) the Grantee's shares of restricted stock (and any stock
appreciation rights identified therewith), to the extent forfeitable on the
date of the Grantee's termination of employment, shall be forfeited on such
date;
(ii) any unexercised option or stock appreciation right (other
than a stock appreciation right identified with a share of restricted stock
or performance unit) to the extent exercisable on the date of the Grantee's
termination of employment, may be exercised in whole or in part by the
Grantee or Permissible Transferee of an Award assigned or transferred in
accordance with Section 8, not later than the 30th day following the
Grantee's termination of employment; provided that if such 30th day is not
a business day, such option or stock appreciation right may be exercised
not later than the first business day following such 30th day; and
(iii) the Grantee's performance units (and any stock appreciation
rights identified therewith) shall become non-forfeitable and may be
exercised in whole or in part by the Grantee or Permissible Transferee of
an Award assigned or transferred in accordance with Section 8, but only if
and to the extent determined by the Committee.
(f) Extension of term. In the event of termination of employment
other than for Cause, the term of any Award which by its terms would
otherwise expire after the Grantee's termination of employment but prior to
the end of the period following the Grantee's termination of employment
described in Sections (b), (c), (d) and (e) above for exercise of Awards
shall be extended so as to permit any unexercised portion thereof to be
exercised at any time by the Grantee or Permissible Transferee of an Award
assigned or transferred in accordance with Section 8 within such period;
provided, however, that in no event may the term of any Award expire more
than 15 years after the Grant Date of such Award.
15. EQUITY INCENTIVE PLANS OF FOREIGN SUBSIDIARIES
The Committee may authorize any foreign Subsidiary to adopt a plan for
granting Awards ("Foreign Equity Incentive Plan"). All awards granted
under such Foreign Equity Incentive Plans shall be treated as grants under
this Plan. Such Foreign Equity Incentive Plans shall have such terms and
provisions as the Committee permits not inconsistent with the provisions of
this Plan and which may be more restrictive than those contained in this
Plan. Awards granted under such Foreign Equity Incentive Plans shall be
governed by the terms of this Plan except to the extent that the provisions
of the Foreign Equity Incentive Plans are more restrictive than the terms
of this Plan, in which case such terms of the Foreign Equity Incentive
Plans shall control.
16. SUBSTITUTED AWARDS
If the Committee cancels any Award (granted under this Plan, or any plan of
any entity acquired by the Company or any of its Subsidiaries), and a new
Award is substituted therefor, then the Committee may, in its discretion,
determine<PAGE>
<Page 40>
the terms and conditions of such new Award; provided that (a) the Option
Price of any new option shall not be less than 100% of the Fair Market
Value of a share of Stock on the date of grant of the new Award; (b) no
award shall be canceled without the consent of the Grantee if the terms and
conditions of the new Award to be substituted are not at least as favorable
as the terms and conditions of the award to be canceled (and the Grant Date
of the new Award shall be the date on which such new Award is granted);
(c) no Section 16 Grantee may exercise a substituted stock appreciation
right or a substituted option (or substituted performance unit) identified
with a stock appreciation right within six months after the Grant Date
(calculated without reference to this Section 16) of such substituted
option, unless the Company shall have received an opinion of counsel for
the Company or "no action" or interpretive letter from the staff of the SEC
to the effect that such limitation is not necessary in order to avoid
liability under Section 16(b) of the 1934 Act; and (d) such cancelled Award
shall be counted for purposes of Section 3(b).
17. SECURITIES LAW MATTERS
(a) If the Committee deems necessary to comply with the Securities
Act of 1933, the Committee may require a written investment intent
representation by the Grantee and may require that a restrictive legend be
affixed to certificates for shares of Stock.
(b) If based upon the opinion of counsel for the Company, the
Committee determines that the exercise or nonforfeitability of, or delivery
of benefits pursuant to, any Award would violate any applicable provision
of (i) federal or state securities law or (ii) the listing requirements of
any national securities exchange on which are listed any of the Company's
equity securities, then the Committee may postpone any such exercise,
nonforfeitability or delivery, as the case may be, but the Company shall
use its best efforts to cause such exercise, nonforfeitability or delivery
to comply with all such provisions at the earliest practicable date.
18. FUNDING
Benefits payable under this Plan to any person shall be paid directly by
the Company. The Company shall not be required to fund, or otherwise
segregate assets to be used for payment of, benefits under this Plan.
19. NO EMPLOYMENT RIGHTS
Neither the establishment of this Plan, nor the granting of any Award shall
be construed to (a) give any Grantee the right to remain employed by the
Company or any of its Subsidiaries or to any benefits not specifically
provided by this Plan or (b) in any manner modify the right of the Company
or any of its Subsidiaries to modify, amend, or terminate any of its
employee benefit plans.
20. RIGHTS AS A STOCKHOLDER
A Grantee shall not, by reason of any Award (other than restricted stock)
have any right as a stockholder of the Company with respect to the shares
of Stock which may be deliverable upon exercise or payment of such Award
until such shares have been delivered to him. Shares of restricted stock
held by a Grantee or held in escrow by the Secretary of the Company shall
confer on the Grantee all rights of a stockholder of the Company, except as
otherwise provided in this Plan. The Committee, in its discretion, at the
time of grant of restricted stock, may permit or require the payment of
cash dividends thereon to be deferred and, if the Committee so determines,
reinvested in additional restricted stock to the extent shares are
available under Section 3 or otherwise reinvested. Stock dividends and
deferred cash dividends issued with respect to restricted stock shall be<PAGE>
treated as additional shares of restricted stock that are subject to the
same restrictions and other terms as apply to the shares with respect to
which such dividends are issued. The Committee may, in its discretion,
provide for crediting to and payment of interest on deferred cash
dividends.
21. NATURE OF PAYMENTS
Any and all grants, payments of cash, or deliveries of shares of Stock
hereunder shall constitute special incentive payments to the Grantee and
shall not be taken into account in computing the amount of salary or
compensation of the Grantee for the purposes of determining any pension,
retirement, death or other benefits under (a) any pension, retirement,
profit-sharing, bonus, life insurance or other employee benefit plan of the
Company or any of its Subsidiaries or (b) any agreement between the Company
or any Subsidiary, on the one hand, and the Grantee, on the other hand,
except as such plan or agreement shall otherwise expressly provide.
<Page 41>
22. NON-UNIFORM DETERMINATIONS
Neither the Committee's nor the Board's determinations under this Plan need
be uniform and may be made by the Committee or the Board selectively among
persons who receive, or are eligible to receive, Awards (whether or not
such persons are similarly situated). Without limiting the generality of
the foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, to enter into non-uniform and
selective Award Agreements as to (a) the identity of the Grantees, (b) the
terms and provisions of Awards, and (c) the treatment, under Section 14, of
terminations of employment. Notwithstanding the foregoing, the Committee's
interpretation of Plan provisions shall be uniform as to similarly situated
Grantees.
23. ADJUSTMENTS
The Committee shall make equitable adjustment of:
(a) the aggregate numbers of shares of Stock, shares of restricted
stock, and bonus stock available under Sections 3(a) and 3(c),
(b) the number of shares of Stock, shares of restricted stock, stock
appreciation rights or performance units covered by an Award,
(c) the Option Price,
(d) the Fair Market Value of Stock to be used to determine the amount
of the benefit payable upon exercise of stock appreciation rights or
performance units, and
(e) the maximum number of shares of Stock for which Awards may be
granted to any Grantee in any three year period under Section 3(b),
to reflect a stock dividend, stock split, reverse stock split, share
combination, recapitalization, merger, consolidation, acquisition of
property or shares, separation, asset spin-off, reorganization, stock
rights offering, liquidation or similar event, of or by the Company.
Notwithstanding the foregoing, upon the approval by the stockholders of the
Company of a plan of liquidation for the Company, any unexercised options,
stock appreciation rights and performance units theretofore granted shall
thereupon become exercisable, and any shares of restricted stock that have
not become nonforfeitable shall become nonforfeitable.
24. AMENDMENT OF THIS PLAN<PAGE>
The Board may from time to time in its discretion amend or modify this Plan
without the approval of the stockholders of the Company, except as such
stockholder approval may be required (a) to permit the grant of Awards
under, and transactions in Stock pursuant to, this Plan to be exempt from
liability under Section 16(b) of the 1934 Act or (b) under the listing
requirements of any national securities exchange on which are listed any of
the Company's equity securities.
25. TERMINATION OF THIS PLAN
This Plan shall terminate on the tenth (10th) anniversary of the Effective
Date or at such earlier time as the Board may determine. Any termination,
whether in whole or in part, shall not affect any Award then outstanding
under this Plan.
26. NO ILLEGAL TRANSACTIONS
This Plan and all Awards granted pursuant to it are subject to all laws and
regulations of any governmental authority which may be applicable thereto;
and notwithstanding any provision of this Plan or any Award, Grantees shall
not be entitled to exercise Awards or receive the benefits thereof and the
Company shall not be obligated to deliver any Stock or pay any benefits to
a Grantee if such exercise, delivery, receipt or payment of benefits would
constitute a violation by the Grantee or the Company of any provision of
any such law or regulation.
27. CONTROLLING LAW
The law of the State of Illinois, except its law with respect to choice of
law, shall be controlling in all matters relating to this Plan.
28. SEVERABILITY
If all or any part of this Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall
not serve to invalidate any portion of this Plan not declared to be
unlawful or invalid. Any Section or part of a Section so declared to be
unlawful or invalid shall, if possible, be construed in a manner which will
give effect to the terms of such Section or part of a Section to the
fullest extent possible while remaining lawful and valid.
<Page 42>
GENERAL INFORMATION ABOUT THE ANNUAL MEETING
- ----------------------------------------------------------------------
PROXY SOLICITATION
This Proxy Statement and the accompanying proxy and voting instruction card
are being furnished to shareholders of the Company beginning on or about
April 12, 1995 in connection with the solicitation of proxies by the Board
of Directors to be used in voting at the Annual Meeting of Shareholders on
May 26, 1995, and any adjournment thereof.
The Company will bear the cost of soliciting proxies, including the charges
and expenses of brokerage firms and others for forwarding solicitation
materials to beneficial owners. The Company has retained D.F. King & Co.,
Inc. to solicit proxies on behalf of the Board at a fee estimated to be
$16,000 plus reasonable out-of-pocket expenses. Proxies may also be
solicited by certain employees and Directors of the Company by mail, by
telephone, or personally, without compensation apart from their normal
salaries.<PAGE>
RECORD DATE AND VOTING AT THE ANNUAL MEETING
Shareholders of record owning Common or Preferred Stock (except Series E
Preferred Stock) at the close of business on March 27, 1995, are entitled
to vote at the 1995 Annual Meeting. On that date there were 694,710,144
shares of Common Stock and 11,356,215 shares of Preferred Stock outstanding
and entitled to vote at the Annual Meeting. Each share of Common Stock and
each share of Preferred Stock (except Series E Preferred Stock) is entitled
to one vote upon each matter presented at the Annual Meeting. Proxies may
be revoked by voting in person at the Annual Meeting, by written notice to
the Company's Secretary, or by delivery of a later-dated proxy, in each
case prior to the closing of the polls for voting at the Annual Meeting. A
proxy in the accompanying form which is properly executed, returned and
not revoked will be voted in accordance with the instructions indicated. A
proxy voted by telephone and not revoked will be voted in accordance with
the shareholder's instructions. If no instructions are given, proxies
which are signed and returned or voted via telephone will be voted FOR the
slate of six Directors proposed by the Board, FOR the adoption of the
Option Plan and FOR the approval of the Restated Incentive Plan. The
enclosed proxy gives discretionary authority as to any matters not
specifically referred to therein. Management is not aware of any other
matters to be presented for action by shareholders before the Annual
Meeting. However, if any such matters properly come before the Annual
Meeting, it is understood that the designated proxy holders have
discretionary authority to vote thereon.
All votes cast by proxy or in person at the Annual Meeting will be
tabulated by First Chicago Trust Company of New York (First Chicago), which
has been appointed independent inspector of election for the 1995 Annual
Meeting and will determine whether or not a quorum is present. With respect
to the election of Directors, First Chicago will treat votes withheld as
shares that are present for purposes of determining a quorum. A plurality
is required to elect Directors, so the six persons receiving the greatest
number of votes will be elected. Withheld votes will not affect the outcome
of the election. With respect to the adoption of the Option Plan and the
approval of the Restated Incentive Plan, First Chicago will treat
abstentions as shares that are present and entitled to vote for purposes of
determining a quorum. Since a majority of the shares represented at the
meeting and entitled to vote is required for approval, abstentions will
have the effect of a vote against approval of these proposals. If a broker
indicates on a proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will be
considered as present for quorum purposes but not as shares entitled to
vote with respect to that matter. Accordingly, broker non-votes will have
no effect on such a matter.
This year, shareholders of record can vote their shares via a toll-free
telephone call in the U.S. and Canada or by mailing their signed proxy
card. The telephone voting procedure is designed to authenticate
shareholders' identities, to allow shareholders to vote their shares and to
confirm that their instructions have been properly recorded. McDonald's
has been advised by counsel that the procedures which have been put in
place are consistent with the
<Page 43>
requirements of applicable law. Specific instructions to be followed by
any shareholder of record interested in voting via telephone are set forth
on the enclosed proxy card.
A list of shareholders of record entitled to vote at the Annual Meeting
will be available for inspection by any shareholder for any purpose germane
to the meeting during ordinary business hours for a period of 10 days prior
to the meeting at the Company's office at McDonald's Plaza, Oak Brook IL
60521.<PAGE>
CONFIDENTIAL VOTING
It is the Company's policy to protect the confidentiality of shareholder
votes throughout the voting process. In this regard, the vote of any
shareholder will not be disclosed to the Company, its Directors, officers
or employees, except to meet legal requirements and to assert or defend
claims for or against the Company and except in those limited circumstances
where (i) a proxy solicitation is contested; (ii) a shareholder writes
comments on a proxy card; or (iii) a shareholder authorizes disclosure.
Both the tabulators and inspectors of election have been and will remain
independent of the Company.
Nothing in this policy prohibits shareholders from disclosing the nature of
their votes to the Company, its Directors, officers or employees, or
impairs voluntary communication between the Company and its shareholders,
nor does this policy prevent the Company from ascertaining which
shareholders have voted or from making efforts to encourage shareholders to
vote.
AUDITORS
The Board of Directors has appointed Ernst & Young LLP as independent
auditors to examine the consolidated financial statements of the Company
for the year ending December 31, 1995. Ernst & Young LLP audited such
statements for the year ended December 31, 1994, and a representative of
that firm will be present at the Annual Meeting and will have the
opportunity to make a statement, if the firm elects to do so, and to
respond to appropriate questions from shareholders.
<PAGE 44>
HOME OFFICE
McDonald's Corporation
McDonald's Plaza
Oak Brook IL 60521
1-708-575-3000
DEFINITIONS
As used in this Proxy Statement the following terms have the following
meanings:
COMMON STOCK means
McDonald's Corporation Common Stock
PREFERRED STOCK means
McDonald's Corporation Preferred Stock, including
Series B, C, D and E, as the case may be
SEC means
Securities and Exchange Commission
1975 OPTION PLAN means
McDonald's Corporation 1975 Stock Ownership Option Plan
INCENTIVE PLAN means
McDonald's Corporation 1992 Stock Ownership Incentive Plan
OPTION PLANS means
McDonald's Corporation Non-Employee Director Stock Option Plan<PAGE>
DEFERRED INCENTIVE PLAN means
McDonald's Corporation Deferred Incentive Plan
PROFIT SHARING PROGRAM means
McDonald's Corporation Profit Sharing Program
STOCK PLAN means
McDonald's Corporation Directors' Stock Plan
CODE means Internal Revenue Code of 1986, and the regulations promulgated
thereunder
FAIR MARKET VALUE means the closing price of the Common Stock on the New
York Stock Exchange composite tape as of any given date
The following trademarks used herein are owned by McDonald's Corporation:
McDonald's and the McDonald's Golden Arches logo
(copyright) 1995 McDonald's Corporation
McD5-2657
(Recycled Paper Graphic)
Printed on Recycled Paper with
10% post-consumer content
<PAGE>
APPENDIX
Photos of Directors and Nominated Directors appear in the Board of
Directors section on page 6 herein.
<PAGE>
[FRONT SIDE OF PROXY AND VOTING INSTRUCTION CARD
FOR NON-EMPLOYEE SHAREHOLDERS]
McDONALD'S CORPORATION
McDonald's Plaza
PROXY AND VOTING INSTRUCTION CARD Oak Brook, IL 60521
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF McDONALD'S
CORPORATION.
McDONALD'S 1995 ANNUAL MEETING OF SHAREHOLDERS WILL BE HELD AT THE LODGE ON
McDONALD'S OFFICE CAMPUS, KROC DRIVE AND RONALD LANE, OAK BROOK, ILLINOIS,
AT 10:00 A.M. (CENTRAL TIME) ON MAY 26, 1995. This Proxy and Voting
Instruction Card will cover the voting of all shares of Common and
Preferred Stock of McDonald's Corporation which you are entitled to vote or
to direct the voting of, including those in the Dividend Reinvestment Plan
and the System Stock Purchase Plan.
YOUR VOTE IS IMPORTANT. PLEASE CONSIDER THE ISSUES DISCUSSED IN THE PROXY
STATEMENT, SIGN, DATE, AND RETURN THIS CARD IN THE ENCLOSED ENVELOPE OR
CALL TOLL-FREE 1-800-652-8683 FROM THE U.S. AND CANADA TO CAST YOUR VOTE.
TO VOTE BY PHONE, PLEASE HAVE THIS CARD AND YOUR TAX IDENTIFICATION NUMBER
READILY AVAILABLE.
Detach Here
- -------------------------------------------------------------------------
9823
THE BOARD RECOMMENDS A VOTE "FOR" ALL NOMINEES<PAGE>
FOR DIRECTOR AND "FOR" PROPOSALS 2 AND 3.
The undersigned, revoking any proxy previously given, appoint(s) Michael R.
Quinlan and Shelby Yastrow, or either of them, as proxies with full power
of substitution to vote as directed all shares the undersigned is entitled
to vote at McDonald's Corporation's 1995 Annual Shareholders Meeting and
AUTHORIZE(S) EACH TO VOTE AT HIS DISCRETION ON ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE MEETING, or any adjournment thereof. IF THIS CARD
CONTAINS NO SPECIFIC VOTING INSTRUCTIONS, MY (OUR) SHARES WILL BE VOTED
"FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTOR AND "FOR" PROPOSALS 2
AND 3.
Check box to vote your shares
with the Board's recommendation. / /
If you do not check the box above, indicate your vote below.
BOARD NOMINEES: J.M. Greenberg, D.G. Lubin, A.J. McKenna, E.H. Rensi,
R.W. Stone and R.N. Thurston
FOR ALL NOMINEES WITHHOLD
EXCEPT AS NOTED AS TO ALL
ON LINE BELOW NOMINEES
1. Election of Directors / / / /
-----------------------------------------------
FOR AGAINST ABSTAIN
2. Non-Employee Director
Stock Option Plan / / / / / /
3. Amended and Restated
1992 Stock Ownership
Incentive Plan / / / / / /
PLEASE SIGN AS YOUR NAME(S) APPEAR(S) ABOVE AND RETURN THIS PROXY 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 by ballot, such vote will supersede this
proxy.
X
------------------------------
X Date
------------------------------ -------------, 1995
/ / COMMENTS: Check here and write comments on reverse side.
/ / Check here to waive confidential voting.
<PAGE>
[REVERSE SIDE OF PROXY AND VOTING INSTRUCTION CARD
FOR NON-EMPLOYEE SHAREHOLDERS]<PAGE>
COMMENTS
--------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
<PAGE>
[FRONT SIDE OF PROXY AND VOTING INSTRUCTION CARD
FOR EMPLOYEE SHAREHOLDERS]
McDONALD'S CORPORATION
McDonald's Plaza
PROXY AND VOTING INSTRUCTION CARD Oak Brook, IL 60521
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF McDONALD'S
CORPORATION.
McDONALD'S 1995 ANNUAL MEETING OF SHAREHOLDERS WILL BE HELD AT THE LODGE ON
McDONALD'S OFFICE CAMPUS, KROC DRIVE AND RONALD LANE, OAK BROOK, ILLINOIS,
AT 10:00 A.M. (CENTRAL TIME) ON MAY 26, 1995. This Proxy and Voting
Instruction Card will cover the voting of all shares of Common and
Preferred Stock of McDonald's Corporation which you are entitled to vote or
to direct the voting of, including those in the Dividend Reinvestment Plan
and the System Stock Purchase Plan and, unless you provide different voting
instructions on the reverse of this card, McDonald's employee benefit
plans.
YOUR VOTE IS IMPORTANT. PLEASE CONSIDER THE ISSUES DISCUSSED IN THE PROXY
STATEMENT, SIGN, DATE, AND RETURN THIS CARD IN THE ENCLOSED ENVELOPE OR
CALL TOLL-FREE 1-800-652-8683 FROM THE U.S. AND CANADA TO CAST YOUR VOTE.
TO VOTE BY PHONE, PLEASE HAVE THIS CARD AND YOUR TAX IDENTIFICATION NUMBER
READILY AVAILABLE.
Detach Here
- -------------------------------------------------------------------------
9823
THE BOARD RECOMMENDS A VOTE "FOR" ALL NOMINEES
FOR DIRECTOR AND "FOR" PROPOSALS 2 AND 3.
The undersigned, revoking any proxy previously given, appoint(s) Michael R.
Quinlan and Shelby Yastrow, or either of them, as proxies with full power
of substitution to vote as directed all shares the undersigned is entitled
to vote at McDonald's Corporation's 1995 Annual Shareholders Meeting and
AUTHORIZE(S) EACH TO VOTE AT HIS DISCRETION ON ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE MEETING, or any adjournment thereof. IF THIS CARD
CONTAINS NO SPECIFIC VOTING INSTRUCTIONS, MY (OUR) SHARES WILL BE VOTED
"FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTOR AND "FOR" PROPOSALS 2
AND 3.
EMPLOYEES: Please see message on reverse side
Check box to vote your shares
with the Board's recommendation. / /
If you do not check the box above, indicate your vote below.
BOARD NOMINEES: J.M. Greenberg, D.G. Lubin, A.J. McKenna, E.H. Rensi,
R.W. Stone and R.N. Thurston
FOR ALL NOMINEES WITHHOLD
EXCEPT AS NOTED AS TO ALL<PAGE>
ON LINE BELOW NOMINEES
1. Election of Directors / / / /
-----------------------------------------------
FOR AGAINST ABSTAIN
2. Non-Employee Director
Option Plan / / / / / /
3. Amended and Restated
1992 Stock Ownership
Incentive Plan / / / / / /
PLEASE SIGN AS YOUR NAME(S) APPEAR(S) ABOVE AND RETURN THIS PROXY 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 by ballot, such vote will supersede this
proxy.
X
------------------------------
X Date
------------------------------ -------------, 1995
/ / COMMENTS: Check here and write comments on reverse side.
/ / Check here to waive confidential voting.
<PAGE>
[REVERSE SIDE OF PROXY AND VOTING INSTRUCTION CARD
FOR EMPLOYEE SHAREHOLDERS]
INFORMATION FOR McDONALD'S EMPLOYEES ONLY:
Your vote on the front of this card directs the trustees of the Profit
Sharing Program, the Stock Sharing Plan and various Equalization Plans
(collectively referred to as the "Plans") to vote the shares credited to
your accounts under the Plans. When you vote these shares, you should
consider your own long-term best interests as a Plan participant.
In addition, you are also directing the trustees to vote shares held in the
Plans (except the Stock Sharing Plan) that have not been voted and 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 interests of other participants.
IF YOU WANT TO VOTE THE PLAN SHARES YOU OWN OR THE SHARES YOU ARE VOTING
FOR OTHER PLAN PARTICIPANTS DIFFERENTLY FROM THE WAY YOU VOTED ON THE FRONT
OF THIS CARD, PLEASE CHECK THE "COMMENT" BOX ON THE FRONT AND MARK YOUR
DIRECTION BELOW.
Your directions to vote shares held in the Plans will be kept confidential
by First Chicago Trust Company of New York, the independent inspectors of
election, even if you elect to waive confidential voting on the front of
this card.<PAGE>
- -------------------------------------------------------------------------
IF YOU WISH TO VOTE ALL SHARES IN THE SAME WAY, YOU DO NOT NEED TO COMPLETE
THE SECTION BELOW. SIMPLY FOLLOW THE VOTING INSTRUCTIONS ON THE FRONT OF
THIS CARD.
THE BOARD RECOMMENDS A VOTE "FOR" ALL NOMINEES FOR DIRECTOR AND "FOR"
PROPOSALS 2 AND 3.
PLAN SHARES NOT YET
PLAN SHARES OWNED CREDITED OR UNVOTED
----------------- -------------------
FOR ALL FOR ALL
NOMINEES WITHHOLD NOMINEES WITHHOLD
EXCEPT AS AS EXCEPT AS AS
NOTED ON TO ALL NOTED ON TO ALL
LINE BELOW NOMINEES LINE BELOW NOMINEES
1. Election
of Directors ----- ----- ----- -----
------------------- ------------------
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
2. Non-Employee
Director Stock
Option Plan ----- ----- ----- ----- ----- -----
3. Amended and Restated
1992 Stock Ownership
Incentive Plan ----- ----- ----- ----- ----- -----
COMMENTS
--------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
<PAGE>
[FRONT SIDE OF PROXY AND VOTING INSTRUCTION CARD
FOR STREET NAME SHAREHOLDERS]
McDONALD'S CORPORATION
McDonald's Plaza
PROXY AND VOTING INSTRUCTION CARD Oak Brook, IL 60521
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF McDONALD'S
CORPORATION.
McDONALD'S 1995 ANNUAL MEETING OF SHAREHOLDERS WILL BE HELD AT THE LODGE ON
McDONALD'S OFFICE CAMPUS, KROC DRIVE AND RONALD LANE, OAK BROOK, ILLINOIS,
AT 10:00 A.M. (CENTRAL TIME) ON MAY 26, 1995. The undersigned, revoking
any proxy previously given, appoint(s) Michael R. Quinlan and Shelby
Yastrow, or either of them, as proxies with full power of substitution to
vote as directed all shares the undersigned is entitled to vote at
McDonald's Corporation's 1995 Annual Shareholders Meeting and AUTHORIZE(S)
EACH TO VOTE AT HIS DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING, or any adjournment thereof. IF THIS CARD CONTAINS NO<PAGE>
SPECIFIC VOTING INSTRUCTIONS, MY (OUR) SHARES WILL BE VOTED "FOR" THE
ELECTION OF ALL NOMINEES AND "FOR" PROPOSALS 2 AND 3.
<PAGE>
[REVERSE SIDE OF PROXY AND VOTING INSTRUCTION CARD
FOR STREET NAME SHAREHOLDERS]
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND RETURN THIS CARD.
THE BOARD RECOMMENDS A VOTE "FOR" ALL NOMINEES FOR DIRECTOR AND "FOR"
PROPOSALS 2 AND 3.
Check box to vote your shares
with the Board's recommendation. / /
If you do not check the box above, indicate your vote below.
BOARD NOMINEES: J.M. Greenberg, D.G. Lubin, A.J. McKenna, E.H. Rensi,
R.W. Stone and R.N. Thurston
FOR ALL NOMINEES WITHHOLD
EXCEPT AS NOTED AS TO ALL
ON LINE BELOW NOMINEES
1. Election of Directors / / / /
-----------------------------------------------
FOR AGAINST ABSTAIN
2. Non-Employee Director
Stock Option Plan / / / / / /
3. Amended and Restated
1992 Stock Ownership
Incentive Plan / / / / / /
PLEASE SIGN AS YOUR NAME(S) APPEAR(S) ABOVE AND RETURN THIS PROXY 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 by ballot, such vote will supersede this
proxy.
X
------------------------------
X Date
------------------------------ -------------, 1995<PAGE>
