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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[Amendment No...........]
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/X/ Preliminary Proxy Statement
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/ / 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)
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Exchange Act Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act
Rules 14a-(i)(4) and 0-11.
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______________________________________________________________
2) Aggregate number of securities to which transaction applies:
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3) Per unit price of 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.
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/ / 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
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PRELIMINARY COPIES
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, if you are a shareholder of record,
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.
SEC rules require the Company to mail an annual report to every
shareholder even if there are multiple shareholders in the same
household. If you are a shareholder of record and have the same address
as other shareholders of record, you may authorize the Company to
discontinue mailings of multiple annual reports. To do so, mark the
appropriate box on each proxy card for which you do not wish to receive
an annual report. Applicable law requires the Company to send separate
proxy statements and proxy cards for all of your accounts.
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HIGHLIGHTS
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These highlights are a summary. Please read this Proxy Statement
completely for all the information needed to vote your proxy.
- McDonald's Corporation's 1996 Annual Meeting of Shareholders will be
held at 2:30 p.m. on Thursday, May 23, 1996, in Oak Brook, Illinois.
See page 2.
- Shareholders will be asked to elect five Directors to serve until the
1999 Annual Meeting of Shareholders. The nominees for Director are:
Hall Adams, Jr., Robert M. Beavers, Jr., Gordon C. Gray, Terry L.
Savage and Fred L. Turner. The Board recommends a vote FOR all
nominees. Information about the nominees is on pages 4 through 8.
- Shareholders will also be asked to act on a proposal to amend the
Company's Restated Certificate of Incorporation to increase the
authorized shares of Common Stock and to approve a $.01 par value for
the Common Stock. The Board recommends a vote FOR this proposal as it
will afford the Company greater flexibility in considering potential
future actions, such as stock splits or stock dividends. Information
about this proposal is on page 16.
- The Board's corporate governance guidelines are described on page 3.
- Information about the pay of McDonald's executive management, as well
as a report on executive compensation prepared by the Board's
Compensation Committee, are included in pages 9 through 11 and 13
through 15.
- The Company's cumulative total return to common shareholders for five-
and ten-year periods is compared with returns for the Standard &
Poor's 500 Stock Index (S&P) & Dow Jones Industrial Average (DJIA)
companies on page 12.
- A description of the Company's confidential voting policy is found on
page 19.
- A glossary of capitalized terms is found on page 20.
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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 1996 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 five Directors
to serve until the 1999 Annual Meeting of Shareholders.
The Board is also asking for your support in approving an amendment to
the Company's Restated Certificate of Incorporation to increase the
number of authorized shares of Common Stock and to approve a change in
the par value of the Common Stock from no par value to $.01 par value.
Your Board of Directors believes that the availability of additional
shares will afford the Company greater flexibility in considering
potential future actions, such as stock splits or stock dividends, and
therefore recommends that you vote FOR this proposal.
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
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TO THE SHAREHOLDERS OF MCDONALD'S CORPORATION:
The 1996 McDonald's Corporation Annual Meeting of Shareholders will be
held on Thursday, May 23, 1996, at 2:30 to 4:00 p.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 five Directors to serve until the 1999 Annual
Meeting of Shareholders or until their successors are elected and
qualified; and
2. An amendment to the Company's Restated Certificate of Incorporation
to increase the number of authorized shares of Common Stock and to
approve a change in the par value of the Common Stock from no par
value to $.01 par value.
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/ Gloria Santona
------------------------
Gloria Santona
Secretary
April 12, 1996
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BOARD OF DIRECTORS
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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.
- Only outside Directors serve on the Audit, Compensation and
Nominating Committees.
- The Board meets on a bi-monthly basis. The agenda is set by the
Chairman and Chief Executive Officer, and Directors may suggest
items for inclusion. Information is made available to the Board a
reasonable period before each meeting.
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- 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.
- Directors have access to the System's management around the world.
COMMITTEES OF THE BOARD
The audit committee is comprised entirely of outside Directors and
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 is comprised entirely of outside Directors and
is responsible for developing compensation policies consistent with and
linked to the Company's strategies. In addition, the Committee
evaluates, in consultation with all outside Directors, the performance of
the Company's Chief Executive Officer and recommends his compensation and
that of all executive management to the Board annually; reviews and
approves all other officers' compensation; and recommends to the Board
the fees of outside 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 __ through __.
The nominating committee is comprised entirely of outside Directors and
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. Shareholders wishing to nominate Director candidates for
consideration may do so by writing to the Secretary at McDonald's Plaza,
Oak Brook IL 60521 and providing the candidate's name,
biographical data and qualifications.
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.
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The chart below sets forth the composition of the Board's committees as of
March 1, 1996, as well as the number of meetings each committee held in
1995.
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Committee Member Number of meetings
in 1995
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Audit Gordon C. Gray 5
Robert N. Thurston
B. Blair Vedder, Jr.
Donald G. Lubin,
non-voting Secretary
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Compensation Donald R. Keough 5
Terry L. Savage
Ballard F. Smith
Robert N. Thurston
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Executive Donald G. Lubin 0
Michael R. Quinlan
Fred L. Turner
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Nominating Hall Adams, Jr. 3
Donald G. Lubin
Andrew J. McKenna
Roger W. Stone
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In 1995, the Board met seven times. During 1995, all the Directors
attended all the meetings of the Board of Directors and of the committees
of which they were members except that one of the Directors was absent
from one Board meeting and two Directors were absent from one committee
meeting each.
COMPENSATION OF THE BOARD
In 1995, each outside 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 Stock Plan. The Stock Plan provides
a vehicle for outside Directors to align their interests with those of
shareholders since deferred fees and the benefits described in the next
paragraph are credited to an account which is adjusted to reflect
dividends as well as gains or losses as if it were invested in Common
Stock. Distributions under the Stock Plan are payable to participants
or their beneficiaries in cash upon retirement or death.
Effective January 1995, the account of each outside Director was credited
with an amount equal to $17,500 for each year of previous service in lieu
of benefits formerly available pursuant to the Stock Plan. After
January 1995, an amount equal to $17,500 will be credited to the account
of each outside Director at the end of each full year of service. In
total, a Director can receive credit for a maximum of ten years of
service.
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Outside Directors receive stock options pursuant to the Option Plan which
was approved by shareholders on May 26, 1995. Each outside Director
received a grant of 1,000 options on January 19, 1995, the date the
Option Plan was adopted by the Board of Directors, and 1,000 options on
May 26, 1995, the date of last year's annual meeting. Under the Option
Plan, each newly appointed outside Director receives an option to purchase
1,000 shares of Common Stock and each year, on the date of the Company's
annual meeting of shareholders, each outside Director receives an option
to acquire 1,000 shares of Common Stock. The option exercise price in
each case is the fair market value of the Common Stock on the date of
grant.
Mr. Lubin also received the use of a corporate vehicle with a value of
$5,750 in 1995.
Directors who are Company employees are not paid for their services as
Directors and are not eligible to participate in the Stock Plan or the
Option Plan. As with its employees, including executives, the Company
does not offer a pension plan to its outside Directors.
DIVERSITY
[Presently, one female and one minority male serve on the Board, and 30
minority men and women are officers. Also, more than 50% of middle
management employees and over 25% of franchisees are female and
minorities.]
BIOGRAPHICAL INFORMATION
Biographical information as of March 1, 1996 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.
Hall Adams, Jr. Nominee. Retired Chief Executive Officer of Leo
Burnett & Co., Inc. Director of The Dun & Bradstreet Corporation and
Sears, Roebuck and Co. Class of 1996. Age: 62. Director since 1993.
Robert M. Beavers, Jr. Nominee. Senior Vice President. Director of
NICOR Inc. Class of 1996. Age: 52. Director since 1984.
James R. Cantalupo. President and Chief Executive Officer--
International. Director of Morton International Inc. Class of 1997.
Age: 52. Director since 1987.
Gordon C. Gray. Nominee. Chairman of Rio Algom Limited, a Canadian
mining company and metals distributor. Director of Rogers Communications
Inc. and Stone-Consolidated Corporation. Class of 1996. Age: 68.
Director since 1982.
Jack M. Greenberg. Vice Chairman and Chief Financial Officer since 1992.
Previously, Senior Executive Vice President and Chief Financial Officer.
Director of Arthur J. Gallagher & Co., Harcourt General, Inc. and Stone
Container Corporation. Class of 1998. Age: 53. Director since 1982.
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Donald R. Keough. Chairman of Allen & Company, Incorporated, 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 Service Industries, Inc., and The Washington Post Company.
Class of 1997. Age: 69. Director since 1993.
Donald G. Lubin. 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
1998. Age: 62. Director since 1967.
Andrew J. McKenna. 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 NBD Corporation, Skyline Corporation, and Tribune
Company. Class of 1998. Age: 66. 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: 51. Director since 1979.
Edward H. Rensi. President and Chief Executive Officer--U.S.A. Director
of Snap-on Incorporated. Class of 1998. Age: 51. Director since 1982.
Terry L. Savage. Nominee. 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 since 1991. Previously, commentator for CBS Inc. (WBBM-TV)
in Chicago. Class of 1996. Age: 51. Director since 1990.
Paul D. Schrage. Senior Executive Vice President, Chief Marketing
Officer. Director of Safety-Kleen Corp. Class of 1997. Age: 61.
Director since 1988.
Ballard F. Smith. Chairman of Premier Food Services, Inc., a foodservice
company. Class of 1997. Age: 49. Director since 1983.
Roger W. Stone. 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 Morton
International Inc., Option Care, Inc., Stone Container Corporation, and
Stone-Consolidated Corporation. Class of 1998. Age: 61. Director since
1989.
Robert N. Thurston. Business consultant. Director of Jiffy Lube
International, Inc. Class of 1998. Age: 63. Director since 1974.
Fred L. Turner. Nominee. Senior Chairman since 1990. Previously,
Chairman. Director of Aon Corporation, Baxter International Inc. and
W.W. Grainger, Inc. Class of 1996. Age: 63. Director since 1968.
B. Blair Vedder, Jr. Retired Chief Operating Officer of Needham Harper
Steers. Class of 1997. Age: 71. Director since 1988.
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Standing, left to right: Savage, Cantalupo, Schrage, Lubin, Greenberg,
Adams, Rensi, Vedder, Smith. Seated on couch, front to back: Keough,
McKenna, Beavers. Seated on chairs, clockwise from front: Quinlan,
Turner, Gray, Stone, Thurston.
[Photo]
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SECURITY OWNERSHIP INFORMATION
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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 7.8 million shares of Common Stock
on February 1, 1996. Directors and Executive Officers have sole voting
and investment power over shares held directly, except for 433,927 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. Directors and Executive Officers as a group owned [1.17%] of the
Common Stock as of February 1, 1996.
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, outside 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.
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The following table details the stock ownership of the named individuals
and group as of February 1, 1996.
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Beneficial ownership
of Common Stock
Beneficial owner (a,b,c,d,e,f)
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Hall Adams, Jr. 2,886
Robert M. Beavers, Jr. 406,827
James R. Cantalupo 816,524
Gordon C. Gray 10,537
Jack M. Greenberg 468,262
Donald R. Keough 7,815
Donald G. Lubin 41,295
Andrew J. McKenna 21,609
Michael R. Quinlan 1,582,156
Edward H. Rensi 631,272
Terry L. Savage 14,210
Paul D. Schrage 506,236
Ballard F. Smith 48,214
Roger W. Stone 20,996
Robert N. Thurston 67,591
Fred L. Turner 1,294,242
B. Blair Vedder, Jr. 25,996
Directors and Executive
Officers as a group
(the Group) (25 persons) 8,034,756
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(a) To the Company's knowledge, no shareholder beneficially owned more
than 5% of the Company's Common Stock as of February 1, 1996.
(b) Included are shares of Common Stock as to which beneficial ownership
is disclaimed, as follows: Messrs. Keough, 200; McKenna, 320;
Quinlan, 1,191; Rensi, 39,101; Schrage, 18,000; and the Group,
83,832. The disclaimed shares are owned by spouses or in a
custodial capacity for children or grandchildren.
(c) Excluded are 22,000 shares held of record by Mr. McKenna in his
capacity as Trustee of the Schwarz Paper Company Profit Sharing
Trust.
(d) Included are shares of Common Stock over which the following have
voting power pursuant to employee benefit plan provisions, as
follows: Messrs. Beavers, 28,724; Cantalupo, 3,459; Greenberg,
1,577; Quinlan, 54,161; Rensi, 6,736; Schrage, 13,959; Turner,
18,409; and the Group, 175,596.
(e) Included are shares of Common Stock which could be acquired within
60 days after February 1, 1996, pursuant to stock options in the
following amounts: Messrs. Adams, 334; Beavers, 128,200; Cantalupo,
655,925; Gray, 334; Greenberg, 377,000; Keough, 334; Lubin, 334;
McKenna, 334; Quinlan, 997,500; Rensi, 449,750; Schrage, 248,950;
Smith, 334; Stone, 334; Thurston, 334; Turner, 281,000; Vedder, 334;
Ms. Savage, 334; and the Group, 4,566,115.
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(f) Included are shares of Common Stock over which the following have
voting power pursuant to provisions of the Stock Plan and related
trust: Messrs. Adams, 1,152; Gray, 6,067; Keough, 4,281; Lubin,
12,083; McKenna, 10,955; Smith, 20,832; Stone, 16,662; Thurston,
19,329; Vedder, 20,792; and Ms. Savage, 12,376.
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PROPOSAL ONE. ELECTION OF DIRECTORS
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At the 1996 Annual Meeting, in accordance with the Company's Restated
Certificate of Incorporation and By-Laws, five Directors are to be
elected, each to serve a three-year term until the 1999 Annual Meeting of
Shareholders or until a 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 five persons nominated by the Board of Directors for election at the
1996 Annual Meeting are:
HALL ADAMS, JR.
ROBERT M. BEAVERS, JR.
GORDON C. GRAY
TERRY L. SAVAGE
FRED L. TURNER
A proxy cannot be voted for more than five persons. 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.
Unless otherwise directed, the shares represented by the enclosed proxy,
when signed and returned or voted via telephone, will be voted FOR the
election of the five nominees.
RECOMMENDATION
The Board of Directors recommends that shareholders vote FOR all five
nominees.
VOTING INFORMATION FOR PROPOSAL ONE
Elections for Directors are decided by a plurality of the votes of the
shares of Common Stock and Series D Preferred Stock represented in person
or by proxy, and entitled to vote on the election of Directors at the
1996 Annual Meeting.
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REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
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DEAR FELLOW SHAREHOLDERS:
Our Committee is 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 decisions are based on our in-depth understanding
of McDonald's and its long-term strategies, as well as our knowledge of
the capabilities and performance of the Company's executives. We have
designed the Company's executive compensation program to attract,
energize, reward and retain executive talent that will produce results
over the long term and enhance McDonald's leadership position in a highly
competitive global business.
PHILOSOPHY
We believe that the Company and its shareholders are best served by
running the business with a long-term perspective while striving to
deliver consistently good annual results. McDonald's record of
performance illustrates that this approach has been advantageous to
shareholders as shown on the graphs set forth on page 12 of this Proxy
Statement. Accordingly, in making compensation decisions, we evaluate
(a) management's vision in identifying opportunities which will benefit
the Company and its shareholders over the long term, (b) the strategies
put in place to capitalize on these opportunities, and (c) management's
ability to identify, motivate and develop talent to execute these
strategies.
Our Committee believes that a significant and increasing portion of
executive compensation should be at risk, that good performance should be
rewarded and that the financial interests of executives should be aligned
with shareholders through stock ownership. We also believe that
compensation should 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 results. We believe that executive compensation at McDonald's
has been structured to meet these criteria and to enhance shareholder
value.
EXECUTIVE COMPENSATION
The process of setting compensation is not mechanical; our decisions are
based on individual, team and Company performance, and shareholder
returns.
Our Committee conducts an overall review of executive compensation
annually. While we review information supplied by independent
consultants to determine the competitiveness of McDonald's total
executive compensation package with that of a peer group used for
compensation comparisons (the "Compensation Peer Group"), we do not
seek to position compensation within any particular range. The
Compensation Peer Group includes the 26 companies comprising the DJIA on
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which the independent consultants have data. Based on this information,
each element of annual cash compensation for Executive Officers
approximates the middle of the Compensation Peer Group's range, while
stock options were well above the median, consistent with our philosophy
that a significant portion of executive compensation should be at risk.
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).
Our Committee annually establishes each executive's base salary based on
our evaluation of the executive's individual performance and competitive
pay practices. We gauge individual performance in many areas, including:
the development and execution of strategies, leadership, ability to
develop staff, ability to balance the many relationships which together
form the McDonald's System, and contributions in the previous year to
programs which affect the performance of the Company and the McDonald's
System. Base salaries for executives increased in 1995 based on our
assessment of individual performance as evidenced by the previous year's
corporate achievements: significant gains in worldwide operating income,
improved return on assets, and sizable growth in earnings per share.
Moreover, we considered the progress during 1994 toward the Company's
long-term strategies.
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 the
annual incentive awarded, an individual's target incentive is initially
adjusted by an overall Company performance factor; then a team
performance factor, reflecting the overall results of the organizational
unit for which the executive is responsible; and finally an individual
performance factor.
In determining annual target incentive bonuses awarded for 1995, our
Committee reviewed overall corporate and System performance during 1995.
In particular, these bonuses were favorably impacted by strong worldwide
operating income, greater return on assets, and growth in both earnings
per share and net income. In addition, we considered gains in both
market share and transaction counts per capita.
STOCK OPTIONS
Our Committee believes that stock options are presently the best vehicle
by which to link employees' interests with those of shareholders, since
an optionee will realize a benefit only if McDonald's stock price
increases. When this happens, all shareholders benefit. 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.
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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
Company's planning process and the implementation of key strategies.
Individual awards to executives are made within these guidelines,
dependent primarily upon current individual performance and, to some
extent, on potential for influencing future results. In 1995, we also
considered the number of options granted in previous years and the 1994
corporate and strategic achievements described under Annual Cash
Compensation.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Quinlan participates in the executive compensation program described
throughout this report. Mr. Quinlan's total compensation in 1995
reflects his outstanding performance, his leadership of constructive
change, his significant contributions in leading the Company's long-term
strategic growth, and his influence on improved financial results which
were reflected in enhanced returns to shareholders. Based on these
factors, Mr. Quinlan's salary for 1995 was increased from $998,875 to
$__________. In addition, Mr. Quinlan was awarded at-risk compensation
consisting of $_________ under TIP, compared with $950,000 for the
previous year, and options to purchase _______ shares of Common Stock.
Consistent with our compensation philosophy, at-risk compensation
represented the predominant portion of the increase in Mr. Quinlan's
total compensation package for 1995.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
Section 162(m) of the IRS Code generally limits the tax deductibility of
annual compensation paid to certain executives to $1 million. Assuming
continued deferral of compensation by certain executives, we expect that
most, if not all, compensation 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
We believe that McDonald's historical and future value is inextricably
linked with the reputation of the McDonald's brand and the unique
relationship and culture which the Company has nurtured among its
employees, franchisees and suppliers. Special management talents and
sensitivities are required to balance these independent and
interdependent relationships. Accordingly, in approaching decisions on
compensation, we go beyond a simple evaluation of financial results to
<PAGE>
consider a number of qualitative factors which we view as unique to
McDonald's -- factors which we believe will have contributed and continue
to contribute significantly to optimizing shareholder value over the
long term.
Respectfully submitted,
/s/ Robert N. Thurston /s/ Donald R. Keough
----------------------- -----------------------
Robert N. Thurston Donald R. Keough
Chairman
/s/ Terry L. Savage /s/ Ballard F. Smith
----------------------- -----------------------
Terry L. Savage Ballard F. Smith
<PAGE>
COMPARISON OF TOTAL SHAREHOLDER RETURNS
-------------------------------------------------------------------------
At least annually, we consider which companies comprise a readily
identifiable investment peer group. Time and again, given the unique
nature of our business, no one group of companies stands out.
For instance, McDonald's is included in published restaurant indices.
However, unlike most other companies included in these indices, which
have no or limited international operations, McDonald's does business
in over 90 countries and more than half of our operating income
comes from outside the U.S. In addition, by virtue of our size,
McDonald's inclusion in those indices tends to skew the results. Hence,
we believe such a comparison would not be meaningful.
This view is shared by many who evaluate our Company, as they often
consider:
---------------------------------------------------------------------------
Our operating characteristics and marketing of branded products
around the world, which place McDonald's among global food and
beverage companies;
Our recognizable brand and the retail nature of our business, which
place McDonald's among global consumer products companies;
Our strong financial position, growing cash flow, solid
international presence and global brand power which place McDonald's
among global branded growth companies; and
Our capitalization, trading volume and importance in an industry
that is vital to the U.S. economy, which have resulted in McDonald's
inclusion in the DJIA since 1985.
---------------------------------------------------------------------------
Thus, in the absence of any readily identifiable 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 the companies comprising the DJIA
(including McDonald's) for the five- and ten-year periods ended
December 31, 1995. 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.
<PAGE>
FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURNS
[GRAPH]
90 91 92 93 94 95
-------------------------------------------------------------
McDonald's $100 132 171 201 208 323
S&P $100 130 140 155 157 215
DJIA companies $100 127 132 147 155 218
-------------------------------------------------------------
Source: S&P Compustat
TEN-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURNS
[GRAPH]
85 86 87 88 89 90 91 92 93 94 95
----------------------------------------------------------------------
McDonald's $100 114 125 138 200 171 226 292 344 356 553
S&P $100 119 125 146 192 186 242 261 287 291 400
DJIA companies $100 113 120 138 179 182 230 241 268 282 397
----------------------------------------------------------------------
Source: S&P Compustat
<PAGE>
EXECUTIVE COMPENSATION
-------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
The following table summarizes total compensation earned by or paid for
services rendered in all capacities to the named Executive Officers
during each of the years ended December 31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Annual compensation Long-term compensation
-----------------------------------------
Awards Payouts
--------------------------- -----------
Restricted Securities All other
Name and stock underlying LTIP* compensation
principal position Year Salary($) Bonus($) awards($) options(#)(a) payouts($) ($)(b)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael R. Quinlan 1995 $_________ $_______ 0 529,000 0 $362,937
Chairman of the Board, 1994 998,875 950,000 0 350,000 0 167,055
Chief Executive Officer 1993 980,000 800,000 0 292,000 0 299,176
Edward H. Rensi 1995 $_________ $_______ 0 181,000 0 $225,675
President, 1994 711,375 485,462 0 176,000 0 129,056
Chief Executive Officer- 1993 669,983 469,638 0 170,000 0 180,870
U.S.A.
James R. Cantalupo 1995 $_________ $_______ 0 181,000 0 $192,531
President, 1994 684,025 499,194 0 176,500 0 124,100
Chief Executive Officer- 1993 631,667 446,446 0 170,000 0 173,862
International
Jack M. Greenberg 1995 $_________ $_______ 0 181,000 0 $216,516
Vice Chairman, 1994 668,875 473,478 0 176,000 0 121,337
Chief Financial Officer 1993 606,833 434,850 0 170,000 0 175,447
Paul D. Schrage 1995 $_________ $_______ 0 63,000 0 $151,510
Senior Executive 1994 493,725 262,147 0 72,600 0 99,401
Vice President, 1993 466,517 262,064 0 72,600 0 116,427
Chief Marketing Officer
-----------------------------------------------------------------------------------------------------------
*Long-Term Incentive Plan
</TABLE>
<PAGE>
(a) The securities underlying the options are shares of Common Stock.
(b) These amounts represent 1995 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: Messrs. Quinlan,
$187,038, $163,634 and $12,265; Rensi, $191,370, $25,530 and
$8,775; Cantalupo, $91,389, $124,516 and $8,563; Greenberg,
$126,594, $81,555 and $8,367; and Schrage, $113,931, $22,977 and
$14,602. Amounts which have been included with respect to the
equalization plans and Deferred Incentive Plan represent the
Company's obligation to pay such amounts to participants.
STOCK OPTION GRANTS IN 1995
Options granted to the named Executive Officers were about 8% of the
total number of options granted in 1995. All options granted will expire
on the tenth anniversary of their respective grant dates and become
exercisable 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 1995 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.
For a perspective, in ten years one share of Common Stock valued at
$33.125 on February 21, 1995 would be worth $53.96, assuming the
hypothetical 5% compounded growth rate, or $85.93, assuming the
hypothetical 10% compounded growth rate.
Another way to look at this is to express these amounts in today's
dollars by applying a present value approach to the hypothetical
appreciation rates. These results are shown in the last two columns of
the table.
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Individual grants
------------------
Number of % of
securities total
underlying options
options granted to Exercise
granted employees price Expiration
(#)(a) in 1995(b) ($/Sh) date
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael R. Quinlan 500,000 3.6% $33.125 2/21/05
28,000 .2 35.000 3/23/05
1,000 NM 36.250 5/26/05
Edward H. Rensi 180,000 1.3 33.125 2/21/05
1,000 NM 36.250 5/26/05
James R. Cantalupo 180,000 1.3 33.125 2/21/05
1,000 NM 36.250 5/26/05
Jack M. Greenberg 180,000 1.3 33.125 2/21/05
1,000 NM 36.250 5/26/05
Paul D. Schrage 62,000 .5 33.125 2/21/05
1,000 NM 36.250 5/26/05
</TABLE>
<TABLE>
<CAPTION>
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)
-------------------------------- ------------------------------<PAGE>
5% 10% 5% 10%
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael R. Quinlan $10,416,067 $26,396,359 $4,988,464 $12,641,748
616,317 1,561,868 300,707 762,052
22,797 57,773 11,997 30,404
Edward H. Rensi 3,749,784 9,502,689 1,795,847 4,551,029
22,797 57,773 11,997 30,404
James R. Cantalupo 3,749,784 9,502,689 1,795,847 4,551,029
22,797 57,773 11,997 30,404
Jack M. Greenberg 3,749,784 9,502,689 1,795,847 4,551,029
22,797 57,773 11,997 30,404
Paul D. Schrage 1,291,592 3,273,149 618,569 1,567,577
22,797 57,773 11,997 30,404
-----------------------------------------------------------------------------------
INCREASE IN VALUE
TO ALL COMMON
SHAREHOLDERS(e) $14.6 billion $37.0 billion $7.0 billion $17.7 billion
-------------------------------------------------------------------------------------
NM - Not meaningful
</TABLE>
<PAGE>
(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 (7.64% on
February 21, 1995, 7.44% on March 23, 1995 and 6.63% on May 26,
1995).
(e) Calculated using a Common Stock price of $33.125, the closing market
price on February 21, 1995, which is the exercise price of
substantially all of the options granted in 1995, and the total
weighted average number of common shares outstanding for 1995.
AGGREGATED OPTION EXERCISES IN 1995 AND FISCAL YEAR-END OPTION VALUES
TABLE
The following table shows information concerning the exercise of stock
options by each of the named Executive Officers during 1995, and the
value of all remaining exercisable and unexercisable options at
December 31, 1995, on a pre-tax basis.
----------------------------------------------------------------------
Number of
securities Value of
underlying unexercised
unexercised in-the-money
Shares options at options at
acquired l2/31/95 12/31/95
on Value (#)(b) ($)(c)
exercise realized Exercisable/ Exercisable/
Name (#) ($)(a) unexercisable unexercisable
----------------------------------------------------------------------
Michael R. Quinlan ______ $_________ 927,500/ $26,167,400/
1,311,500 $22,309,463
Edward H. Rensi ______ $_________ 362,250/ 9,549,735/
599,000 10,805,459
James R. Cantalupo ______ $_________ 568,425/ 16,107,483/
633,875 11,765,642
Jack M. Greenberg ______ $_________ 289,500/ 6,961,781/
609,500 11,045,683
Paul D. Schrage ______ $_________ 215,300/ 5,956,737/
256,900 4,902,129
----------------------------------------------------------------------
(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, 1995 ($45.125 per share) less the per share option
exercise price multiplied by the number of exercisable or
unexercisable options, as the case may be.
<PAGE>
PROPOSAL TWO. APPROVAL OF AMENDMENT TO RESTATED CERTIFICATE OF
INCORPORATION
-------------------------------------------------------------------------
The Board of Directors recommends that shareholders consider and approve
an amendment to Article Fourth of the Company's Restated Certificate of
Incorporation which would increase the number of authorized shares of
Common Stock, from 1.25 billion to 3.5 billion and approve a $.01 par
value per share for the Common Stock ("Proposal Two"). Proposal Two
would not change the provisions of the present Article Fourth in any
manner other than to increase the number of authorized shares of Common
Stock and to approve a $.01 par value for the Common Stock. By approving
the $.01 par value, shareholders will enable the Company to take
advantage of significant savings in state filing fees.
As of December 31, 1995, of the currently authorized shares of Common
Stock, 699,753,097 shares were outstanding and 130,559,659 shares were
held in treasury, 105,089,194 of which were reserved for issuance under
the Company's employee benefit plans. The remaining 419,687,244
authorized common shares were uncommitted.
Although currently authorized shares are sufficient to meet all presently
known needs, the Board considers it desirable that McDonald's have the
flexibility to issue an additional amount of Common Stock without further
shareholder action, unless required by law or stock exchange regulations.
The availability of these additional shares will enhance the Company's
flexibility in connection with possible stock splits, stock dividends,
acquisitions, financings, and other corporate purposes.
Since going public in 1965, McDonald's Common Stock has split eleven
times, making a 100 share investment in 1965 now equal to 37,180 shares.
Since the Company last increased the amount of its authorized Common
Stock in 1988, it was able to effect two stock splits. Most recently, the
Company issued 415,156,378 shares of Common Stock as the result of a two-
for-one stock split effected in the form of a stock dividend in May 1994.
Without this increase in authorized shares, the Company would be unable
to effect a two-for-one stock split. While the Company has no present
plans to split the Common Stock, it wishes to have the ability to do so
if such a split would be in the best interests of shareholders.
The Company does not have any commitment or understanding at this time
for the issuance of any shares of the additional Common Stock. Instead,
the Company intends to repurchase up to $2.2 billion of its Common Stock
within the next three years. This represents the combination of a new
$2 billion common share repurchase program announced in January 1996 and
$2 million remaining under the Company's $1 billion share repurchase
program announced in January 1994. In fact, over the 10 year period
ended December 31, 1995, the Company repurchased $2.8 billion of its
Common Stock.
Although the Company is not aware of any pending or threatened efforts
to obtain control of the Company, the availability for issuance of
additional shares of Common Stock could enable the Board of Directors
<PAGE>
to render more difficult or discourage an attempt to do so. For example,
the issuance of shares of Common Stock in a public or private sale,
merger or similar transaction would increase the number of outstanding
shares, thereby diluting the interest of a party attempting to obtain
control of the Company.
Holders of Common Stock do not have preemptive rights to subscribe to
additional securities that may be issued by the Company, which means that
current shareholders do not have a prior right to purchase any new issue
of capital stock of the Company in order to maintain their proportionate
ownership. However, stockholders wishing to maintain their interests may
be able to do so through normal market purchases.
VOTING INFORMATION FOR PROPOSAL TWO
The affirmative vote of the holders of a majority of the issued and
outstanding shares of the Common Stock and the Series D Preferred Stock
entitled to notice of and to vote at the 1996 Annual Meeting voting
together as a class and the affirmative vote of a majority of the holders
of such Common Stock voting as a separate class is required to approve
Proposal Two.
The Board of Directors recommends that shareholders vote FOR Proposal
Two.
<PAGE>
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, 1995 through
December 31, 1995, its Executive Officers and Directors complied with all
applicable Section 16(a) filing requirements. 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 1995, the Company and its subsidiaries purchased approximately
$3.1 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 1996 on similar terms.
In 1995, as part of its ongoing share repurchase program, the Company
purchased shares of Common Stock from Mr. Cantalupo, a Director and
Executive Officer of the Company, at $173,320 (the New York Stock Exchange
composite closing price on the date of purchase) who acquired these shares
within two years prior to their sale through the exercise of stock options
for $70,608.
1997 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, 1996, if it is to be considered for inclusion in the
Company's 1997 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,
1995, (including any financial statements, 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>
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, 1996 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 23, 1996, 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 $17,000 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.
RECORD DATE AND VOTING AT THE ANNUAL MEETING
Shareholders of record owning Common Stock or Series D Preferred Stock
outstanding at the close of business on March 25, 1996, are entitled to
vote at the 1996 Annual Meeting. On that date there were ____________
shares of Common Stock and ____________ shares of Series D Preferred
Stock outstanding and entitled to vote at the Annual Meeting. Each share
of Common Stock and each share of Series D 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 Proposal One, the slate of five Directors
proposed by the Board and FOR Proposal Two, the amendment to the
Company's Restated Certificate of Incorporation. 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 1996
Annual Meeting and will determine whether or not a quorum is present.
With respect to Proposal One, First Chicago will treat votes withheld as
shares that are present for purposes of determining a quorum. Directors
are elected by a plurality vote, so the five persons receiving the
<PAGE>
greatest number of votes will be elected. Withheld votes will not affect
the outcome of the election. The affirmative vote of a majority of all
outstanding shares entitled to vote, and the affirmative vote of a
majority of the holders of Common Stock entitled to vote, is required
for approval of Proposal Two. Abstentions and broker non-votes have the
same effect as votes against the proposal.
With respect to any other matter properly brought before the meeting,
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 adoption, abstentions will have the effect of a vote against adoption.
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 matters other than Proposal Two.
Shareholders of record can vote their shares via a toll-free telephone
call in the U.S. 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 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.
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.
<PAGE>
AUDITORS
The Board of Directors has appointed Ernst & Young LLP as independent
auditors to audit the consolidated financial statements of the Company
for the year ending December 31, 1996. Ernst & Young LLP audited such
statements for the year ended December 31, 1995, 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>
Glossary
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 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 Plan means
McDonald's Corporation Non-Employee Director Stock Option Plan
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
IRS 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
HOME OFFICE
McDonald's Corporation
McDonald's Plaza
Oak Brook IL 60521
1-708-575-3000
[The following trademarks used herein are owned by McDonald's
Corporation: McDonald's and the McDonald's Golden Arches logo]
(copyright) 1996 McDonald's Corporation
[McD6-3034]
[Printed on Recycled Paper with
20% post-consumer content]
<PAGE>
[FRONT SIDE OF PROXY AND VOTING INSTRUCTION CARD
FOR NON-EMPLOYEE SHAREHOLDERS]
McDONALD'S CORPORATION
McDONALD'S PLAZA
OAK BROOK, IL 60521
PROXY AND VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF McDONALD'S
CORPORATION.
McDONALD'S 1996 ANNUAL MEETING OF SHAREHOLDERS WILL BE HELD AT THE LODGE
ON McDONALD'S OFFICE CAMPUS, KROC DRIVE AND RONALD LANE, OAK BROOK,
ILLINOIS, AT 2:30 P.M. (CENTRAL TIME) ON MAY 23, 1996. This Proxy and
Voting Instruction Card will cover the voting of all shares of McDonald's
Corporation Common and Preferred Stock which you are entitled to vote or
to direct the voting of.
YOUR VOTE IS IMPORTANT. Please consider the issues discussed in the Proxy
Statement, sign, date, and return this card in the enclosed envelope.
If you prefer, you can vote by phone by calling TOLL-FREE 1-800-652-8683
FROM THE U.S. To vote by phone, please have this card and your U.S. tax
identification number available. Your phone vote authorizes the named
proxies in the same manner as if you marked, signed and returned this card.
Detach Here
---------------------------------------------------------------------------
9823
THE BOARD RECOMMENDS A VOTE "FOR" ALL NOMINEES
FOR DIRECTOR AND "FOR" PROPOSAL 2.
The undersigned, revoking any proxy previously given, appoint(s)
Michael R. Quinlan and Gloria Santona, 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 1996 Annual Shareholders
Meeting and AUTHORIZE(S) EACH TO VOTE AT HIS OR HER DISCRETION ON ANY
OTHER MATTER THAN 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" PROPOSAL 2.
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: H. Adams, Jr., R.M. Beavers, Jr., G.C. Gray,
T.L. Savage, and F.L. Turner.
FOR ALL NOMINEES WITHHOLD
EXCEPT AS NOTED AS TO ALL
BELOW NOMINEES
1. Election of Directors / / / /
______________________________
FOR AGAINST ABSTAIN
2. Amendment to Restated
Certificate of Incorporation / / / / / /
/ / Do not mail future Annual Reports for this account. Another
household member receives one.
/ / Waive confidential voting.
/ / Comments are on reverse side.
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 ___________, 1996
<PAGE>
[REVERSE SIDE OF PROXY AND VOTING INSTRUCTION CARD
FOR NON-EMPLOYEE SHAREHOLDERS]
COMMENTS: _________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
<PAGE>
[FRONT SIDE OF PROXY AND VOTING INSTRUCTION CARD
FOR EMPLOYEE SHAREHOLDERS]
McDONALD'S CORPORATION
McDONALD'S PLAZA
OAK BROOK, IL 60521
PROXY AND VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF McDONALD'S
CORPORATION.
McDONALD'S 1996 ANNUAL MEETING OF SHAREHOLDERS WILL BE HELD AT THE LODGE
ON McDONALD'S OFFICE CAMPUS, KROC DRIVE AND RONALD LANE, OAK BROOK,
ILLINOIS, AT 2:30 P.M. (CENTRAL TIME) ON MAY 23, 1996. This Proxy and
Voting Instruction Card will cover the voting of all shares of
McDonald's Corporation Common Stock which you are entitled to vote or to
direct the voting of, including those in McDirect Shares 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.
If you prefer, you can vote by phone by calling TOLL-FREE 1-800-652-8683
FROM THE U.S. To vote by phone, please have this card and your U.S. tax
identification number available. Your phone vote authorizes the named
proxies in the same manner as if you marked, signed and returned this
card. Employees may vote by phone unless they wish to provide different
voting instructions for the benefit plan shares they are entitled to vote
or direct the voting of.
Detach Here
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9823
THE BOARD RECOMMENDS A VOTE "FOR" ALL NOMINEES
FOR DIRECTOR AND "FOR" PROPOSAL 2.
The undersigned, revoking any proxy previously given, appoint(s)
Michael R. Quinlan and Gloria Santona, 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 1996 Annual
Shareholders Meeting and AUTHORIZE(S) EACH TO VOTE AT HIS OR HER
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" PROPOSAL 2.
EMPLOYEES: Please see message on reverse.
Check box to vote your shares
with the Board's recommendations. / /
If you do not check the box above, indicate your vote below.
BOARD NOMINEES: H. Adams, Jr., R.M. Beavers, Jr., G.C. Gray,
T.L. Savage, and F.L. Turner.
FOR ALL NOMINEES WITHHOLD
EXCEPT AS NOTED AS TO ALL
BELOW NOMINEES
1. Election of Directors / / / /
_______________________________
FOR AGAINST ABSTAIN
2. Amendment to Restated
Certificate of Incorporation / / / / / /
/ / Do not mail future Annual Reports for this account. Another
household member receives one.
/ / Waive confidential voting.
/ / Comments are on reverse side.
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 ____________, 1996
<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 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 long-term
best interests as a Plan participant.
In addition, you are also directing the trustees to vote shares held in
the Plans 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, 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 waive confidential voting on the front of this card.
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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"
Proposal 2.
PLAN SHARES NOT YET
PLAN SHARES OWNED CREDITED OR UNVOTED
----------------- -------------------
FOR ALL WITHHOLD FOR ALL WITHHOLD
NOMINEES AS TO ALL NOMINEES AS TO ALL
EXCEPT AS NOMINEES EXCEPT AS NOMINEES
NOTED BELOW NOTED BELOW
1. Election of
Directors _________ _________ _________ _________
________________________ ________________________
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
2. Amendment to
Restated
Certificate of
Incorporation ___ ___ ___ ___ ___ ___
COMMENTS___________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
<PAGE>
[FRONT SIDE OF PROXY AND VOTING INSTRUCTION CARD
FOR STREET NAME SHAREHOLDERS]
McDONALD'S CORPORATION
McDONALD'S PLAZA
OAK BROOK, IL 60521
PROXY AND VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF McDONALD'S
CORPORATION.
McDONALD'S 1996 ANNUAL MEETING OF SHAREHOLDERS WILL BE HELD AT THE LODGE
ON McDONALD'S OFFICE CAMPUS, KROC DRIVE AND RONALD LANE, OAK BROOK,
ILLINOIS, AT 2:30 P.M. (CENTRAL TIME) ON MAY 23, 1996.
The undersigned, revoking any proxy previously given, appoint(s)
Michael R. Quinlan and Gloria Santona, 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 1996 Annual
Shareholders Meeting and AUTHORIZE(S) EACH TO VOTE AT HIS OR HER
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" PROPOSAL 2.
[REVERSE SIDE OF PROXY AND VOTING INSTRUCTION CARD
FOR STREET NAME SHAREHOLDERS]
Your vote is important.
Please sign and return this card.
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: H. Adams, Jr., R.M. Beavers, Jr., G.C. Gray,
T.L. Savage, and F.L. Turner.
FOR ALL NOMINEES WITHHOLD
EXCEPT AS NOTED AS TO ALL
BELOW NOMINEES
1. Election of Directors / / / /
__________________________________
FOR AGAINST ABSTAIN
2. Amendment to Restated
Certificate of Incorporation / / / / / /
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 _____________, 1996
