Additional Proxy Soliciting Materials (definitive) (defa14a)
2022年5月6日 - 02:03AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment
No. )
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12 |
McDONALD’S CORPORATION |
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as Specified In Its Charter)
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Filing Proxy Statement, if other than the Registrant)
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On May 4, 2022, McDonald’s Corporation (“McDonald’s”)
took the following actions in connection with its 2022 Annual Meeting:
| · | issued an investor presentation, a copy of which is attached hereto
as Exhibit 1; |
| · | launched the website VoteforMcD.com, screenshots of which are attached hereto as Exhibit
2; and |
| · | initiated a Google advertisement campaign, screenshots of which are attached
hereto as Exhibit 3. |
FORWARD-LOOKING STATEMENTS
This document contains forward-looking
statements about future events and circumstances. Generally speaking, any statement not based upon historical fact is a forward-looking
statement. In particular, statements regarding McDonald’s plans, strategies, prospects and expectations regarding its business and
industry are forward-looking statements. They reflect McDonald’s expectations, are not guarantees of performance and speak only
as of the date hereof. Except as required by law, McDonald’s does not undertake to update such forward-looking statements. You should
not rely unduly on forward-looking statements. McDonald’s business results are subject to a variety of risks, including those that
are described in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and subsequent filings with the Securities and
Exchange Commission (the “SEC”).
IMPORTANT ADDITIONAL INFORMATION REGARDING PROXY SOLICITATION
McDonald’s has filed a definitive proxy statement and WHITE
proxy card with the SEC in connection with its solicitation of proxies for its 2022
Annual Meeting. MCDONALD’S SHAREHOLDERS ARE ENCOURAGED TO READ THE DEFINITIVE PROXY STATEMENT (AND ANY AMENDMENTS AND SUPPLEMENTS
THERETO), THE ACCOMPANYING WHITE PROXY CARD AND OTHER DOCUMENTS FILED WITH THE SEC IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION.
McDonald’s shareholders may obtain a copy of the definitive proxy statement (and any amendments and supplements thereto), the accompanying
WHITE proxy card and other relevant documents filed by McDonald’s with the SEC without charge from the SEC’s website at www.sec.gov.
McDonald’s shareholders may also obtain a copy of these documents without charge by sending a request to shareholder.services@us.mcd.com
or visiting the investor section of the McDonald’s website at www.investor.mcdonalds.com.
CERTAIN INFORMATION REGARDING PARTICIPANTS
McDonald’s, its Directors and certain of its executive officers
are participants in the solicitation of proxies from McDonald’s shareholders in connection with the matters to be considered at
the 2022 Annual Meeting. Information regarding the ownership of McDonald’s Directors and executive officers in McDonald’s
common stock is included in the definitive proxy statement for its 2022 Annual Meeting, filed with the SEC on April 8, 2022, which can
be found through the SEC’s website at www.sec.gov. Changes to such ownership have been or will be reflected on Statements of Changes
in Beneficial Ownership on Form 4 filed with the SEC. Details concerning the nominees of the McDonald’s Board of Directors for
election at the 2022 Annual Meeting are also included in such definitive proxy statement.
| 2022 Annual Meeting
Update
May 2022 |
| 1
This presentation contains forward-looking statements about future events and circumstances. Generally speaking, any
statement not based upon historical fact is a forward-looking statement. Forward-looking statements can also be
identified by the use of forward-looking or conditional words such as “could,” “should,” “can,” “continue,” “estimate,”
“forecast,” “intend,” “look,” “may,” “will,” “expect,” “believe,” “anticipate,” “plan,” “remain,” “confident” and “commit” or
similar expressions. In particular, statements regarding our plans, strategies, prospects and expectations regarding our
business, industry and ESG commitments are forward-looking statements. They reflect our expectations, are not
guarantees of performance and speak only as of the date hereof (May 4, 2022). Except as required by law, we do not
undertake to update such forward-looking statements. You should not rely unduly on forward-looking statements. Our
business results are subject to a variety of risks, including those that are described in our Quarterly Report on Form 10-Q
for the quarter ended March 31, 2022 and subsequent filings with the Securities and Exchange Commission.
Website links included in this presentation, including those of McDonald's and third parties, are for convenience only.
Information contained on or accessible through such website links is not incorporated herein and does constitute a part of
this presentation.
Important disclaimers |
| 2
▪ McDonald's is known as an industry leader in driving and scaling animal welfare, and our gestation stall
commitment is backed by science and is consistent with industry-endorsed definitions
▪ Despite industry-wide challenges related to the COVID-19 pandemic and global African Swine Fever outbreak, we
remain committed to phasing out the use of gestation stalls for housing confirmed pregnant sows in the U.S. by
the end of 2024
▪ The Board is actively involved in overseeing all aspects of our business, including our sustainability strategy and
supply chain management issues
▪ Icahn’s nominees do not possess experience, expertise or qualifications that would allow them to add meaningful
value with respect to the large majority of issues regularly faced by our Board
▪ Under our Accelerating the Arches strategy, we have a strong track record of achieving our ESG goals, while
generating industry-leading returns for shareholders and driving long-term sustainable growth
Executive summary
1
2
3
4
5 |
| 3
Table of contents
Known as an industry leader in driving and scaling animal welfare with strong progress against targets
Animal Health & Welfare
Our Purpose & Impact
Accelerating the Arches strategy focuses leadership on issues that matter most to our stakeholders
Board & Governance
Highly qualified and engaged Board, safeguarding interests of all shareholders
Company Performance
Achieving our ESG goals, while generating industry-leading returns for shareholders
1
2
3
4 |
| Section 1
Animal Health & Welfare
Known as an industry leader in driving and
scaling animal welfare improvements with
strong progress against targets |
| 5
McDonald’s has a robust approach to animal health & welfare
To achieve positive impact in the health and welfare of the animals in our supply chain, we focus on:
Creating objective third-
party verified systems to
measure performance
against industry
benchmarked standards
Taking a whole-system
approach that considers
everything from housing
and husbandry to humane
slaughter
Working with recognized
subject matter experts and
academia to access guidance
and science and challenge
the way we think
Leveraging our
global scale in our local
markets
to drive the
right outcomes
We care about the health and welfare of the animals in our supply chain, and know that our ability to serve safe, quality food comes from
animals that are cared for properly
1 2 3 4
▪ While our strategy for animal welfare is global, it incorporates the geographic variations in the way animals are raised within a global
supply chain. In this regard, we have come to realize that a focus on a desired outcome is the best approach, allowing the local
producer to achieve that outcome based on their management system
▪ Our animal health and welfare requirements for all suppliers are defined in our Global Raw Material Sponsorship Program and further
outlined in our Global Sustainable Sourcing Guide, as well as being embedded in our product Quality System Specifications
▪ Our global and market Quality Systems teams are in frequent contact with our suppliers, reviewing their performance to ensure
policies are properly implemented and consistently met |
| 6
Use of Gestation Stalls
▪ McDonald’s is on track to achieve our industry-leading goal to phase out the use
of gestation stalls for confirmed pregnant sows by the end of 2024
– More than 61% of our U.S. pork supply chain has met this goal as of the end of
2021, and we expect to reach 85 to 90% of our target by the end of 2022
– Although the COVID-19 pandemic and costly outbreak of African Swine Fever
have caused unprecedented disruptions to global supply chains and global
pork production, we remain committed to meeting this goal
Cage Free Eggs
▪ 100% of the egg supply chain in Australia, France, Germany and the UK is cage-
free
▪ More than 74% of the U.S. egg supply chain is cage-free, in line with our goal to
source 100% cage-free eggs by 2025
McDonald's is known as an industry leader in driving and scaling animal welfare
standards
We believe that animal health and welfare is an
opportunity for industry and cross-sector
collaboration, as evidenced by our partnership
with stakeholders for continuous improvement:
▪ We are a founding member of the Global
Roundtable for Sustainable Beef
▪ We formed the Chicken Sustainability
Advisory Council in 2018
▪ We actively participate in:
– The U.S. Roundtable for Sustainable
Poultry & Eggs
– The Coalition for Sustainable Egg Supply
1
2
3
Status of McDonald’s Current Animal Health & Welfare Commitments
We’ve made significant progress on all of our animal health & welfare commitments to date |
| 7
▪ In 2012, McDonald’s became the first major QSR brand to make a commitment to source from producers who do not use
gestation stalls for pregnant sows
▪ These standards allow for confirmed pregnant sows to live in a group setting for the vast majority of their lives
– Confirmation of sow pregnancy typically occurs within four to six weeks after insemination. During this time, sows are housed
in individual stalls for the viability of their embryos and safety of themselves, the other animals and the humans that care for
them
– Sow safety and embryo viability are an important determinant of the commercial viability of sow breeding and farrowing
operations and vital to ensuring affordability in pork production at the scale of U.S. consumer demand
▪ This commitment was made with the input of industry experts, including:
– The American Association of Swine Veterinarians (the “AASV”)
– Members of McDonald’s Animal Welfare Council, including Dr. Temple Grandin and Dr. Ed Pajor
– Wayne Pacelle, President & CEO of the Humane Society of the United States
▪ The definition of group housing for confirmed pregnant sows used by McDonald’s has been endorsed by the National Pork
Producers Council, the AASV and the National Pork Board, whose Pork Quality Assurance guidelines outline industry standards
for U.S. production
▪ Our 2012 commitment led to a step-change in the industry, with a commonly adopted approach to group housing
McDonald’s 2012 pork commitment is backed by science |
| 8
“The stage of gestation when sows are mixed affects aggression, injuries and stress in sows and the challenges associated with aggression, injuries and stress at mixing are greater
early after insemination than later.”
– Applied Animal Behaviour Science Journal, “Effects of stage of gestation at mixing on aggression, injuries and stress in sows,” 2015
“Science shows that placing sows in breeding stalls before being confirmed pregnant is best for their well-being and provides the best outcomes early in pregnancies. We’ve seen
significant progress on this issue. Calls for new commitments and shifting goal posts are not based on veterinary science."
– Dallas Hockman, National Pork Producers Council
“…Most animal welfare experts and swine veterinarians agree that limiting a pregnant sow’s movement for four to six weeks while pregnancy is confirmed is the right thing to do
because it reduces the likelihood of miscarriage.”
– Charlie Arnot, Chief Executive Officer, The Center for Food Integrity
“The definition of ‘group housing’ does not specify number of weeks for pregnancy confirmation, but typically occurs between 35 and 45 days of gestation. This timeframe
coincides with the phase of pregnancy where embryos have successfully implanted into the uterine wall and fetal development is advanced enough for detection using current
technology. Forming sow groups during the implantation phase of pregnancy has been shown to decrease conception rates. There is also an advantage to animal welfare by
confirming pregnancy prior to forming sow groups so as to not disrupt the group’s dominance hierarchy with non-pregnant sows returning to estrus and exhibiting estrus
behaviors or removal of non-pregnant sows from the established group.”
– Sherrie Webb, Director of Animal Welfare and JSHAP Associate Editor, American Association of Swine Veterinarians
“Based on my decades of experience as a pork producer… group housing led to poor sow welfare and productivity outcomes. The sows fought in pens to establish dominance and
injured each other... Due to these fights and associated stress, sows in a group pen also generally give birth to fewer piglets per litter each time that they farrow, further reducing a
farm’s productivity”
– Phil Borgic, Director, National Pork Producers Council
McDonald’s commitment is supported by industry experts… |
| 9
Smithfield Foods Tyson Foods
…and industry producers
“Tyson Foods works proactively with our strategic procurement partners to implement
responsible practices throughout our supply chain. McDonald’s has been a
tremendous partner to us in working to focus on and continuously improve animal
health and welfare outcomes. Through its leadership, McDonald’s has helped to
create a future of quality, secure and sustainable food because it knows that how food
is produced and where it comes from matters to our shared customers, communities,
and the environment. McDonald’s has used its considerable reach and credibility to
promote productive values across the industry, including its commitment to improve
animal health and welfare outcomes. Tyson Foods supports the use of housing
systems that promote animal health and welfare throughout our supply chain.
McDonald’s is clearly a solutions-based leader with a strong commitment to
providing a safe and humane environment for animals, as well as affordable food
options for U.S. consumers.”
– Ken Opengart, DVM, PhD, Vice President, Animal Welfare and International
Sustainability, Tyson Foods
“McDonald’s has continuously advocated for farming solutions that benefit
stakeholders across the industry, and we are proud to be its partner. The company has
long used its leadership position to promote ESG-forward initiatives, because it
knows that prioritizing progressive solutions is essential to the broader U.S. food
system. Its investments in partnerships with suppliers, and meaningful support it
provides to farmers, have made a tangible impact. These efforts underscore the
collaboration that McDonald’s has driven throughout the industry and its commitment
to the highest possible standards. With regards to sow welfare, McDonald’s has worked
with a wide range of stakeholders to inform its approach and has helped its partners
meet standards that are supported by veterinary science, benefit all parties and drive
impact at scale. McDonald’s was one of the first to support suppliers in sourcing from
producers that have adopted group-housing systems for pregnant sows – ensuring
excellent animal care while enabling pork producers to meet U.S. demand and keep
food affordable for consumers. Smithfield was the first U.S. pork producer to commit to
group housing for sows on all company-owned farms, a transition it completed in
2017.”
– Shane Smith, President and CEO, Smithfield Foods |
| 10
We are delivering on our pork commitment and promoting best practices
2012
McDonald’s makes
commitment to source
pork from U.S.
suppliers that do not
house pregnant sows
in gestation stalls by
the end of 2022
2012-2017
McDonald’s works
closely with
suppliers to help
them outline their
plans to phase out
sow gestation
stalls by 2017
2017
McDonald’s achieves its
milestone to source pork
for its U.S. business only
from producers who
share its commitment to
phase out gestation stalls
for confirmed pregnant
sows in its supply chain
2017-2022
McDonald’s makes
meaningful progress on
its commitment while
facing widespread
industry disruptions
2022
McDonald’s extends
its target by two years
due to the industry
headwinds and
communicates that
the company is more
than 61% towards its
goal as of the end of
2021 and will reach
85 to 90% of its target
by the end of 2022
2024
McDonald’s remains
committed to
reaching its target to
phase out the use of
gestations stalls for
housing confirmed
pregnant sows in its
supply chain by the
end of 2024
▪ McDonald’s has worked closely with suppliers, vendors and partners to transition to non-gestation stall sources, and continues to engage
to ensure commitments are on track
▪ The COVID-19 pandemic(1) and the costly outbreak of African Swine Fever have caused unprecedented disruptions
to global supply chains and global pork production
▪ In the U.S., this situation has been exacerbated as the structure of the U.S. pork industry is highly fragmented,
with limited vertical integration
▪ Despite these challenges, we have worked closely with our supply chain partners to best position ourselves to
honor our commitment
Where McDonald’s pork
commitment stands today
(1) The conversion to group housing requires a significant amount of financing, which many facilities had difficulty obtaining as a result of COVID-19. There was also a reduction in the number of animals, resulting in a decline in overall farm revenues and some smaller farms being
pushed out of business. Given the cost and lack of offsetting increase in revenues, many producers have had difficulty affording the transition unless part of a scheduled renovation/rebuilding of an existing facility or new construction. |
| 11
Icahn’s “crate-free” demand reflects a departure from accepted science and
cites a Proposition that is not applicable to McDonald’s
Icahn is demanding compliance with California’s Proposition 12, which is currently being legally challenged, and is not enforceable by law.
Furthermore, if enforced, this Proposition would not apply to McDonald’s products.
▪ Proposition 12 is under temporary halt on enforcement of the prohibition on pork from gestation stalls, due to the state’s two-year delay in
finalizing regulation
▪ This proposed law is focused on whole or premium fresh cuts, whereas McDonald’s buys ground pork and strip and Canadian bacon that is fully or
partially cooked(¹)
However, several states have passed laws addressing the transition to group housed sow production for all types of pork products, with criteria that
is consistent with McDonald’s 2012 commitment:
▪ For example, in 2010, the State of Ohio struck an agreement with the Humane Society of the United States to phase out the use of gestation stalls
for confirmed pregnant sows within Ohio by the end of 2025
▪ According to the agreement, which was signed by the Humane Society, “[i]t is understood that in all housing systems, sows may be housed in
breeding/gestation stalls until they are confirmed pregnant”
▪ This was codified by Rule 901:12-8-02 promulgated under the Ohio Administrative Code, which provides that breeding/gestation stalls may be used
post-weaning for a period of time that seeks to maximize embryonic welfare and allows for the confirmation of pregnancy—a period that veterinary
scientists estimate to be four to six weeks
– Our 2012 commitment was made with input from animal welfare advocates, agricultural experts and veterinary scientists. It was understood
then, and remains so today, that there is a period of a breeding sow’s life when it should not be housed in a group setting: during the
insemination process and until a pregnancy is confirmed, which best promotes a successful pregnancy
Icahn’s “crate-free” demand is so obscure that it represents an extremely niche market comprising less than 0.1% of U.S. pork
production
(1) “Cut” for purposes of section 25991(u) of the Health and Safety Code and this Article means any uncooked primal, wholesale, sub-primal or retail cut including, but not limited to, those identified and described in the United States Department of Agriculture’s Institutional Meat
Purchase Specifications (IMPS): Fresh Pork Series 400 (November 2014 Edition) and the 2014 Uniform Retail Meat Identity Standards (URMIS) developed by the Industry-Wide Cooperative Meat Identification Standards Committee, but shall exclude any ground or otherwise
comminuted meat products. |
| 12
Sourcing 100% “crate-free” pork is not feasible today
Group housed vs. “crate-free” pork availability
Product “Crate-free” Volume Available (million lbs)(2)
Trim 0.6
Picnics 0.6
Bellies 0.9
Loins 1.4
Total 3.6
▪ McDonald’s represents roughly 1% of the pork produced in the U.S. (291.6m lbs),
whereas “crate-free” pork represents 0.1% or less of total pork production
▪ There is not sufficient “crate-free” pork available today to meet McDonald’s
needs
▪ The current supply of what may be defined as “crate-free” pork would not meet the volume required for our supply chain
▪ McDonald’s has offered premium pricing to suppliers for “crate-free” pork, and even that is not enough to create sufficient supply
▪ The industry faces significant challenges in creating housing systems with more stringent parameters than standard group housed requirements,
including compliance with Proposition 12
– An analysis by Dr. Steve R. Meyer, consulting economist for the National Pork Producers Council, found that, due to the Proposition 12 production
method that increases sow mortality, reduces litter sizes and reduces productivity, compliant producers nationally will have to spend an estimated
$293.9 million to $347.7 million of additional capital in order to reconstruct their sow housing
– The California Department of Food and Agriculture acknowledged that within California, Proposition 12 will make pork “more expensive to
consumers,” “disproportionately reduce food purchasing power of low-income consumers,” substantially increase costs to public entities like
schools, and impose substantial conversion, operating, and record-keeping costs on sow farmers, including “lower piglet output per animal and
increased breeding pig mortality”
Based on current estimates, McDonald’s would require at least 300-400 times the animals housed today in “crate-free” systems to keep
its supply chain running(1)
(1) Given that McDonald’s consumes only 1% of U.S. pork, to convert the entire industry would require at least 30,000 – 40,000 times the animals housed today in crate-free systems.
(2) Estimates based on 0.1% of predicted volume currently available. The predicted volume is based off of what may be available as per practices as described by American Humane and utilized by small specialty brands (which may vary from the practices described by American
Humane). |
| 13
Icahn’s position does not make economic sense
▪ McDonald’s suppliers only purchase approximately 1% of the pork that is produced in the U.S.
▪ The raw material that our suppliers purchase is pork trim (80%), pork bellies for bacon (10%), picnics for McRib (6%) and sow
loins for Canadian bacon (4%)
▪ McDonald’s is already paying a premium to purchase group housed pork
▪ For an additional meaningful increase in the number of group housed sows in the industry, retailers need to purchase and sell
more premium group housed products such as hams, ribs and market loins
▪ If producers are only selling trim and bellies from a carcass, the premium McDonald’s pays for those items does not fully cover
the group housed costs for all the premium cuts
▪ In other words, the economics don’t work for pork producers to convert to group housed pork if only selling trim, which
represents only 16% of the carcass
▪ It comes down to supply and demand and without buyers of the premium cuts of pork, there is not enough market demand
for group housed pork to cover the costs of raising sows in this manner
Going “crate-free” would significantly increase costs, placing a burden on all aspects of our business, our supply chain and McDonald’s
customers, while lacking the support of industry experts |
| 14
We remain focused on driving progress within the industry
Conducting group housed pork
reviews with suppliers to drive
accountability and remaining
committed to reporting regular
progress updates with
transparency
Continuing to inform our
forward-looking strategies with
input from credible third-party
experts and scientists with the
intent to develop and drive
scalable solutions
Staying agile as pork production
practices continue to evolve over time
as producers balance consumer
demand, animal health and welfare
concerns and land and resource
constraints
Seeking Expert Input Developing Solutions Driving Accountability
1 2 3
Key Pillars of Our Strategy
We are proud that an estimated 30 - 35%(1) of U.S. pork production has moved to group housing systems since we became the first
major QSR brand to make this kind of commitment in 2012, and we look forward to promoting further collaboration across the
industry on this issue
(1) Source: National Pork Producers Council. |
| Section 2
Our Purpose & Impact
Accelerating the Arches strategy focuses
leadership on issues that matter most to our
stakeholders |
| 16
Franchisees
McDonald’s benefits from the
entrepreneurial spirit of local
business owners as 93% of
McDonald’s restaurants
worldwide are franchised
Suppliers
McDonald’s suppliers are
dedicated to quality and safety
Crew & Corporate Staff
McDonald’s is committed to our
people who make the
difference in providing a great
experience for our customers
40K+
RESTAURANTS
100+
COUNTRIES
>65M
CUSTOMERS
Served Every Day
Three-legged stool – the McDonald’s business model |
| 17
Accelerating the Arches
encompasses all aspects
of McDonald’s business as
the leading global omni-
channel restaurant brand,
including our purpose,
values, and growth pillars
that build on the
Company’s competitive
advantages
Overview of Accelerating the Arches strategic plan |
| 18
Recent Highlights:
▪ Substantially achieved the
responsible sourcing goals we set
in 2020 for our six priority
commodities: beef, soy for chicken
feed, coffee, palm oil, fish and
fiber
▪ Continued to make progress
toward the five Global Happy Meal
Goals we set in 2018 across our 20
major markets
▪ Committed to phasing out the use
of gestation stalls for housing
confirmed pregnant sows in the
U.S. by the end of 2024
- More than 61% converted to
group housing as of the end of
2021; expect to reach 85-90%
converted by the end of 2022
Our Planet
Recent Highlights:
▪ Joined the United Nations
Race to Zero campaign,
putting McDonald’s on the
path to net zero emissions by
2050, building on momentum
of prior SBTs
▪ Released our inaugural
Climate Risk & Resiliency
Summary, guided by
reporting recommendations
from the Task Force on
Climate-Related Financial
Disclosures (TCFD)
▪ Made a three-year, $5
million commitment to
accelerate and scale
sustainable packaging
solutions for the industry
Recent Highlights:
▪ Continued the five-year,
$100 million commitment to
RMHC we set in 2020 to help
increase access to quality
health care for children
around the world
▪ Supported employees in
times of need through
Employee Assistance Fund
and relief efforts for
communities after disasters
via the Red Cross
▪ Donated millions of pounds
of food and offered free
‘Thank You Meals’ to
healthcare workers and first
responders
Jobs, Inclusion and
Empowerment
Recent Highlights:
▪ Raised hourly wages at Company-owned
McDonald’s USA restaurants
▪ Disclosed comprehensive McDonald’s
Diversity Snapshot and EEO-1 data
▪ Making progress on ambitious goals to
increase diversity in leadership roles
▪ 2021 pay gap analysis showed that we
substantially achieved equal pay for
women globally, with identified gap closed
in 2022, and that there was no pay gap
disfavoring historically underrepresented
groups in the U.S.
▪ Invited U.S.-based suppliers to sign a
Mutual Commitment to DEI
▪ Launched a Franchisee Recruitment
Initiative to help increase the number of
new diverse franchisees
For more information on our ESG impact and progress highlights, see the Impact Strategy & ESG Reporting page of our website
As part of our Accelerating the Arches strategy, we have prioritized our role and commitment in the communities in which we operate to
focus on four areas
Fulfilling our purpose to feed and foster communities
Food Quality & Sourcing Community
Connection |
| 19
We are proud of the progress we have made against our range of ambitious goals. We have achieved or substantially achieved all of our
2020 sustainability goals and will continue to advance our responsible sourcing in the future. Learn more by reading our 2020 – 2021
Purpose & Impact Progress Summary
McDonald’s has a track record of meeting ESG commitments
Category Goal Status
Beef Goal 1: Accelerate Industry Progress
By the end of 2020, source a portion of our beef from suppliers participating in sustainability programs aligned
with the Global Roundtable for Sustainable Beef (GRSB) Principles and Criteria and that meet McDonald’s
requirements in 10 of our top beef sourcing countries globally
Goal 2: Share Knowledge and Tools
By the end of 2020, engage with local farmers through farmer outreach projects to help develop and share best
practices related to our Priority Impact Areas, in our top 10 beef sourcing countries globally
Goal 3: Promote Flagship Farmers
By the end of 2020, select and showcase McDonald’s Flagship Farmers to demonstrate leading best practices
related to key sustainability impact areas, in our top 10 beef sourcing countries globally
Goal 4: Pioneer New Practices
By the end of 2020, set up McDonald’s Progressive Farm Partnerships to trial and discover new practices
related to our Priority Impact Areas, in our top 10 beef sourcing countries globally
Goal 5: Conserve Forests
By the end of 2020, eliminate deforestation in supply chains for our beef, chicken (including soy in feed),
palm oil, coffee and the primary fiber-based guest packaging sourced for McDonald’s restaurants
Achieved
Achieved
Achieved
Achieved
Substantially Achieved
Achieved = 100% Substantially Achieved = 95% to 99.9% |
| 20
McDonald’s has a track record of meeting ESG commitments (cont’d.)
Category Goal Status
Coffee By the end of 2020, all coffee sourced for McDonald’s restaurants will be sustainably sourced and support
deforestation-free supply chains
By the end of 2020, eliminate deforestation in supply chains for our beef, chicken (including soy in feed),
palm oil, coffee and the primary fiber-based guest packaging sourced for McDonald’s restaurants
Soy
(chicken feed) By the end of 2020, eliminate deforestation in supply chains for our beef, chicken (including soy in feed),
palm oil, coffee and the primary fiber-based guest packaging sourced for McDonald’s restaurants
Fiber By the end of 2020, all primary fiber-based guest packaging sourced for McDonald’s restaurants will come
from recycled or certified sources
By the end of 2020, eliminate deforestation in supply chains for our beef, chicken (including soy in feed),
palm oil, coffee and the primary fiber-based guest packaging sourced for McDonald’s restaurants
Palm Oil By the end of 2020, eliminate deforestation in supply chains for our beef, chicken (including soy in feed),
palm oil, coffee and the primary fiber-based guest packaging sourced for McDonald’s restaurants
Fish By the end of 2020, all the wild-caught fish sourced for McDonald’s products will come from verified
sustainable sources
Substantially Achieved
Substantially Achieved
Achieved
Substantially Achieved
Substantially Achieved
Substantially Achieved
Achieved
Achieved = 100% Substantially Achieved = 95% to 99.9%
We are proud of the progress we have made against our range of ambitious goals. We have achieved or substantially achieved all of our
2020 sustainability goals and will continue to advance our responsible sourcing in the future. Learn more by reading our 2020 – 2021
Purpose & Impact Progress Summary |
| 21
▪ We enhanced our executive compensation program to strengthen leadership accountability toward our Core Values. McDonald’s incorporated quantitative human
capital-related metrics to the 2021 annual incentive compensation program for its Executive Vice Presidents
- In addition to the Company’s financial performance, executives are measured on their ability to champion our core values, improve representation within
leadership roles for both women and historically underrepresented groups, and create a strong culture of inclusion within the Company
▪ By 2025, we are committed to better representing the communities we serve by increasing the diversity of our leadership roles
▪ By the end of 2030, McDonald’s has an overall goal to reach gender parity in leadership roles
- To set these goals, we leveraged internal and external data to understand where we are currently, and where we want to be in the future
2025
Women in leadership
roles globally
(Senior Director and above)
45%
This 2025 goal is an ~8%
increase from our 2020 baseline
data.
During 2021, we made progress
towards this goal
2025
Historically underrepresented groups in
leadership roles in the U.S.
(Senior Director and above)
35%
This 2025 goal is a ~6%
increase from our 2020
baseline data.
During 2021, we made
progress towards this
goal
▪ Each member of the leadership team also works collaboratively with McDonald’s Chief Diversity, Equity and Inclusion Officer and his team to build an action plan to move the
needle on these commitments within their respective function that includes, but isn’t limited to:
- Active engagement with internal and external diversity groups
- Internal sentiment measurement via our "Inclusion Index" – which has been designed to measure the critical components of building an inclusive culture
- Mentorship and sponsorship relationships with more junior women or underrepresented groups
- Creating diverse candidate slates for all open Officer roles
Collaboration with McDonald’s Chief Diversity, Equity and Inclusion Officer
1
2
3
To reflect our continued focus on diversity & inclusion, we’ve implemented policies that hold our leaders directly accountable for making
tangible progress on our DEI goals
McDonald’s is holding executives accountable for DEI progress
= 2020 Baseline = 2025 Goal |
| 22
A global net zero emissions goal requires system-wide decarbonization, and McDonald’s is working with market business
teams, franchisees, suppliers and other partners to convert ambition to action to impact by:
System-wide Emissions Reductions
▪ Increasing the substantial emissions
reductions already in progress across our
restaurants, offices and supply chain in
service of McDonald’s existing SBTi targets
(set in 2018, covering scopes 1, 2 and 3)
▪ Evolving our targets and aligning to the
latest climate science across all scopes of
our emissions
▪ Seeing increase in global suppliers setting
climate targets and implementing tailored
strategies to reduce emissions
Innovative, Locally Tailored Solutions
▪ Enabling McDonald’s teams across the world to innovate and implement
locally tailored solutions to help advance industry-leading innovations in
renewable energy, regenerative farming, circular economy and
sustainable packaging
▪ Markets are already at work, with McDonald’s UK & Ireland also
announcing its comprehensive business and sustainability strategy
▪ In Europe, renewable energy purchases in 2020 covered over 6,000
restaurants’ worth of electricity across 11 markets
▪ Once all 2019-2021 transacted U.S. renewable energy virtual power
purchase agreement (VPPA) projects are online, the energy generated
will be equivalent to over 8,000 U.S. restaurants' worth of electricity,
avoiding ~2.3 million metric tons of CO2e/year
Effective Collaboration
▪ Contributing insights from McDonald’s
supply chain and sustainability journey thus
far to the SBTi’s important ongoing work to
develop credible 1.5°C emissions reduction
pathways for forestry, land and agriculture,
and to define a science-based framework for
net zero emissions in agriculture-dependent
supply chains
▪ Once final, these frameworks will guide the
future evolution of our existing 2030
targets
In October 2021, McDonald’s joined the United Nations Race to Zero campaign and signed on to the Science Based Target initiative’s
(SBTi) Business Ambition for 1.5°C Campaign
We are accelerating climate action to reach net zero by 2050
We recently released our inaugural Climate Risk & Resiliency Summary, guided by reporting recommendations from the Task Force
on Climate-Related Financial Disclosures (TCFD), demonstrating our continued commitment to disclosing climate-related risks and
opportunities for our business |
| Section 3 Highly qualified and engaged Board,
safeguarding interests of all shareholders
Board & Governance |
| 24 24
Fresh perspectives balanced with
institutional knowledge
3 3
6
0-5 Years 6-10 Years >10 Years
Diversity that contributes to a balanced
and effective Board
of Directors are women
or racially/ethnically
diverse 50%
Updated Director Selection Process
▪ In December 2020, our Governance Committee approved updated Director Selection Process guidelines to more closely align with
the Company’s values and the strategic drivers associated with Accelerating the Arches
▪ These updates highlight important areas of focus for the Company and our investors including cybersecurity, digital business
models, human capital management, diversity, equity and inclusion, and sustainability
CHRIS KEMPCZINSKI
President and CEO
LLOYD DEAN
CEO,
CommonSpirit Health
RICHARD LENNY
Non-Executive Chairman,
Conagra Brands
Director Since: 2005
JOHN MULLIGAN
EVP and COO,
Target Corporation
Director Since: 2015
SHEILA PENROSE
Former Non-Executive Chairman,
Jones Lang LaSalle
Director Since: 2006
PAUL WALSH
Executive Chairman,
McLaren Group
Director Since: 2019
MILES WHITE
Former Chairman and CEO,
Abbott Laboratories
Director Since: 2009
Director Since: 2003
CATHERINE ENGELBERT
Commissioner,
Women’s National
Basketball Association
Director Since: 2019
ENRIQUE HERNANDEZ, JR.
Independent Chairman
Executive Chairman,
Inter-Con Security Systems
MARGARET GEORGIADIS
CEO – Partner,
Flagship Pioneering
Director Since: 2015
ROBERT ECKERT
Operating Partner,
FFL Partners, LLC
JOHN ROGERS, JR.
Founder, Chairman,
Co-CEO and CIO,
Ariel Investments
Director Since: 2003
Director Since: 1996
Director Since: 2015
Director Since: 2019
McDonald’s has a highly qualified and diverse Board |
| 25
DEAN
ECKERT
ENGELBERT
GEORGIADIS
HERNANDEZ
KEMPCZINSKI
LENNY
MULLIGAN
PENROSE
ROGERS
WALSH
WHITE
BRAND MANAGEMENT: Contributes to an understanding of how our business, standards and performance are
essential to protecting and increasing the value of the McDonald’s brand ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
CUSTOMER-CENTRIC: Provides an understanding of our business, operations and customer-centric
Accelerating the Arches growth strategy, focusing on our purpose, values and growth pillars ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
DIGITAL: Provides an understanding of how the 3 D’s (digital, delivery and drive-thru) leverage competitive
strengths ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
FINANCE/CAPITAL MARKETS: Supports the oversight of our financial statements and strategy and financial
reporting to investors and other stakeholders ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
GLOBAL EXPERIENCE: Contributes to an understanding of how our business is structured to enable the right
level of support for our international markets, as well as the sharing of solutions across international markets ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
HUMAN CAPITAL MANAGEMENT: Provides an understanding of how we manage and develop our workforce,
and how we focus on promoting equality throughout the organization ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
INFORMATION TECHNOLOGY/CYBERSECURITY: Contributes to an understanding of information technology
capabilities, cloud computing, scalable data analytics and risks associated with cybersecurity matters ✓ ✓ ✓
MARKETING: Provides awareness of culturally relevant approaches that effectively communicate the story of
our brand, food and purpose ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
OTHER PUBLIC COMPANY BOARD: Demonstrates a practical understanding of organizations, processes,
governance and oversight of strategy, risk management and growth ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
REAL ESTATE: Provides an understanding of how owning or leasing real estate, combined with co-investment
by franchisees, enables us to achieve high restaurant performance levels ✓ ✓ ✓
SUSTAINABILITY/CORPORATE RESPONSIBILITY: Contributes to an understanding of sustainability issues and
corporate responsibility, and their relationship to our business and strategy ✓ ✓ ✓ ✓ ✓ ✓ ✓
More than half of
McDonald’s
Directors have
significant
sustainability /
corporate
responsibility
expertise including
through experience
as:
▪ Executives at large,
global retail
companies,
including at major
consumer brands
within the food
and beverage
industries
▪ Investors in public
and private
markets
▪ Public company
directors at
complex, global
organizations
Our Directors’ skills and experiences facilitate robust oversight |
| 26
Directors Lenny and Penrose provide the McDonald’s Board with critical skills
and experience
Richard Lenny
Compensation Committee Chair
Sustainability & Corporate Responsibility Member
▪ Mr. Lenny is the Non-Executive Chairman of Conagra Brands, a leading branded food
company
▪ He has served as Chair of McDonald’s Compensation Committee since 2019, and also
serves on the Sustainability & Corporate Responsibility Committee
▪ As Chair of the Compensation Committee, he has led the effort to establish a strong
pay-for-performance program that closely aligns the interests of executives with those
of shareholders, including the addition of quantitative human capital metrics to create a
strong culture of inclusion among employees
▪ Mr. Lenny brings extensive knowledge of strategy and business development, finance,
marketing and consumer insights, supply chain management and distribution,
sustainability and social responsibility matters gained from his experience as Chief
Executive Officer of The Hershey Company
▪ He has extensive experience with major consumer brands in the food industry, having
also served in executive-level positions at Kraft Foods, Nabisco Biscuit and Snacks and
the Pillsbury Company
▪ Mr. Lenny has served as Director of several large public companies, including Conagra
Brands, Illinois Tool Works, Discover Financial and The Hershey Company, giving him a
broad understanding of governance issues facing public companies and strong leadership
insights
▪ Ms. Penrose is the former Non-Executive Chair of Jones Lang LaSalle, which has been
widely recognized for its commitment to sustainability. She also currently serves as an
Executive Advisor to Boston Consulting Group
▪ She has served as Chair of McDonald’s Sustainability & Corporate Responsibility
Committee since 2016 and has a track record of success as its leader; she also serves on
the Executive and Governance Committees
▪ Ms. Penrose has significant experience working with management to incorporate and
balance perspectives from a wide range of stakeholders to inform our sustainability
and ESG approach
▪ She has overseen McDonald’s recent sustainability efforts and progress against
ambitious climate, responsible sourcing and diversity, equity and inclusion goals
▪ In addition to her sustainability experience, she brings to our Board extensive experience
in, and knowledge of, finance and real estate, both of which are areas of significance to
our Company; she is also well-versed in strategy and business development, finance, and
leadership development and succession planning
▪ Ms. Penrose has served as Director and chaired key board committees of several public
companies, including Jones Lang LaSalle, EFunds Corporation and Nalco Chemical
Company, giving her extensive corporate governance and sustainability oversight
experience
▪ In addition, she co-founded the Corporate Leadership Center, a non-profit organization
that partners with leading institutions to offer programs in executive leadership
development, contributing to our Board’s strong human capital management expertise
Sheila Penrose
Sustainability & Corporate Responsibility Committee Chair
Governance / Executive Committee Member |
| 27
The Board evaluated the dissident nominees using its standard Director Selection Process; each of the nominees were held to the same
standards as all of McDonald’s director candidates
Replacing Directors with Icahn’s candidates is not in McDonald’s or its
shareholders’ best interests
▪ High integrity and business ethics
▪ Strength of character and judgment
▪ Ability to devote significant time to Board duties
▪ Desire and ability to continually build expertise in emerging areas of strategic focus for
McDonald’s
▪ Demonstrated focus on promoting equality
▪ Business and professional achievements
▪ Ability to represent the interests of all shareholders
▪ Knowledge of corporate governance matters
▪ Understanding of the advisory and proactive oversight responsibility of our Board
▪ Comprehension of their role as a public company director and the fiduciary duties owed
to shareholders
▪ Intellectual and analytical skills
Key Attributes and Skills of All Director Nominees
After conducting virtual interviews with each of Mmes. Ganzler and
Samuelrich and reviewing each candidate’s biographical and other
information, the Governance Committee determined that neither
candidate possessed the experience, expertise or qualifications that would
allow them to add meaningful value with respect to the large majority of
issues regularly faced by the McDonald’s Board of Directors:
▪ In particular, neither Ms. Ganzler nor Ms. Samuelrich has the knowledge
or context that a candidate who has led a large corporation or had other
“C-suite” experience or served on a public company board would have
▪ Additionally, neither candidate has multinational or international
experience or context or has significant experience or expertise on
financial or complex supply chain issues
As such, the Governance Committee declined to recommend that either
candidate be included in the Board of Director’s slate of director nominees
for the Company’s 2022 Annual Shareholders’ Meeting
Assessment of Icahn Nominees |
| 28
Our Sustainability & Corporate Responsibility Committee monitors and
oversees our strategies and management of ESG issues
▪ Review and monitor our strategies and efforts to address sustainability and brand
trust
▪ Oversee important sustainability priorities and other matters, including corporate
philanthropy
▪ Review and monitor the development and achievement of our environmental and
social impact goals and metrics, and other aspects of brand trust
▪ Review global sustainability communication plans and reporting
▪ Review risks related to sustainability and corporate responsibility matters
▪ Review and monitor Company culture and human capital management matters,
including workplace health and safety, respectful workplace and DEI
▪ Oversight of sustainability and corporate responsibility-related shareholder
proposals
Meetings in 2021:
5
▪ Oversaw progress on all of our sustainability goals across the entire supply chain,
including our efforts focused on animal health and welfare
▪ Drew on its diverse experience to support the development of strategy to achieve
net zero emissions by 2050; will continue to oversee progress to ensure we hold the
Company accountable to its targets
▪ Oversaw the formalization of our climate ambition with specific targets included in
our inaugural Climate Risk & Resiliency Report, guided by recommendations from
the Task Force on Climate-related Financial Disclosures (TCFD)
▪ Oversaw significant progress on our Purpose, Impact and ESG strategy more
broadly, particularly on packaging and waste issues, including launching our new
sustainable Happy Meal toy strategy and our additional $5 million commitment with
the NextGen Consortium to continue work to accelerate and scale sustainable
packaging solutions for the industry
Committee Members:
Sheila Penrose (Chair)
Margaret Georgiadis
Richard Lenny
Paul Walsh
Relevant Areas of Focus: 2021 Oversight Highlights:
The Committee meets with a range of McDonald’s management members throughout the year and regularly updates our Board on its
risk oversight activities, including escalating any risks that it concludes may be reasonably likely to be significant |
| 29
Refreshed and Independent Board
▪ Independent Board Chairman
▪ 11 of 12 Directors are independent (all except CEO)
▪ No special interest Directors; our Director nominees represent the interest of all
shareholders
▪ All standing Committees are independent (except Executive Committee, chaired
by our CEO)
▪ Refreshed Director Selection Process guidelines align with Accelerating the
Arches
▪ Regular succession planning and effective leadership transitions at CEO,
executive management and Board levels
▪ 50% of Directors joining our Board since 2015
Accountability to Shareholders
▪ Annual election of all Directors
▪ Majority voting standard for uncontested Director elections
▪ No supermajority voting provisions
▪ No “poison pill” (shareholder rights plan)
▪ Proxy access for Director candidates nominated by shareholders reflecting
standard market practices
▪ Meaningful thresholds for shareholders to call special meetings
▪ Public disclosure of corporate political contributions and certain trade
association memberships
Diverse and Committed Directors
▪ Demonstrated commitment to diversity, with 50% of our Board comprised of
diverse Directors (25% women and 25% racially/ethnically diverse)
▪ Requirement that Directors shall not serve on more than three public company
boards, in addition to service on the McDonald’s Board
▪ No Directors who are current public company CEOs serve on more than one
outside Board
▪ Directors are required to obtain consent from the Chairman and Chair of the
Governance Committee to serve on the Board of any other for-profit company
Facilitating Effective Oversight
▪ Significant shareholder outreach and engagement program, with independent
Director participation for select meetings
▪ Executive sessions of independent Directors scheduled for Board and Committee
meetings
▪ Annual Board and Committee self-evaluation
▪ Board access to independent advisors
We are committed to strong corporate governance practices |
| 30
Key Compensation Elements 2021 Performance Measures 2021 Key Terms
Base Salary ▪ N/A
▪ Decided based on competitive considerations, scope of
responsibilities, individual performance, tenure in position,
internal pay equity and the effect on our general and
administrative expenses
Short-Term Incentive Plan
(STIP)
▪ Operating Income Growth
(42.5%)
▪ Systemwide Sales Growth
(42.5%)
▪ Human Capital Metrics
(15%)
▪ Target of 180% of base salary for CEO
▪ Operating income growth requires balancing increases in revenue
with financial discipline to produce strong margins and cash flow
▪ Systemwide sales is an important metric in a franchise business as
income generation is correlated to sales growth and is a measure
of the financial health of franchisees
▪ Included quantitative human capital metrics
▪ Payouts are limited to 200% of the target award
Long-Term
Incentives
Performance-
Based
Restricted
Stock Units
(PRSUs)
▪ Earnings per share (EPS) growth
(75%)
▪ Return on invested capital
(ROIC) (25%)
▪ Relative total shareholder
return (TSR) (+/- 25 points)
▪ Cliff vest at the end of a three-year service period, subject to
achievement of EPS and ROIC
▪ Also subject to a modifier based on relative TSR over the
performance period compared to the S&P 500 Index
▪ Payouts are limited to 200% of the target award
Stock Options ▪ Share Price ▪ Provide value only if share price increases
▪ Vest ratably 25% per year with a 10-year term
▪ As a result of strong top and bottom-line
financial results across the world, our NEOs
nearly achieved the maximum payout
factor with a Corporate STIP of 184.9%
(inclusive of both financial and human
capital metrics)
▪ However, the PRSUs that vested in early
2022 paid out below target (66.7%) due to
the impact of the COVID-19 pandemic on
our 2020 performance (despite strong
performance in 2019 and 2021)
▪ These payouts demonstrate the
Committee’s commitment to align payouts
with Company performance over different
time periods in order to drive long-term
value creation for our shareholders
Performance
-
Based
Our quantitative human capital metrics measure executive performance related to championing the Company’s core values, improving diversity representation for
women and underrepresented groups, and creating a strong culture of inclusion among employees
2021 Pay for Performance Alignment
The Board is committed to designing and overseeing a strong pay-for-performance program that closely aligns the interests of executives
with those of shareholders
Executive compensation is directly aligned with business results |
| 31
✓ Strong pay-for-performance alignment
✓ Robust performance targets, and payouts under our incentive plans can
vary significantly based on Company performance
✓ Performance metrics support our growth strategy and align interests of
management with interests of shareholders
✓ STIP includes quantitative human capital metrics
✓ Majority of total direct compensation paid over the long-term
✓ Significant stock ownership and retention requirements
✓ Clawback provisions in equity agreements and STIP
✓ Independent compensation consultant
✓ Double-trigger change in control equity provisions
✓ Annual compensation peer group review
✓ Annual Say-on-Pay vote
What We Do
What We Don’t Do
Change in control agreements
Tax gross-up on perquisites
Repricing of stock options
Backdating of stock options
Encourage unreasonable risk taking
Employment agreements
Hedging or pledging of McDonald’s stock
The Board’s executive compensation practices prioritize pay-for-performance while driving business results with a focus on creating long-
term shareholder value
Our compensation practices promote executive accountability |
| Section 4
Company Performance
Achieving our ESG goals while generating
industry-leading returns for shareholders |
| 33
Commitment to Core Menu CD
Reached 26mm
loyalty members
earning rewards
in the U.S.
Drive-Thru locations in over 25,000
restaurants
Delivery via >33,000 locations in
100 countries and strategic
partnerships with Uber Eats,
DoorDash and Just Eat Takeaway
McDonald’s is focused on executing against its strategic plan
Operational proof points highlight our immense progress and commitment to delivering results
Continued focus on taste and quality
improvement to core burgers
Introduction of new, large chicken sandwiches in
various markets
Maximizing Our Marketing M
Unveiled BTS Meal (54 Countries) and trended as
#2 worldwide topic on Twitter in Q1 ‘21
Growth Powered by the M, C, & Ds
Invest in new, culturally relevant approaches to effectively communicate our
story of brand, food and purpose. This includes enhancing digital capabilities
that provide a more personal connection with customers
We’re tapping into customer demand for the familiar and focusing on serving
delicious burgers, chicken and coffee
We are leveraging our competitive strengths and built a powerful digital experience
growth engine so that, however customers choose to interact with McDonald’s, they
can enjoy a fast, easy experience that meets their needs
Doubling Down on 3Ds
(Digital, Delivery and Drive Thru)
McPlant Launch in UK,
Austria
On-trend innovation in chicken: McSpicy,
Spicy McNuggets
Source: Company materials, filings and Wall Street research.
Strong global coffee
share |
| 34
$4.2
$5.7
$4.6
$7.1
2018 2019 2020 2021
$8.8 $9.1
$7.3
$10.4
2018 2019 2020 2021
Reported Operating Income
Resilient operating model has led to consistently strong results
42% 42% 38% 45%
Reported Systemwide Sales(1)
$96.1 $100.2
$93.3
$112.5
2018 2019 2020 2021
Top-line performance resilient despite
challenging operating environment
Strong operating margins
driven by MCD’s franchise model
Reflects temporary COVID
disruption from restaurant
closures
+6% +4% (7%) +21%
Global
Systemwide
sales growth
Operating
margin(3)
Reported Free Cash Flow(2)
Model has driven high free cash flow
conversion and growth
71% 95% 98% 94%
FCF
Conversion
Rate(2)
Cash from
Operations $7.0 $8.1 $6.3 $9.1 Revenue $21.3 $21.4 $19.2 $23.2
Source: Company filings.
Note: Numbers in billions, unless otherwise specified.
(1) Systemwide sales includes sales at all restaurants, whether operated by the Company or by franchisees. While franchised sales are not recorded as revenues by the Company, management believes the information is important in understanding the Company's financial
performance because these sales are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base.
(2) Free cash flow and FCF Conversion Rate are defined as cash provided by operations less capital expenditures, and free cash flow divided by net income, respectively. Management reviews these measures to evaluate the Company’s ability to convert net profits into cash
resources, after reinvesting in the core business, that can be used to pursue opportunities to enhance shareholder value. See Appendix A hereto for a reconciliation of free cash flow and FCF Conversion Rate to cash provided by operations, the most directly comparable GAAP
financial measure.
(3) Operating margin is defined as operating income as a percent of total revenues. |
| 35
$64bn(1)
Since 2014
Met goal of $25bn in cash
return for 2017-2019
Meaningful Capital Returned to Shareholders
23%
FY2014-FY2021
Reduction in basic shares
outstanding
Source: FactSet and Bloomberg, Company filings as of April 28, 2022.
(1) Reflects dividends and share repurchases from January 1, 2014 to December 31, 2021.
(2) TSR defined as share price performance plus impact of reinvested dividends. One-year TSR reflects period beginning April 28, 2021 and ending April 28, 2022. Five-year TSR reflects five-year period beginning April 28, 2017 and ending April 28, 2022.
(3) Proxy peers includes 3M, Best Buy, Carnival Cruise, Coca-Cola, Colgate-Palmolive, FedEx, General Mills, Johnson and Johnson, Kellogg, Kimberly-Clark, Kraft Heinz, Lowe’s, Marriott, Mondelez, Nike, PepsiCo, Proctor and Gamble, Starbucks, Target, Walgreens, Walmart and YUM!
Brands.
(4) Selected QSR peers include Chipotle, Domino’s, YUM! Brands, Starbucks, Wendy’s, Papa John’s, RBI and Jack in the Box.
Significant Value Creation for Shareholders
2.1%
LTM Div. Yield
45 consecutive years of
dividend increases
Stellar track record of capital return and total shareholder return
Our commitment to investing in new and existing restaurants plus returning free cash flow to shareholders through dividends and share
repurchases has contributed to best-in-class total shareholder return over the long- and short-term
105%
97%
81%
71%
68%
MCD
S&P 500
Dow Jones
Proxy Peer Avg.
Selected QSR
Peer Avg.
12%
5%
4%
2%
(11%)
MCD
Proxy Peer Avg.
S&P 500
Dow Jones
Selected QSR
Peer Avg.
5-Year TSR(2) 1-Year TSR(2)
(4) (4)
(3)
(3) |
| Section 5 Conclusion |
| 37
▪ Our gestation stall commitment is backed by science and consistent with industry-endorsed definitions
▪ Over the course of the past several years there have been market challenges for farmers and producers that have slowed progress on phasing out
gestation stalls – both for the producers that source pork to McDonald’s suppliers and across the entire industry
▪ Despite these challenges, more than 61% of our U.S. pork supply chain has phased out the use of gestation stalls for confirmed pregnant sows as of the
end of 2021
▪ We expect to source 85% to 90% of our U.S. pork volumes from group housing systems by the end of 2022
▪ We remain committed to phasing out the use of gestation stalls for housing confirmed pregnant sows in the U.S. by the end of 2024
We ask for your support on the WHITE CARD at our Annual Meeting
We remain committed to achieving our gestation stall goal in the U.S. by the end of 2024
▪ The Board actively oversees all aspects of our business, including our sustainability strategy and supply chain management issues
▪ The Sustainability & Corporate Responsibility Committee oversees our sustainability priorities, including reviewing and monitoring the development and
achievement of our sustainability goals and metrics
▪ Ms. Penrose has a track record of success as Chair of the Committee, including significant experience working with management to incorporate and
balance perspectives from a wide range of stakeholders to inform our sustainability and ESG approach
▪ Mr. Lenny has extensive knowledge of strategy and business development, finance, marketing and consumer insights, supply chain management and
distribution, sustainability and social responsibility matters
▪ Icahn’s nominees do not possess experience, expertise or qualifications that would allow them to add meaningful value with respect to the large
majority of issues regularly faced by our Board
Our directors are the most qualified to continue overseeing McDonald’s ESG strategy and commitments |
| Appendix Non-GAAP Reconciliation |
| 39
Appendix A: Non-GAAP Reconciliation
Free Cash Flow and FCF Conversion Rate
Year Ended December 31,
(Dollars in millions) 2021 2020 2019 2018
Cash provided by operations $9,142 $6,265 $8,122 $6,967
Less: Capital expenditures 2,040 1,641 2,394 2,742
Free cash flow $7,102 $4,624 $5,728 $4,225
Divided by: Net income 7,545 4,731 6,025 5,924
FCF conversion rate 94.1% 97.8% 95.1% 71.3%
Source: Company filings. |
|
Annual Shareholders' Meeting
NYSE: $254.32 Volume: More Stock
I f i
2022 McDonald’s
Annual Shareholders’
Meeting
May 26, 2022 – 9:00 a.m. Central Time
Vote TODAY using the WHITE proxy card and disregard any gold proxy card
that may be sent to you by the Icahn Group. We encourage you to submit your
vote using the WHITE proxy card as promptly as possible, even if you plan to
attend the virtual Annual Shareholders Meeting.
How to Vote
Okay
Important Information For Our
Annual Meeting
Forward-Looking Statements
This website and other written or oral statements made from time to time by McDonald’s Corporation
(“McDonald’s”) contain forward-looking statements about future events and circumstances. Generally
speaking, any statement not based upon historical fact is a forward-looking statement. In particular,
statements regarding McDonald’s plans, strategies, prospects and expectations regarding its
business and industry are forward-looking statements. They refect McDonald’s expectations, are not
guarantees of performance and speak only as of the date hereof. Except as required by law,
McDonald’s does not undertake to update such forward-looking statements. You should not rely
unduly on forward-looking statements. McDonald’s business results are subject to a variety of risks,
including those that are described in its Quarterly Report on Form 10-Q for the quarter ended March
31, 2022 and subsequent flings with the Securities and Exchange Commission (the “SEC”).
Important Additional Information Regarding Proxy Solicitation
McDonald’s has fled a defnitive proxy statement and WHITE proxy card with the SEC in connection
with its solicitation of proxies for its 2022 Annual Meeting. Important: McDonald’s shareholders are
encouraged to read the defnitive proxy statement (and any amendments and supplements
thereto), the accompanying WHITE proxy card and other documents fled with the SEC in their
entirety because they contain important information. McDonald’s shareholders may obtain a copy
of the defnitive proxy statement (and any amendments and supplements thereto), the accompanying
WHITE proxy card and other relevant documents fled by McDonald’s with the SEC without charge
from the SEC’s website at www.sec.gov. McDonald’s shareholders may also obtain a copy of these
documents without charge by sending a request to shareholder.services@us.mcd.com or visiting the
investor section of the McDonald’s website at www.investor.mcdonalds.com.
Certain Information Regarding Participants
McDonald’s, its Directors and certain of its executive ofcers are participants in the solicitation of
proxies from McDonald’s shareholders in connection with the matters to be considered at the 2022
Annual Meeting. Information regarding the ownership of McDonald’s Directors and executive ofcers
in McDonald’s common stock is included in the defnitive proxy statement for its 2022 Annual Meeting,
fled with the SEC on April 8, 2022, which can be found through the SEC’s website at www.sec.gov.
Changes to such ownership have been or will be refected on Statements of Changes in Benefcial
Ownership on Form 4 fled with the SEC. Details concerning the nominees of the McDonald’s Board of
Directors for election at the 2022 Annual Meeting are also included in such defnitive proxy statement.
|
| Annual Shareholders' Meeting
2022 McDonald’s
Annual Shareholders’
Meeting
May 26, 2022 – 9:00 a.m. Central Time
Vote TODAY using the WHITE proxy card and disregard any gold proxy card
that may be sent to you by the Icahn Group. We encourage you to submit your
vote using the WHITE proxy card as promptly as possible, even if you plan to
attend the virtual Annual Shareholders Meeting.
How to Vote |
| McDonald’s Shareholder Resources
Notice of Meeting / Proxy Statement
McDonald's Presentation - May 4, 2022
Statement from McDonald’s Corporation in Response to Mr. Icahn’s Media
Outreach - April 21, 2022
McDonald’s Board of Directors Statement in Response to Carl Icahn -
February 20, 2022
McDonald’s Animal Health & Welfare Policies
Facts About McDonald’s 2012 Commitment on
Sow Welfare:
McDonald’s purchases only approximately 1% of U.S.-produced pork, and
does not own any sows, or produce or package pork in the United States.
Our 2012 commitment led to changes throughout the pork industry,
with a commonly adopted approach to group housing.
Our 2012 commitment was shaped with input from independent veterinary
scientists, along with agricultural experts and animal welfare advocates,
including the Humane Society of the United States.
These standards allow for pregnant sows to live in a group setting for the
vast majority of their lives. Confirmation of sow pregnancy typically occurs
within four to six weeks after insemination. During this time, sows are
housed in individual stalls for the viability of their embryos and safety of
themselves, the other animals and the humans that care for them.
The definition of group housing for pregnant sows used by McDonald’s has
been endorsed by the National Pork Producers Council, the American
Association of Swine Veterinarians and the National Pork Board, whose
Pork Quality Assurance guidelines outline industry standards for U.S.
production.
Today, an estimated 30 – 35% of U.S. pork production has moved to group
housing systems.
However, over the course of the past several years there have been market
challenges for farmers and producers, such as the COVID-19 pandemic
and the African Swine Fever outbreak, that have slowed progress on
phasing out gestation stalls – both at our suppliers and across the entire
industry.
Despite these challenges, over 61% of our U.S. pork supply chain has
phased out the use of gestation stalls for confirmed pregnant sows, and by
the end of 2022, we expect to source 85 – 90% of our U.S. pork volumes
from sows not housed in gestation stalls once pregnancy is confirmed.
We remain committed to phasing out the use of gestation stalls for
housing pregnant sows in the U.S. by the end of 2024.
For more information on McDonald’s commitments, please visit our Animal
Health & Welfare page. |
| What Others Are Saying:
Media Coverage
WSJ Opinion: Thank you, McDonald’s
Agri-Pulse Op-Ed: Hogwash
Reuters: McDonald's calls Icahn demands on sourcing pigs unfeasible,
expensive
Bloomberg: Bacon Will Cost More at McDonald’s Should Icahn Get His Way
WSJ Opinion: At Last, a Businessman Biden Can Blame for Raising Prices;
Billionaire Carl Icahn ramps up his campaign against McDonald's.
Third-Party Testimony
“The definition of ‘group housing’ does not specify number of weeks for
pregnancy confirmation, but typically occurs between 35 and 45 days of
gestation. This timeframe coincides with the phase of pregnancy where
embryos have successfully implanted into the uterine wall and fetal
development is advanced enough for detection using current technology.
Forming sow groups during the implantation phase of pregnancy has been
shown to decrease conception rates. There is also an advantage to animal
welfare by confirming pregnancy prior to forming sow groups so as to not
disrupt the group’s dominance hierarchy with non-pregnant sows returning to
estrus and exhibiting estrus behaviors or removal of non-pregnant sows from
the established group.”
– Sherrie Webb, Director of Animal Welfare, American Association of Swine
Veterinarians
“Science shows that placing sows in breeding stalls before being confirmed
pregnant is best for their well-being and provides the best outcomes early in
pregnancies. We’ve seen significant progress on this issue. Calls for new
commitments and shifting goal posts are not based on veterinary science."
– Dallas Hockman, National Pork Producers Council
“…Most animal welfare experts and swine veterinarians agree that limiting a
pregnant sow’s movement for four to six weeks while pregnancy is confirmed is
the right thing to do because it reduces the likelihood of miscarriage.”
– Charlie Arnot, Chief Executive Officer, The Center for Food Integrity
“Based on my decades of experience as a pork producer… group housing led to
poor sow welfare and productivity outcomes. The sows fought in pens to
establish dominance and injured each other... Due to these fights and
associated stress, sows in a group pen also generally give birth to fewer piglets
per litter each time that they farrow, further reducing a farm’s productivity."
– Phil Borgic, Director, National Pork Producers Council |
| “The stage of gestation when sows are mixed affects aggression, injuries and
stress in sows and the challenges associated with aggression, injuries and
stress at mixing are greater early after insemination than later.”
– Applied Animal Behaviour Science Journal, “Effects of stage of gestation
at mixing on aggression, injuries and stress in sows,” 2015
“McDonald’s has continuously advocated for farming solutions that benefit
stakeholders across the industry, and we are proud to be its partner. The
company has long used its leadership position to promote ESG-forward
initiatives, because it knows that prioritizing progressive solutions is essential
to the broader U.S. food system. Its investments in partnerships with suppliers,
and meaningful support it provides to farmers, have made a tangible impact.
These efforts underscore the collaboration that McDonald’s has driven
throughout the industry and its commitment to the highest possible standards.
With regards to sow welfare, McDonald’s has worked with a wide range of
stakeholders to inform its approach and has helped its partners meet
standards that are supported by veterinary science, benefit all parties and drive
impact at scale. McDonald’s was one of the first to support suppliers in
sourcing from producers that have adopted group-housing systems for
pregnant sows – ensuring excellent animal care while enabling pork producers
to meet U.S. demand and keep food affordable for consumers. Smithfield was
the first U.S. pork producer to commit to group housing for sows on all
company-owned farms, a transition it completed in 2017.”
– Shane Smith, President and Chief Executive Officer, Smithfield Foods
“Tyson Foods works proactively with our strategic procurement partners to
implement responsible practices throughout our supply chain. McDonald’s has
been a tremendous partner to us in working to focus on and continuously
improve animal health and welfare outcomes. Through its leadership,
McDonald’s has helped to create a future of quality, secure and sustainable
food because it knows that how food is produced and where it comes from
matters to our shared customers, communities, and the environment.
McDonald’s has used its considerable reach and credibility to promote
productive values across the industry, including its commitment to improve
animal health and welfare outcomes. Tyson Foods supports the use of housing
systems that promote animal health and welfare throughout our supply chain.
McDonald’s is clearly a solutions-based leader with a strong commitment to
providing a safe and humane environment for animals, as well as affordable
food options for U.S. consumers.”
– Ken Opengart, DVM, PhD, Vice President, Animal Welfare and
International Sustainability, Tyson Foods |
| How to Vote
Our Board unanimously recommends that you use the WHITE proxy card to
vote “FOR ALL” of our Board’s Director nominees and in accordance with our
Board’s recommendation on each other proposal properly presented at the
meeting. Our Board urges you to disregard any materials, including any gold
proxy card, that may be sent to you by the Icahn Group.
Please carefully review the proxy materials and follow the instructions below to
ensure your vote is received by 10:59 p.m. Central Time on May 25, 2022:
Internet: Visit the website shown on your WHITE proxy card or voting
instruction form. Or, if you received your proxy materials by email, simply
click the WHITE “VOTE NOW” button in the email.
Telephone: Dial the toll-free number shown on your WHITE proxy card or
voting instruction form (available 24/7).
Mail: If you received a WHITE proxy card or voting instruction form by mail,
you may mark, date, sign and return it in the postage-paid envelope
furnished for that purpose.
If you have any questions or require assistance with voting your WHITE proxy
card, please contact our proxy solicitation firms at:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Shareholders: (877) 456-3463 (toll-free from the U.S. or Canada) or (412) 232-
3651 (from other countries)
Banks and brokers: (212) 750-5833
Kingsdale Advisors
745 5th Avenue, Suite 500
New York, New York 10151
(855) 683-3113 (toll-free in North America)
(416) 867-2272 (outside of North America)
contactus@kingsdaleadvisors.com |
Exhibit 3
This regulatory filing also includes additional resources:
tm2210156-7defa14aseq1.pdf
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