Summary
McDonald's Corporation (MCD) filed an 8-K on December 4, 2007, primarily detailing executive compensation and personnel changes related to compliance with Section 409A of the Internal Revenue Code. The most significant development is the approval of the "Executive Retention Replacement Plan" effective December 31, 2007. This new plan is designed to provide participants with the economic equivalent of benefits under the existing Executive Retention Plan, ensuring compliance with tax regulations while maintaining executive incentive structures. Only four key executives, including CEO James A. Skinner and soon-to-retire CFO Matthew H. Paull, are participants, and the plan does not affect those already receiving benefits. Additionally, the filing announces target incentive awards for 2008 under the Target Incentive Plan (TIP) for top executives, with the CEO eligible for 150% of base salary, the COO for 125%, and the CFO for 100%, with a maximum award of 250% of target. Importantly, the report outlines compensation adjustments for Peter J. Bensen, who will succeed Matthew H. Paull as Chief Financial Officer effective January 1, 2008. These adjustments include a base salary increase to $450,000, a target TIP award of 100% of base salary, and an enhanced pro-rated target Cash Performance Unit Plan (CPUP) award of $1,135,417 for the 2007-2009 performance period, alongside expected equity awards.
Key Highlights
- 1McDonald's approved an "Executive Retention Replacement Plan" effective December 31, 2007, to ensure compliance with IRC Section 409A while preserving executive benefits.
- 2The new retention plan is limited to four key executives, including the CEO and the retiring CFO, and does not impact current benefit recipients.
- 3Target incentive awards for 2008 were set for top executives: CEO (150% of base salary), COO (125%), and CFO (100%), with a maximum award potential of 250% of target.
- 4Peter J. Bensen is promoted to Executive Vice President and Chief Financial Officer, succeeding Matthew H. Paull, effective January 1, 2008.
- 5Mr. Bensen's compensation package includes a base salary increase to $450,000.
- 6Mr. Bensen's target TIP award for 2008 is set at 100% of his base salary.
- 7Mr. Bensen's pro-rated target Cash Performance Unit Plan (CPUP) award for the 2007-2009 period has been increased to $1,135,417.
- 8Minor, non-material changes were made to other company compensation plans (Severance Plan, Excess Benefit and Deferred Bonus Plan, Directors’ Deferred Compensation Plan) for 409A compliance.