What is the primary purpose of these RSU grants?

The primary purpose of these Restricted Stock Unit (RSU) grants is to incentivize and reward the company's named executive officers for achieving specific performance goals, namely a sustained growth in diluted Earnings Per Share (EPS) over a three-year period. This aligns executive compensation with the company's long-term success and shareholder value.

When will these RSUs vest, and what conditions must be met?

The RSUs will vest after a three-year period, specifically on February 8, 2015. Vesting is contingent upon McDonald's Corporation achieving a cumulative compounded annual growth rate of at least 6% in diluted EPS from January 1, 2012, through December 31, 2014. If the 6% target is not met, but there is positive EPS growth, a portion of the RSUs will vest proportionally.

How is 'EPS' calculated for the purpose of these RSU grants?

For the purpose of these RSU grants, EPS is adjusted to exclude the effects of foreign currency translation (constant currencies) to better reflect the underlying business performance. Additionally, the Compensation Committee has the discretion to exclude certain income or expense items that are not considered indicative of ongoing operational results.

What happens if McDonald's does not achieve any EPS growth during the performance period?

If McDonald's Corporation does not achieve any positive compounded annual EPS growth during the performance period (January 1, 2012, through December 31, 2014), none of the granted RSUs will vest.

MCD 8-K: Leadership Changes

Summary

McDonald's Corporation (MCD) announced on February 9, 2012, that its Compensation Committee approved grants of Restricted Stock Units (RSUs) to its named executive officers on February 8, 2012. These awards are designed to incentivize future performance and align executive compensation with shareholder value creation. The key feature of these RSU grants is their performance-based vesting structure. The RSUs will vest in full after three years (February 2015), contingent upon the company achieving a cumulative compounded annual growth rate in diluted Earnings Per Share (EPS) of at least 6% from January 1, 2012, through December 31, 2014. Partial vesting is possible if EPS growth is positive but below the 6% target, with the vesting amount being proportional to the actual EPS growth achieved. This structure directly links executive rewards to the company's ability to grow its EPS, a critical metric for investors.

Key Highlights

1Grant of Restricted Stock Units (RSUs) to named executive officers approved on February 8, 2012.
2RSUs are subject to a three-year cliff vesting period, concluding in early 2015.
3Vesting is contingent on achieving a performance target related to diluted Earnings Per Share (EPS) growth.
4The performance target is a cumulative compounded annual EPS growth rate of 6% over the period from January 1, 2012, to December 31, 2014.
5Partial vesting is allowed if EPS growth is positive but falls short of the 6% target.
6No vesting will occur if no EPS growth is achieved.
7EPS for performance calculation will be adjusted for foreign currency translation and may exclude non-recurring items at the Committee's discretion.

MCDONALDS CORP 8-K Report, Executive Changes (Feb 10, 2012)

Summary

Key Highlights

Frequently Asked Questions