8-KLeadership Changes

MCDONALDS CORP 8-K Report, Executive Changes (Feb 23, 2018)

Filed February 23, 2018For Securities:MCD

Summary

This 8-K filing from McDonald's Corporation, dated February 23, 2018, details the 2018 Target Incentive Plan (TIP) awards for its named executive officers. The primary focus is on the payout structure, which is predominantly tied to the company's operating income growth in 2018 compared to 2017. This structure ensures executive compensation is directly linked to the company's financial performance and strategic initiatives, specifically the Velocity Growth Plan. Investors should note that achieving any TIP payout is contingent on the company, or relevant business segment, demonstrating operating income growth for the year. Furthermore, the maximum potential payout for these executives is set at 200% of their target award, providing a clear upside potential while emphasizing the importance of achieving growth targets. The filing also clarifies that operating income metrics may be adjusted for constant currency and exclude non-indicative items at the Compensation Committee's discretion, offering a nuanced view of performance evaluation.

Key Highlights

  • 12018 Target Incentive Plan (TIP) payout structure approved for named executive officers.
  • 2Executive TIP awards are primarily linked to 2018 operating income growth over 2017 operating income.
  • 3A minimum threshold of operating income growth is required for any TIP payout to be eligible.
  • 4President and CEO Stephen Easterbrook has the highest target TIP award at 180% of base salary.
  • 5Maximum TIP award for all listed officers is capped at 200% of their target award.
  • 6Payouts can be further influenced (positively or negatively) by the Company's performance against modifiers tied to the Velocity Growth Plan.
  • 7Operating income for compensation purposes may be adjusted to constant currencies and exclude certain non-recurring items.

Frequently Asked Questions

The primary driver for executive bonuses under the 2018 Target Incentive Plan (TIP) is the company's operating income growth in 2018 compared to 2017. Meeting a growth threshold is mandatory for any payout.

Yes, the maximum TIP award that any of the listed executive officers can earn in 2018 is 200% of their target award.

The Velocity Growth Plan modifiers are pre-established performance metrics linked to McDonald's strategic initiatives. The company's performance against these modifiers can positively or negatively impact the final TIP payouts for the listed officers.

Operating income for TIP calculation purposes may be adjusted. It is measured in constant currencies to reflect underlying business trends and certain income/expense items that are not indicative of ongoing results may be excluded at the Compensation Committee's discretion.