Slide 1: Helping McDonald's Realize Its ESG Potential
Helping McDonald’s Realize Its ESG Potential Investor Presentation May 2022
Slide 2: Disclaimer
DISCLAIMER Additional Information and Where to Find It; Participants in the Solicitation and Notice to Investors THE SOLICITATION DISCUSSED HEREIN RELATES TO THE SOLICITATION BY BARBERRY CORP. AND CARL C. ICAHN OF PROXIES FOR USE AT THE 2022 ANNUAL MEETING OF STOCKHOLDERS OF MCDONALD’S CORPORATION (
Slide 3: Table of Contents
TABLE OF CONTENTS Executive Summary 4 The Problem: Broken Promises & Poor Oversight17 Our Solution: The Icahn Nominees35 The Path Forward: A Superior ESG Framework44 Appendix49
Slide 4: Executive Summary
Executive Summary
Slide 5: Why We Are Here Today
WHY WE ARE HERE TODAY McDonald’s’ Board failed to deliver on a 10-year-old commitment made to Carl Icahn and other stakeholders to eliminate the usage of cruel gestation crates in its supply chain. This broken promise, as well as other supply chain and environmental, social and governance (“ESG”) is
Slide 6: A History of Our Engagement with McDonald's
A HISTORY OF OUR ENGAGEMENT WITH MCDONALD’S The McDonald’s Board has failed to assume accountability for its ESG failures Early 2012 Mr. Icahn becomes aware of HSUS’ efforts at MCD and requests that MCD announces plans to eliminate gestation crates from its supply chain. Following HSUS and Mr. Icahn
Slide 7: The Board Has Tolerated Unconscionable Practices
THE BOARD HAS TOLERATED UNCONSCIONABLE PRACTICES The McDonald’s Board has failed to prioritize ESG and ensure the Company meets its stated commitments Failing to Effectively Oversee Its Supply Chain and Deflecting Blame Disregarding the Need for Better ESG Practices Failing to Meet Stated Commitment
Slide 8: The Board's Brazen Attempts to Mislead Stakeholders
THE BOARD’S BRAZEN ATTEMPTS TO MISLEAD STAKEHOLDERS The incumbent Board is pushing a false narrative that does not include the elimination of gestation crates from its supply chain THE REALITY: MCDONALD’S’ MISLEADING LANGUAGE After initially committing to “ending” the use of gestation crates in its
Slide 9: McDonald's Has Ultimately Failed Stakeholders on ESG
HSUS 2020 Food Industry Grade (HSUS) MSCI rating for McDonald’s in product quality and safety (MSCI) F McDonald’s was one of the only companies to fall down a BBFAW tier from 2012-2021 (BBFAW) McDonald’s received the lowest score possible on the Good Food Institute (GFI) 2019 Scorecard (GFI) McDonal
Slide 10: Synthesizing Our ESG Priorities from a Materiality Assessment
SYNTHESIZING OUR ESG PRIORITIES FROM A MATERIALITY ASSESSMENT ESG Theme Product & Life Cycle Impacts Social Impact Human Capital Governance Importance1 to external stakeholders Note: Methodology to determine materiality and importance to external stakeholders considers ESG ratings methodologies, fra
Slide 11: What We Are Calling For
WHAT WE ARE CALLING FOR Despite McDonald’s’ hollow attempts to miscast some of our “demands,” the reality is our asks are completely reasonable and can help the Board restore its broken credibility with shareholders Replace two directors with our nominees to help McDonald’s’ Board more effectively o
Slide 12: Our Aligned & Experienced Nominees Can Help McDonald's
OUR ALIGNED & EXPERIENCED NOMINEES CAN HELP MCDONALD’S Our independent and highly qualified nominees can help drive the Company’s commitments to animal welfare and ESG matters Leslie Samuelrich 25+ Years of Responsible Investing Experience Leads sustainable investing strategy, business development a
Slide 13: Why We Are Seeking to Remove Ms. Penrose and Mr. Lenny
WHY WE ARE SEEKING TO REMOVE MS. PENROSE AND MR. LENNY We believe McDonald’s needs new directors on the Sustainability and Corporate Responsibility Committee who possess the requisite backgrounds to objectively analyze the Company’s historical ESG performance and help develop a credible go-forward s
Slide 14: McDonald's' SCR Committee Lacks Sustainability Skills and Experience
MCDONALD’S’ SCR COMMITTEE LACKS SUSTAINABILITY SKILLS AND EXPERIENCE RELEVANT SASB CRITERIA ADDITIONAL IMPORTANT EXPERIENCE ADDITIONAL IMPORTANT EXPERIENCE INDIVIDUAL Energy Management Water/ Wastewater Management Product Quality & Safety Customer Welfare Labor Practices Supply Chain Management ESG
Slide 15: ESG Improvement Areas for McDonald's
ESG IMPROVEMENT AREAS FOR MCDONALD’S In addition to suggesting that the Board commence an overall review of the Company’s ESG practices, we want to work with our fellow directors to enhance governance and facilitate prompt ESG improvements, including: Improved Animal Welfare Standards Our nominees a
Slide 16: The Path Forward: A Superior ESG Framework
THE PATH FORWARD: A SUPERIOR ESG FRAMEWORK An ESG framework that focuses on advancing capabilities for McDonald’s’ key ESG factors will help the Company rebuild trust with shareholders, customers and employees Protein Diversification & Product Innovation Climate Impact & Strategy Food Quality & Nutr
Slide 17: The Problem: Broken Promises & Poor Oversight
The Problem: Broken Promises & Poor Oversight
Slide 18: McDonald's Failed to Make Good on Its 10-Year Promise
MCDONALD’S FAILED TO MAKE GOOD ON ITS 10-YEAR PROMISE The Board has impugned its credibility on ESG by failing to deliver on its commitment to eliminate the usage of cruel gestation crates in its supply chain 2002 McDonald’s states it plans to explore “sow housing alternatives” 2012 McDonald’s pledg
Slide 19: The Board's Attempts to Shift Blame Fall Flat
THE BOARD’S ATTEMPTS TO SHIFT BLAME FALL FLAT Rather than assume accountability for its failings on this important issue, the Board has hidden behind excuses In what we perceive to be poor excuses for nonperformance, McDonald’s has blamed “industry-wide challenges for farmers and producers, such as
Slide 20: McDonald's Trails Peers on Top ESG Issues
MCDONALD’S TRAILS PEERS ON TOP ESG ISSUES Under the incumbent Board, McDonald’s is a laggard – not a leader – on ESG compared to its peers (1) Note: Capabilities were classified against public ESG disclosures (qualitative, metrics, and goals) across all relevant criteria for SASB, TCFD, ISS, MSCI, S
Slide 21: McDonald's Lags on ESG Compared to Proxy Peer Group
MCDONALD’S LAGS ON ESG COMPARED TO PROXY PEER GROUP MCD MCD Distribution of MSCI Scores in MCD Proxy Peers Distribution of CDP 2021 Climate Change Scores in MCD Proxy Peers McDonald’s has the lowest CDP Climate Change score out of all its peers Majority of MCD peers have a stronger MSCI score Majori
Slide 22: The Board Bears Responsibility for Poor Oversight
THE BOARD BEARS RESPONSIBILITY FOR POOR OVERSIGHT The Board has failed to effectively oversee the Company’s ESG and sustainability efforts, resulting in poor disclosures and little meaningful progress Animal Welfare McDonald’s is missing key indicators for all material protein sources for business a
Slide 23: The Board Has Tolerated Unconscionable Practices
THE BOARD HAS TOLERATED UNCONSCIONABLE PRACTICES The McDonald’s Board has failed to prioritize ESG and ensure the Company meets its stated commitments Failing to Effectively Oversee Its Supply Chain and Deflecting Blame Disregarding the Need for Better ESG Practices Failing to Meet Stated Commitment
Slide 24: The Board Is Dragging Its Feet on Animal Welfare
THE BOARD IS DRAGGING ITS FEET ON ANIMAL WELFARE The Company has labeled our reasonable request to eliminate gestation crates “completely unfeasible” – but the truth is many leading suppliers have already adapted to be in compliance with Proposition 12 Hatfield plans to offer a variety of pork produ
Slide 25: McDonald's' Peers Are Prioritizing Animal Welfare
MCDONALD’S’ PEERS ARE PRIORITIZING ANIMAL WELFARE BBFAW analyzed welfare improvement across 57 food companies that have been continuously assessed by BBFAW since 2012 The study found that 72% of the food companies have showed improvement in animal welfare (moving up at least one tier) However, McDon
Slide 26: The Board Should Embrace Improved Animal Welfare
THE BOARD SHOULD EMBRACE IMPROVED ANIMAL WELFARE We believe McDonald’s has an opportunity to join its peers by prioritizing improved animal welfare in its supply chain and enhanced transparency with stakeholders Chipotle has successfully eliminated the use of gestation crates throughout its global s
Slide 27: The Board Is Using Pricing Concerns as an Excuse
THE BOARD IS USING PRICING CONCERNS AS AN EXCUSE While it will cost the Company near-term capital to eliminate gestation crates, we believe the move will deliver business and financial benefits over the long-term Rather than waste $16 million of shareholder capital on this costly proxy contest, we c
Slide 28: The Board Must Be Held Accountable for Insufficient Disclosures
THE BOARD MUST BE HELD ACCOUNTABLE FOR INSUFFICIENT DISCLOSURES Animal welfare experts believe McDonald’s has deceived shareholders and consumers about its animal confinement policies On April 22, 2022, HSUS filed a complaint with the SEC to investigate and hold McDonald’s accountable for deceiving
Slide 29: The Board Has Failed to Diversify Protein Sources
THE BOARD HAS FAILED TO DIVERSIFY PROTEIN SOURCES 40% of McDonald’s’ net sales are from products are based on ruminant red meat (Source: ISS ESG Report), and the Company has no public commitment to expanding plant-based options Plant-based foods are not mentioned once in McDonald’s’ entire climate s
Slide 30: Americans Are Shifting Toward Plant-Based Diets
More than half of all Americans (55%) say they are willing to eat more plant-based meat alternatives and roughly one in four Americans (27%) say they have rewarded food companies that are taking steps to reduce their impact on the environment by buying their products at least once in the last 12 mon
Slide 31: The Board Is Failing to Manage Climate Impact & Risks
THE BOARD IS FAILING TO MANAGE CLIMATE IMPACT & RISKS IN MCDONALD’S’ SUPPLY CHAIN Five commodities are responsible for more than 75% of the GHG footprint of the U.S. diet: Beef, milk & dairy, pork, chicken and eggs. Beef alone is responsible for over 50% of the GHGs in the diet – and McDonald’s is t
Slide 32: The Board Approved Egregious Executive Compensation
THE BOARD APPROVED EGREGIOUS EXECUTIVE COMPENSATION For 2021, total Chief Executive Officer compensation was an astounding 2,251x the average employee's total compensation. $20,028,132 $8,897 We believe the Board has allowed an unacceptable pay gap to persist between McDonald’s’ Chief Executive Offi
Slide 33: McDonald's Could Face Serious Business & Reputational Risks
MCDONALD’S COULD FACE SERIOUS BUSINESS & REPUTATIONAL RISKS If the McDonald’s Board does not immediately improve on ESG, we believe it could cause the Company and its shareholders serious harm over the next five to 10 years Financial Challenges Regulatory Issues Loss of Customers & Market Share Repu
Slide 34: The Train Has Left the Station on ESG
THE TRAIN HAS LEFT THE STATION ON ESG AND MCDONALD’S WILL BE LEFT BEHIND IF IT DOES NOT MOVE QUICKLY Countries around the world have formally recognized animals as sentient creatures and are developing more robust legislative and oversight measures to enhance the policies that protect them U.S. legi
Slide 35: Our Solution: The Icahn Nominees
Our Solution: The Icahn Nominees
Slide 36: Meet Our Slate
MEET OUR SLATE Our independent director candidates stand for improved governance, oversight and accountability Maisie Ganzler Two Decades of Restaurant & Food Industry Experience Deep knowledge of the industry’s supply chain workings, sourcing and procurement methods Animal Welfare Expertise Signifi
Slide 37: McDonald's' SCR Committee Lacks Sustainability Skills and Experience
MCDONALD’S’ SCR COMMITTEE LACKS SUSTAINABILITY SKILLS AND EXPERIENCE RELEVANT SASB CRITERIA ADDITIONAL IMPORTANT EXPERIENCE ADDITIONAL IMPORTANT EXPERIENCE INDIVIDUAL Energy Management Water/ Wastewater Management Product Quality & Safety Customer Welfare Labor Practices Supply Chain Management ESG
Slide 38: Why We Are Seeking to Remove Ms. Penrose and Mr. Lenny
WHY WE ARE SEEKING TO REMOVE MS. PENROSE AND MR. LENNY We believe McDonald’s need new directors on the SCR Committee who possess the requisite backgrounds to objectively analyze the Company’s historical ESG performance and help develop a credible go-forward strategy As Chair of McDonald’s’ SCR Commi
Slide 39: Maisie Ganzler's Biography
MAISIE GANZLER’S BIOGRAPHY Maisie Ganzler has more than two decades of experience in the restaurant and food service industry, as well as significant expertise in matters involving labor, animal welfare, sustainability and procurement Chief Strategy & Brand Officer of Bon Appétit Management Company,
Slide 40: Endorsements for Ms. Ganzler
ENDORSEMENTS FOR MS. GANZLER Maisie has been on the forefront of sustainability long before ESG was a concept. It is her passion and thoughts that have helped shape Bon Appetit into the market leader in sustainable food practices and this, in turn, has led the way for Compass Group, the global leade
Slide 41: Leslie Samuelrich's Biography
LESLIE SAMUELRICH’S BIOGRAPHY Leslie Samuelrich has more than 25 years of experience in ESG, corporate engagement, environmental and public health programs and investment management President of Green Century Capital Management, where she focuses on the firm’s investment strategies, business develop
Slide 42: Endorsements for Ms. Samuelrich
ENDORSEMENTS FOR MS. SAMUELRICH Leslie is an inspiring and highly engaged board member with vast leadership experience. […] Her deep insights into Governance and the public and investor debate regarding Social and Environmental Impacts will be valuable to any organization. Combined, this makes Lesli
Slide 43: What the Icahn Nominees Stand For
WHAT THE ICAHN NOMINEES STAND FOR In addition to suggesting that the Board commence an overall review of the Company’s ESG practices, we want to work with our fellow directors to enhance governance and facilitate prompt ESG improvements, including: Improved Animal Welfare Standards Our nominees are
Slide 44: The Path Forward: A Superior ESG Framework for McDonald's
The Path Forward: A Superior ESG Framework for McDonald’s
Slide 45: How We Can Add Value in McDonald's' Boardroom
HOW WE CAN ADD VALUE IN MCDONALD’S’ BOARDROOM If elected to the Board, our director candidates plan to help the Board’s SCR Committee conduct a review of McDonald’s’ corporate practices and develop a superior ESG framework for McDonald’s The Committee should perform a top-to-bottom review of the bus
Slide 46: The Path Forward: A Superior ESG Framework
THE PATH FORWARD: A SUPERIOR ESG FRAMEWORK An ESG framework that focuses on advancing capabilities for McDonald’s’ key ESG factors will help the Company rebuild trust with shareholders, customers and employees Protein Diversification & Product Innovation Climate Impact & Strategy Food Quality & Nutr
Slide 47: Our Nominees Can Help Oversee & Implement a Superior ESG Framework
OUR NOMINEES CAN HELP OVERSEE & IMPLEMENT A SUPERIOR ESG FRAMEWORK TO HELP MCDONALD’S SUCEED IN THE LONG-TERM Prioritization of key ESG issues on which McDonald’s is currently falling short, including animal welfare and the integration of plant-based meat alternatives Clearly articulated goals and c
Slide 48: The Time for Change Is Now
THE TIME FOR CHANGE IS NOW Shareholders can hold McDonald’s accountable and inject much-needed ESG expertise and experience in the boardroom by voting on the GOLD proxy card to elect our two director candidates VOTE ON THE GOLD PROXY CARD
Slide 49: Appendix
Appendix
Slide 50: How Gestation Crates Are Currently Still Used in McDonald's' Supply Chain
HOW GESTATION CRATES ARE CURRENTLY STILL USED IN MCDONALD’S’ SUPPLY CHAIN McDonald’s allows the use of gestation crates up until a sow is confirmed to be pregnant, which can take up to six weeks of its pregnancy and is a complete shift from its stated commitment in 2012, which had a goal of eliminat
Slide 51: Selected Peers 5-Year Stock Performance
(1) Stock performance data taken from Google Finance market close 4.25.22 Selected Peers 5-Year Stock Performance McDonald’s (MCD) Chipotle (CMG) Yum! Brands (YUM) PepsiCo (PEP) Company 1-Yr. Return 5-Yr. Return Chipotle 3.07% 219.51% Yum! 4.83% 84.44% McDonald’s 8.85% 80.72% PepsiCo 21.19% 53.37% S
Slide 52: Key Inputs for McDonald's' Assessment
KEY INPUTS FOR MCDONALD’S’ ASSESSMENT ESG rating agencies, frameworks and standards, and industry norms captured from six ESG peers Assessed Peers Key ESG Ratings Agencies ESG Frameworks and Standards
Slide 53: Peer Assessment: Animal Welfare
PEER ASSESSMENT: ANIMAL WELFARE Gap Weak Moderate Strong ESG Capability Spectrum Evaluation Criteria Rating Agency Coverage Peers MCD ISS MSCI Sustain alytics FAIRR BBFAW Unilever PepsiCo Yum! Starbucks RBI Chipotle Qualitative Governance and oversight x x ● ● ● ● ● ● ● Animal welfare standards x x
Slide 54: ESG Roadmap: Animal Welfare
ESG ROADMAP: ANIMAL WELFARE ESG Disclosure Roadmap & Recommendations ESG Disclosure Roadmap & Recommendations Qualitative Metrics Goals Integrate binding, contractual terms for suppliers that align with animal welfare targets and objectives Clearly define a management position with responsibility fo
Slide 55: Benchmarking Peer Overview
BENCHMARKING PEER OVERVIEW Ticker MCD UL PEP YUM SBUX QSR CMG Market Cap1 185.027B 116.204B 238.126B 35.276B 89.631B 26.596B 41.493B SASB Industry Restaurants Household & Personal Products2 Non-Alcoholic Beverages2 Restaurants Restaurants Restaurants Restaurants MCD Proxy Peer n/a ü ü ü ESG Publicat
Slide 56: SASB Industry: Restaurants
SASB INDUSTRY: RESTAURANTS Topic Accounting Metric Category SASB Code Energy Management (1) Total energy consumed, (2) percentage grid electricity, (3) percentage renewable Quantitative FB-RN-130a.1 Water Management (1) Total water withdrawn, (2) total water consumed, percentage of each in regions w
Slide 57: Life Cycle Impacts and ESG Innovation: Material Factors
LIFE CYCLE IMPACTS AND ESG INNOVATION: MATERIAL FACTORS (1) Note: Ratings agency categorizations across these categories vary slightly; illustrate weighting percentage an approximation to allow for comparability ESG Factors and Descriptions ESG Products & Innovation: Researching, developing and offe
Slide 58: Social Impact: Material ESG Factors
SOCIAL IMPACT: MATERIAL ESG FACTORS (1) Note: Ratings agency categorizations across these categories vary slightly; illustrate weighting percentage an approximation to allow for comparability ESG Factors and Descriptions Animal Welfare: Aligning products and services with the wellbeing and physical
Slide 59: Human Capital: Material ESG Factors
HUMAN CAPITAL: MATERIAL ESG FACTORS ESG Factors and Descriptions Labor Practices: Upholding fair labor practices for all employees. This may include efforts or policies that relate to freedom of association, collective bargaining, fair and livable wage, employee benefits and more. Health and Safety:
Slide 60: Governance: Material ESG Factors
GOVERNANCE: MATERIAL ESG FACTORS ESG Factors and Descriptions Board Diversity & Independence: Promoting and accurately sharing the structure of the company's board to ensure effectiveness and representation of shareholder values. This may include disclosing independent board members, committees, min
Slide 61: MCD Supply Chain FAIRR & BBFAW Analysis
MCD SUPPLY CHAIN FAIRR & BBFAW ANALYSIS Supplier BBFAW Tier FAIRR GHG DEF WAT POL ABS FAW WOR FSY GOV SUP FAIRR Rank /60 Overall Risk Tyson Foods Tier 4 Med Med Med High High Med Med Med Med Best Practice 10 Medium Marfrig Global Foods Tier 2 Low Med High High Med Med Med Low Med Best Practice 5 Low
Slide 62: ESG Framework: Protein Diversification & Product Innovation
ESG FRAMEWORK: PROTEIN DIVERSIFICATION & PRODUCT INNOVATION Our nominees can help the Board explore and grow the Company’s plant-based product offering Establish a time-based goal to grow revenue from alternative protein sources Incorporate targets for protein diversification in executive compensati
Slide 63: ESG Framework: Animal Welfare Improvements
ESG FRAMEWORK: ANIMAL WELFARE IMPROVEMENTS Given that both of our director candidates have animal welfare expertise, we believe they can help McDonald’s’ achieve industry best practices Integrate binding, contractual terms for suppliers that align with best-in-class animal welfare targets and object
Slide 64: ESG Framework: Positive Climate Impact & Actionable Strategy
ESG FRAMEWORK: POSITIVE CLIMATE IMPACT & ACTIONABLE STRATEGY Our nominees would help the Board explore paths for McDonald’s to reduce its environmental footprint Clearly incorporate product transition away beef and other GHG intensive foods in climate action approach and business strategy, including
Slide 65: ESG Framework: Improving Food Quality & Nutrition for MCD Customers
ESG FRAMEWORK: IMPROVING FOOD QUALITY & NUTRITION FOR MCD CUSTOMERS Our nominees can support McDonald’s’ efforts to ensure quality, safe, and healthy food for its customers across its entire global product line Receive a third-party certification of health and safety management system Identify key p