Slide 1: 2022 Annual Meeting Update
2022 Annual Meeting Update May 2022
Slide 2: Important disclaimers
Important disclaimers 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 condi
Slide 3: Executive summary
Executive summary 1 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 2 Despite industry-wide challenges related to the COVID-19 pandemic and global African S
Slide 4: Table of contents
Table of contents Animal Health & Welfare 1 Known as an industry leader in driving and scaling animal welfare with strong progress against targets Our Purpose & Impact 2 Accelerating the Arches strategy focuses leadership on issues that matter most to our stakeholders Board & Governance 3 Highly qua
Slide 5: Animal Health & Welfare
Animal Health & Welfare Section 1 Known as an industry leader in driving and scaling animal welfare improvements with strong progress against targets
Slide 6: McDonald's has a robust approach to animal health & welfare
McDonald’s has a robust approach to animal health & welfare 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 To achieve positive impact in the health and welfare of the animal
Slide 7: McDonald's is known as an industry leader in driving and scaling animal welfare standards
McDonald's is known as an industry leader in driving and scaling animal welfare standards We’ve made significant progress on all of our animal health & welfare commitments to date Status of McDonald’s Current Animal Health & Welfare Commitments We believe that animal health and welfare is an opportu
Slide 8: McDonald's 2012 pork commitment is backed by science
McDonald’s 2012 pork commitment is backed by science 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 majo
Slide 9: McDonald's commitment is supported by industry experts…
McDonald’s commitment is supported by industry experts… “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 s
Slide 10: …and industry producers
…and industry producers Smithfield Foods Tyson Foods “McDonald’s has continuously advocated for farming solutions that benefit “Tyson Foods works proactively with our strategic procurement partners to stakeholders across the industry, and we are proud to be its partner. The implement responsible pra
Slide 11: We are delivering on our pork commitment and promoting best practices
We are delivering on our pork commitment and promoting best practices 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 2012 2017 2022 2024 McDonald’s makes 2012-2017 McDonald’
Slide 12: Icahn's "crate-free" demand reflects a departure from accepted science
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, th
Slide 13: Sourcing 100% "crate-free" pork is not feasible today
Sourcing 100% “crate-free” pork is not feasible today 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) The current supply of what may be defined as “crate-free” pork would not meet the v
Slide 14: Icahn's position does not make economic sense
Icahn’s position does not make economic sense 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 McDonald’s suppliers only purchase approximately 1% of the
Slide 15: We remain focused on driving progress within the industry
We remain focused on driving progress within the industry 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 ac
Slide 16: Our Purpose & Impact
Our Purpose & Impact Section 2 Accelerating the Arches strategy focuses leadership on issues that matter most to our stakeholders
Slide 17: Three-legged stool – the McDonald's business model
Three-legged stool – the McDonald’s business model 40K+ 100+ >65M RESTAURANTS COUNTRIES CUSTOMERS Served Every Day Franchisees Suppliers Crew & Corporate Staff McDonald’s benefits from the McDonald’s is committed to entrepreneurial spirit of local McDonald’s suppliers are our people who make the bus
Slide 18: Overview of Accelerating the Arches strategic plan
Overview of Accelerating the Arches strategic plan 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 17
Slide 19: Fulfilling our purpose to feed and foster communities
Fulfilling our purpose to feed and foster communities 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 Community Jobs, Inclusion and Food Quality & Sourcing Our Planet Connection Empowerment Rec
Slide 20: McDonald's has a track record of meeting ESG commitments
McDonald’s has a track record of meeting ESG commitments 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
Slide 21: McDonald's has a track record of meeting ESG commitments (cont'd.)
McDonald’s has a track record of meeting ESG commitments (cont’d.) 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. Lear
Slide 22: McDonald's is holding executives accountable for DEI progress
McDonald’s is holding executives accountable for DEI progress 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 1 We enhanced our executive compensation program to strengthen l
Slide 23: We are accelerating climate action to reach net zero by 2050
We are accelerating climate action to reach net zero by 2050 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 A global net zero emissions goal requires system-wide decarboniz
Slide 24: Board & Governance
Board & Governance Section 3 Highly qualified and engaged Board, safeguarding interests of all shareholders
Slide 25: McDonald's has a highly qualified and diverse Board
McDonald’s has a highly qualified and diverse Board LLOYD DEAN ROBERT ECKERT CATHERINE ENGELBERT CEO, Operating Partner, Commissioner, Diversity that contributes to a CommonSpirit Health FFL Partners, LLC Women’s National balanced and effective Board Basketball Association Director Since: 2015 Direc
Slide 26: Our Directors' skills and experiences facilitate robust oversight
Our Directors’ skills and experiences facilitate robust oversight KEMPCZINSKI GEORGIADIS HERNANDEZ ENGELBERT MULLIGAN PENROSE ROGERS ECKERT WALSH LENNY WHITE DEAN More than half of BRAND MANAGEMENT: Contributes to an understanding of how our business, standards and performance are essential to prote
Slide 27: Directors Lenny and Penrose provide the Board with critical skills and experience
Directors Lenny and Penrose provide the McDonald’s Board with critical skills and experience Sheila Penrose Richard Lenny Sustainability & Corporate Responsibility Committee Chair Compensation Committee Chair Governance / Executive Committee Member Sustainability & Corporate Responsibility Member
Slide 28: Replacing Directors with Icahn's candidates is not in shareholders' best interests
Replacing Directors with Icahn’s candidates is not in McDonald’s or its shareholders’ best interests 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 Key Attributes
Slide 29: Our Sustainability & Corporate Responsibility Committee oversees ESG issues
Our Sustainability & Corporate Responsibility Committee monitors and oversees our strategies and management of ESG issues 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 r
Slide 30: We are committed to strong corporate governance practices
We are committed to strong corporate governance practices Refreshed and Independent Board Accountability to Shareholders Independent Board Chairman Annual election of all Directors 11 of 12 Directors are independent (all except CEO) Majority voting standard for uncontested Director elections
Slide 31: Executive compensation is directly aligned with business results
Executive compensation is directly aligned with business results 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 Key Compensation 2021 Performance 2021 Key Terms 2021 Pay for Performanc
Slide 32: Our compensation practices promote executive accountability
Our compensation practices promote executive accountability The Board’s executive compensation practices prioritize pay-for-performance while driving business results with a focus on creating long-term shareholder value What We Do 9 Strong pay-for-performance alignment 9 Significant stock ownership
Slide 33: Company Performance
Company Performance Section 4 Achieving our ESG goals while generating industry-leading returns for shareholders
Slide 34: McDonald's is focused on executing against its strategic plan
McDonald’s is focused on executing against its strategic plan Operational proof points highlight our immense progress and commitment to delivering results Growth Powered by the M, C, & Ds M Maximizing Our Marketing C Commitment to Core Menu D Doubling Down on 3Ds (Digital, Delivery and Drive Thru) I
Slide 35: Resilient operating model has led to consistently strong results
Resilient operating model has led to consistently strong results Reported Systemwide Sales(1) Reported Operating Income Reported Free Cash Flow(2) Top-line performance resilient despite Strong operating margins Model has driven high free cash flow challenging operating environment driven by MCD’s fr
Slide 36: Stellar track record of capital return and total shareholder return
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-ter
Slide 37: Conclusion
Section 5 Conclusion
Slide 38: We ask for your support on the WHITE CARD at our Annual Meeting
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 Our gestation stall commitment is backed by science and consistent with industry-endorsed definitions Over the course of the past several years
Slide 39: Appendix Non-GAAP Reconciliation
Appendix Non-GAAP Reconciliation
Slide 40: Appendix A: Non-GAAP Reconciliation
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 b