mcdonald's 2008 shareholders' meeting & proxy statement

Notice of 2008 Annual Shareholders’ Meeting and Proxy Statement

McDonald’s Corporation

1 Chairman’s Letter to Shareholders

2 Notice of 2008 Annual Shareholders’ Meeting

3 Corporate governance principles and Board matters

3 Corporategovernance

3 Directorindependence

4 BoardCommittees

5 Directorcompensation

6 BoardandCommitteeevaluations

6 CodeofConductfortheBoardofDirectors

6 Directorselectionprocess

7 Communications

7 ShareholdercommunicationswiththeBoardofDirectorsandnon-managementDirectors

7 ConsiderationofDirectornominations

7 Shareholderproposalsforinclusioninnextyear’sProxyStatement

7 Othershareholderproposalsforpresentationatthe2009AnnualShareholders’Meeting

8 Proposals to be voted on

8 ProposalNo.1.ElectionofDirectors

9 ProposalNo.2.Approvaloftheappointmentofanindependentregisteredpublicaccountingfirmtoserveasindependentauditorsfor2008

10 Stock ownership

10 Stockownershipguidelines

10 Securityownershipofcertainbeneficialowners

10 Securityownershipofmanagement

11 Executive compensation

11 CompensationCommitteeReport

11 Compensationdiscussionandanalysis

25 Compensationtables

37 Compliance with Section 16(a) of the Exchange Act

37 Transactions with related persons, promoters and certain control persons

37 Policiesandproceduresforrelatedpersontransactions

38 Relatedpersontransactions

39 Audit Committee matters

39 AuditCommitteeReport

40 Policyforpre-approvalofauditandpermittednon-auditservices

40 Auditorfeesandservices

41 Solicitation of proxies and voting

41 NoticeandAccess

41 RecorddateandvotingattheAnnualShareholders’Meeting

41 Proxysolicitation

41 Confidentialvoting

42 Additional information

42 Executiveofficers

42 McDonald’sCorporationAnnualReportonForm10-K,otherreportsandpolicies

42 HouseholdingofAnnualShareholders’Meetingmaterials

43 Information about attending the Annual Shareholders’ Meeting

CONtENtS

McDonald’sCorporation20081

DEARFEllOwSHAREHOlDERS:

We are pleased to invite you to McDonald’s 2008 Annual Shareholders’ Meeting. During the

meeting, we will report on McDonald’s performance during the past year and our plans for the

future. We will ask you to vote for the election of the Director nominees and to approve the

appointment of the Company’s independent auditors for 2008. We will also have time at the

meeting to hear from you, our shareholders, and we look forward to that discussion.

In addition to our continuing Directors nominated for election this year, we are pleased to

introduce two new nominees for shareholder election to the Board, Ralph Alvarez and Susan

Arnold. Ralph is McDonald’s President and Chief Operating Officer and Susan is President

– Global Business Units of The Procter & Gamble Company. These candidates continue our

practice of welcoming to the Board a diversity of experience, thought and opinion, and we

look forward to their contributions as Directors.

On behalf of the Board, I want to acknowledge Director Edward Brennan, who served this

Board of Directors with distinction until his death at the end of last year. We miss his leader-

ship, counsel and friendship.

Director Hall “Cap” Adams will retire at the 2008 Annual Meeting after 15 years of service

on the Board. We appreciate the valuable contributions Cap has made to the Board and to

McDonald’s over the years. We thank Cap for his dedicated service and wish him all the best

for many happy and healthy years of retirement.

Your vote is important. Whether or not you plan to attend the meeting, we encourage you to

consider the matters presented in the Proxy Statement and vote as soon as possible.

Cordially,

Andrew J. McKennaChairman

April 9, 2008

2McDonald’sCorporation2008

NOtiCEOF2008ANNuAlSHAREHOlDERS’MEEtiNg:

To McDonald’s Corporation Shareholders:

McDonald’s Corporation will hold its 2008 Annual Shareholders’ Meeting on Thursday,

May 22, 2008, at 9:00 a.m. Central Time, in the Prairie Ballroom at The Lodge at McDonald’s

Office Campus, Oak Brook, Illinois. The registration desk will open at 7:30 a.m. At the

meeting, shareholders will be asked to:

1. Elect six Directors;

2. Approve the appointment of an independent registered public accounting firm to serve

as independent auditors for 2008; and

3. Transact other business properly presented at the meeting.

Your Board of Directors recommends that you vote FOR all nominees for Director and

FOR the approval of the independent auditors. Your vote is important.

If you are unable to attend the meeting in person, you may watch a live webcast by going

to www.investor.mcdonalds.com and selecting the appropriate link under “Webcasts.”

A replay of the Annual Shareholders’ Meeting will be available for a limited time.

Please consider the issues presented in this Proxy Statement and vote your shares as

promptly as possible.

Thank you.

By order of the Board of Directors,

Gloria Santona Secretary

Oak Brook, Illinois April 9, 2008


Corporate governanceCorporategovernancepracticesremainanimportantfocusforallpubliccompanies,includingMcDonald’s.AlthoughourProxyStatementrespondstotherequirementsoftheSecuri-tiesandExchangeCommission(SEC)andtheNewYorkStockExchange(NYSE)inthisarea,webelievethatgoodgovernanceismorethanacollectionofregulations.itistheintersectionoftherelationshipsamongourBoardofDirectors,ourmanagementandourshareholdersandisinformedbythevaluesthathavebeenthefoundationofourbusinessformorethan50years—integrity,fairness,diligenceandethicalbehavior.

webelievegoodgovernancestartswithaBoardwhoseindependenceensurescandidandconstructiveengagementwithmanagementaboutallaspectsofourbusiness.OurDirectornominationprocessseekspersonswiththeinitiative,time,skillsandexperiencetobeeffectivecontributors,particu-larlyinlightoftheCompany’schallenges.

OurgovernanceprocessesaddressmattersrelatingtoBoardoperationsthatarefundamentaltoshareholderinterests.Forexample,theCompanyhasamajorityvotingstandardforuncontestedDirectorelections.inaddition,Directorsmustalsolimitoutsideactivitiesandabidebyaspecificcodeofcon-ductsothatwecanbeconfidentabouttheircommitment.tounderscoretheiralignmentwithshareholders,Directorsreceivestock-equivalentcompensationandmustownaspeci-fiedvalueofMcDonald’scommonstock.Sinceearly2004,ourBoardhasbeenledbyanindependentChairman,AndrewMcKenna.HeandourotherindependentDirectorsmeetregu-larlywithoutmanagementpresenttoevaluatetheCompany’sresults,plansandchallenges,aswellasmanagement’sper-formanceandthestrengthanddevelopmentofourleadershipbench.in2007,thefullBoardmetninetimes.OurindependentDirectorsalsometinexecutivesessionsixtimes.DirectorsareexpectedtoattendtheCompany’sAnnualShareholders’Meet-ing,andallorsubstantiallyallBoardmeetingsandmeetingsoftheCommitteesoftheBoardonwhichtheyserve.in2007,alloftheDirectorsattendedtheAnnualShareholders’Meeting.

Boardoversightisalsoeffectedthroughsixstandingcom-mittees.theyaretheAudit,Compensation,governance,CorporateResponsibility,FinanceandExecutiveCommittees.Eachofthemoperatesunderawrittenchartertopromoteclarityintheirresponsibilitiesandaccountabilityamongtheirmembers.theseCommitteesworkinacoordinatedwaytoaddressrecurringmattersandrespondtounanticipatedevents.theCommitteesarediscussedingreaterdetailbegin-ningonpage4ofthisProxyStatement.

McDonald’sisproudofitsgovernancestructure,butmind-fulthatgovernanceisajourney,notadestination.wewelcomeshareholdercommunicationsaboutourpractices,whichcanbesenttotheCompanyasdescribedonpage7ofthisProxyStatement.goodgovernanceiscriticaltofulfillingourobli-gationstoshareholders.wearecommittedtocontinuouslyimprovingourgovernancepracticestopromoteaneffectivecollaborationofmanagementandourBoardthatyieldsvalueforourshareholders.

CORPORAtEgOvERNANCEPRiNCiPlESANDBOARDMAttERS

Director independenceOurCorporategovernancePrinciplesrequirethatallDirec-torsexcepttheChiefExecutiveOfficerandthePresident beindependent.theBoardisresponsiblefordeterminingtheindependenceofourDirectors,andtheBoardhasadoptedStandardsonDirectorindependenceforthispurpose.theBoardconsidersrelationshipsinvolvingDirectorsandtheirimmediatefamilymembersthatmayimplicateanyoftheseStandardsorotherapplicablelaworthelistingstandardsoftheNYSEandreliesoninformationderivedfromCompanyrecords,questionnairescompletedbyDirectorsandinquiriesofotherrelevantparties.

therelationshipsreviewedbytheBoardaspartofitsmostrecentindependencedeterminationsconsistedofcommercialrelationshipswithcompanies:> atwhichBoardmembersorthenewDirectornomineethenservedasofficers(includingMattel,inc.andinter-ConSecuritySystems,inc.);

> inwhichBoardmembers,thenewDirectornomineeortheirimmediatefamilymembersthenheldanaggregate10%ormoredirectorindirectinterest(includingSchwarzSupplySource(formerlyknownasSchwarzPaperCompany)andinter-ConSecuritySystems,inc.);and

> atwhichBoardmembersorthenewDirectornomineethenservedasoutsideDirectors(includingAonCorporation,BankofAmericaCorporation,HewittAssociates,inc.,JoneslanglaSalleincorporated,thewaltDisneyCompanyandwellsFargo&Company).

therelationshipswiththecompaniesnotedaboveinvolvedMcDonald’spurchaseofproductsandservicesintheordinarycourseofbusinessthatweremadeonarm’s-lengthtermsinamountsandunderothercircumstancesthatdidnotaffecttherelevantDirectors’independenceundertheBoard’sStandardsonDirectorindependenceorunderapplicablelawandlistingstandards.

theBoardalsorevieweddonationsmadebytheCompanytonot-for-profitorganizations,includingeducationalinstitutions,withwhichBoardmembersortheirimmediatefamilymem-berswereaffiliatedbymembershiporserviceasdirectorsortrustees.

Basedonitsreviewoftheaboverelationships,theBoarddeterminedthatnoneofitsnon-managementDirectorshasamaterialrelationshipwiththeCompanyandthatallofthemareindependentwithinthemeaningoftheBoard’sStandardsonDirectorindependence,aswellasapplicablelawandlistingstandards.Currently,ournon-managementDirectorsareHallAdams,Jr.,RobertA.Eckert,EnriqueHernandez,Jr.,JeanneP.Jackson,RichardH.lenny,walterE.Massey,AndrewJ.McKenna,CaryD.McMillan,SheilaA.Penrose,Johnw.Rogers,Jr.andRogerw.Stone.DirectorEdwardA.Brennan,whoservedwithdistinctiononourBoardsince2002,passedawayinDecember2007.DirectorBrennanwasindependentduringhis2007tenureonourBoard.inaddition,theBoardhasdeterminedthatSusanE.Arnold,ifelected,willbeinde-pendent.Ms.ArnoldisanomineeforelectionatthisAnnualShareholders’Meeting.


Board CommitteesOur Corporate Governance Principles provide for six standing committees: Audit, Compensation, Governance, Corporate Responsibility, Finance and Executive. Charters for each of the committees are available on the Company’s website at www.governance.mcdonalds.com.

theAudit Committeeoverseesfinancialreportingmattersandiscriticalinsettingtheright“toneatthetop”foraccount-ing,controlandcompliancematters.theAuditCommitteeappointstheCompany’sindependentauditorsandevaluatestheirindependenceandperformance.theAuditCommitteereviewswiththeinternalauditorsandtheindependentaudi-torstheoverallscopeandresultsoftheirrespectiveaudits,theinternalaccountingandfinancialcontrols,andthestepsmanagementhastakentomonitorandcontroltheCompany’smajorriskexposures.theAuditCommitteealsoreviewstheCompany’smaterialfinancialdisclosuresandpre-approvesallauditandpermittednon-auditservices.inaddition,theAuditCommitteeannuallyreviewstheadequacyandappropriate-nessoftheCompany’scomplianceprograms,includingtheCompany’sdisclosurecontrolsandprocedures,andreceivesregularreportsaboutethicsandcomplianceprograms.theCommitteealsoreviewsrelatedpersontransactionsandmakesrecommendationstotheBoardaboutthosematters.MembersoftheCommitteeareDirectorsHernandez(Chair-person),Adams,Massey,McMillan,PenroseandStone.AllmembersoftheAuditCommitteeareindependentwithinthemeaningofthelistingstandardsoftheNYSE.theBoarddeterminedthatDirectorsHernandez,McMillanandStonequalifyas“auditcommitteefinancialexperts”andthateachmemberoftheAuditCommitteeisfinanciallyliterate,allwithinthemeaningofapplicablerulesoftheSECandthelistingstandardsoftheNYSE.in2007,theAuditCommitteemetninetimes,includingmeetingstoreviewtheCompany’sannualandquarterlyfinancialreportspriortofilingwiththeSEC.

The Audit Committee Report, a discussion of the Policy for Pre-Approval of Audit and Permitted Non-Audit Services and a summary of Auditor Fees and Services can be found on pages 39 and 40 of this Proxy Statement.

theCompensation Committeehasspecialoversightforthedetaileddisclosurerequirementsregardingexecutivecompensation.theCompensationCommitteealsoevaluatestheperformanceoftheCompany’sChiefExecutiveOfficerandapproveshiscompensationinconsultationwiththeothernon-managementDirectors.Basedonrecommendationsfrommanagement,theCommitteealsoreviewsandapprovesseniormanagement’scompensationandapprovescompensationguidelinesforallotherofficersoftheCompany.theCommitteeadministerstheCompany’sincentiveandequitycompensationplansand,inconsultationwithseniormanagement,reviewsandapprovescompensationpolicies.MembersoftheCom-mitteeareDirectorsEckert(Chairperson),Jackson,lennyandRogers.untilhisdeathinDecember2007,DirectorBrennanwasChairpersonoftheCompensationCommittee.Allmem-bersoftheCompensationCommitteeareindependentwithinthemeaningofthelistingstandardsoftheNYSEandarealso“outsidedirectors”withinthemeaningofSection162(m)oftheinternalRevenueCodeand“non-employee”directorswithin

themeaningofRule16b-3undertheSecuritiesExchangeActof1934.in2007,theCompensationCommitteemetseventimes.

The Compensation Committee Report can be found on page 11 of this Proxy Statement and additional information about the Committee’s processes and procedures for the consideration and determination of executive compensation can be found in the Compensation Discussion and Analysis, also beginning on page 11 of this Proxy Statement.

theGovernance CommitteemonitorsourBoardstruc-tureandoperations.Aspartofitsfunctions,thegovernanceCommitteesetscriteriaforBoardmembership;searchesforandscreenscandidatestofillBoardvacancies;recommendsappropriatecandidatesforelectioneachyearand,inthisregard,evaluatesindividualDirectorperformance;assessesoverallBoardperformance;considersBoardcompositionandsize;recommendstotheBoardthecompensationpaidtonon-managementDirectorsandevaluatestheCompany’scorporategovernanceprocess.theCommitteealsoconsidersandmakesrecommendationstotheBoardregardingshare-holderproposalsforinclusionintheCompany’sannualproxystatement.inaddition,underourmajorityvotingstandardforuncontestedDirectorelections,ifanincumbentDirectorfailstobeelected,thegovernanceCommitteeisresponsibleformakingarecommendationtotheBoardaboutwhethertoaccepttheDirector’sresignation.MembersoftheCommitteeareDirectorsMcKenna(Chairperson),Eckert,HernandezandStone.DirectorBrennanservedonthegovernanceCommitteeuntilhisdeathinDecember2007.Allmembersofthegover-nanceCommitteeareindependentwithinthemeaningofthelistingstandardsoftheNYSE.in2007,thegovernanceCommitteemetsixtimes.

theCorporate Responsibility CommitteeactsinanadvisorycapacitytotheCompany’smanagementwithrespecttopoliciesandstrategiesthataffecttheCompany’sroleasasociallyresponsibleorganization,includingissuespertainingtohealthandsafety,theenvironment,employeeopportunities,diversity,consumersandthecommunitiesinwhichtheCompanydoesbusiness.theseissuesareimportanttoourcustomersandtotheMcDonald’sSystem,whichincludesfranchiseesandsuppliersaswellastheCompany,itssubsidiaries,jointventuresanddevelopmentallicensees,andweacknowledgethebenefitsofdialogueabouttheseissues.MembersoftheCommitteeareDirectorsMassey(Chairperson),Adams,PenroseandRogers.in2007,theCorporateResponsibilityCommitteemetthreetimes.

theFinance CommitteeensuresthatMcDonald’ssignifi-cantfinancialpoliciesandplans,suchasitsdividendpolicyandsharerepurchaseprogramareconsideredinappropriatedetailinlightoftheCompany’soverallstrategyandperformance.theFinanceCommitteehasprincipaloversightresponsibilitywithrespecttocertainmaterialfinancialmattersthatareoutsidethepurviewoftheAuditCommittee,includingtheCompany’streasuryactivitiesaswellasacquisitionsanddivestituresthataresignificanttotheCompany’sbusiness.thisCommitteeannuallyreviewstheCompany’sworldwideinsuranceprogram,bankingandtradingarrangements,and

McDonald’sCorporation2008�

policieswithrespecttodividendsandsharerepurchase.MembersoftheCommitteeareDirectorsJackson(Chair-person),lenny,McKenna,McMillanandStone.in2007,theFinanceCommitteemetthreetimes.

theExecutive CommitteemayexercisemostBoardpowersduringtheperiodsbetweenBoardmeetings.MembersofthisCommitteeareDirectorsSkinner(Chairperson),Eckert,HernandezandMcKenna.in2007,theExecutiveCommitteemetonce.DirectorBrennanservedontheExecutiveCommit-teeuntilhisdeathinDecember2007.

Director compensationunderMcDonald’sCorporategovernancePrinciples,thegovernanceCommitteerecommendstotheBoardtheformandamountofcompensationfornon-managementDirectors.Onlynon-managementDirectorsarepaidfortheirserviceontheBoard.

thefollowingtablesummarizesthecompensationreceivedbythenon-managementDirectorsin2007:

Fees earned Stock Option or paid in Awards Awards Name cash ($)(2)(3) ($)(4)(5) ($)(6)(7) Total ($) (a) (b) (c) (d) (h)

HallAdams,Jr. $126,000 $ 90,000 $11,722 $ 227,722EdwardA.Brennan(1) 140,804 89,014 11,722 241,540RobertA.Eckert 125,500 90,000 12,944 228,444EnriqueHernandez,Jr. 150,000 90,000 11,722 251,722JeanneP.Jackson 131,500 90,000 11,722 233,222RichardH.lenny 123,000 90,000 – 213,000walterE.Massey 134,000 90,000 11,722 235,722AndrewJ.McKenna(8) 143,000 878,421 11,722 1,033,143CaryD.McMillan 120,500 90,000 12,944 223,444SheilaA.Penrose 126,000 90,000 – 216,000Johnw.Rogers,Jr. 123,000 90,000 12,944 225,944Rogerw.Stone 138,000 90,000 11,722 239,722

(1)AllamountsreportedforDirectorBrennanareasofthedateofhisdeathonDecember27,2007.

(2)Non-managementDirectorswhoservedthroughout2007earned:anannualretainerof$90,000(exceptthatDirectorBrennanreceivedaproratedretainerof$89,022);a$2,000feeforeachBoardmeetingattended;a$1,500feeforeachCommitteemeetingattended;anda$2,000feeforeachexecutivesessionnotheldinconjunctionwithaBoardmeeting.inaddition,in2007,theChairpersonofeachoftheAudit,CompensationandgovernanceCommittees(DirectorsHernandez,BrennanandMcKenna,respectively)receivedanannualretainerfeeof$20,000(exceptthatDirectorBrennanreceivedaproratedretainerof$19,783).theChairpersonofeachoftheCorporateResponsibilityandFinanceCommittees(DirectorsMasseyandJackson,respectively)receivedanannualretainerfeeof$10,000forserviceinthesecapacities.

theCompanyreimbursesnon-managementDirectorsforexpensesincurredinconnectionwithattendingBoard,Committeeandshareholdermeetings,aswellasattendingMcDonald’sbusinessmeetingsatmanagement’sinvitation.Onlimitedoccasions,theCompanymaydeterminethatitisappropriatefornon-managementDirectorstobeaccom-paniedbytheirspousesinconnectionwiththesemeetingsand/oratothereventsrelatedtotheirserviceontheBoard.inthesecircumstances,theCompanyalsoreimbursesthespouses’travelexpenses.inaddition,inaccordancewithourCorporategovernancePrinciples,theCompanyreim-bursesreasonableexpensesrelatedtocontinuingeducationforourDirectors.

(3)Non-managementDirectorsmayelecttodeferalloraportionoftheirretainerand/orfeesintheformofcommonstockequivalentunitsundertheCompany’sDirectors’DeferredCompensationPlan.Suchdeferrals,aswellasthecom-monstockequivalentunitsdescribedinnote4below,arecreditedtoanaccountthatisperiodicallyadjustedtoreflectthegains,lossesanddividendsassociatedwithanotionalinvestmentinMcDonald’scommonstock.thenumberofcommonstockequivalentunitscreditedtoanon-man-agementDirector’saccountisbasedonaper-sharepriceequaltotheclosingpriceofMcDonald’sstockontheNYSEonthedatethecreditismade.Amountscreditedtothenon-managementDirectors’accountsarepaidincash,inasinglelumpsumafterthenon-managementDirectorretiresfromtheBoardordies.ifthenon-managementDirectorhasmadeavalidpriorwrittenelectioninaccordancewiththetermsoftheplan,alloraportionoftheamountinthenon-managementDirector’saccountmaybepaidinequalannualinstallmentsoveraperiodofupto15yearsbegin-ningafterretirementfromtheBoard.

(4)RepresentstheexpensetotheCompanyin2007,asreportedinourfinancialstatementspursuanttoStatementofFinancialAccountingStandardsNo.123(revised2004),(FAS123R),of(i)commonstockequivalentunitsgrantedundertheDirectors’DeferredCompensationPlanonDecember31,2007toeachnon-managementDirectorwhowasservingattheendoftheyearandtoDirectorBrennan’sbeneficiaryforservicethroughDecember27,2007;and(ii)inthecaseofDirectorMcKenna,restrictedstockunits,includingaspecialgrantof17,000restrictedstockunitsonMay23,2007,awardedinrecognitionofDirectorMcKenna’sserviceasnon-executiveChairmanoftheBoard,asdescribedinnote8onthenextpage.


(5)theaggregatenumberofoutstandingstockawardsheldbyeachofthenon-managementDirectorsasofDecember31,2007issetforthinthetablebelow.StockawardsincludecommonstockequivalentunitsundertheDirectors’DeferredCompensationPlanand,inthecaseofDirectorMcKenna,bothcommonstockequivalentunitsandrestrictedstockunits:

Aggregate number of outstanding stock awards as of December 31, 2007 Name (December 27, 2007 for Director Brennan)

HallAdams,Jr. 14,840EdwardA.Brennan 26,649RobertA.Eckert 18,576EnriqueHernandez,Jr. 40,940JeanneP.Jackson 29,044RichardH.lenny 9,033walterE.Massey 17,905AndrewJ.McKenna 121,294CaryD.McMillan 16,479SheilaA.Penrose 4,140Johnw.Rogers,Jr. 18,041Rogerw.Stone 76,126

(6)RepresentstheexpensetotheCompanyin2007underFAS123R,asreportedinourfinancialstatements,ofstockoptionsgrantedinprioryears.theCompanyhasnotgrantedanystockoptionstonon-managementDirectorssinceMay20,2004.

(7)theaggregatenumberofoutstandingstockoptionsheldbyeachofthenon-managementDirectorsasofDecember31,2007issetforthinthetablebelow:

Aggregate number of outstanding stock options as of December 31, 2007 Name (December 27, 2007 for Director Brennan)

HallAdams,Jr. 26,000EdwardA.Brennan 20,000RobertA.Eckert 15,000EnriqueHernandez,Jr. 26,000JeanneP.Jackson 24,000RichardH.lenny –walterE.Massey 1,666AndrewJ.McKenna 10,998CaryD.McMillan 15,000SheilaA.Penrose –Johnw.Rogers,Jr. 15,000Rogerw.Stone 23,666

(8)theamountreportedinthe“StockAwards”columnforDirectorMcKennarepresentsthesumof(i)the$90,000credittohisaccountundertheDirectors’DeferredCompen-sationPlanonDecember31,2007;and(ii)the2007expensetotheCompanyunderFAS123Rofthespecialawardsof10,000restrictedstockunitsgrantedonMay10,2005,15,000restrictedstockunitsgrantedonMay25,2006and17,000restrictedstockunitsgrantedonMay23,2007,inrecognitionofhisserviceasnon-executiveChairman

oftheBoard.theserestrictedstockunitswillvestonthelaterofoneyearfromthedateofgrantorDirectorMcKenna’sretirementdate.the2007expenseunderFAS123RofDirectorMcKenna’srestrictedstockunitswas$788,421.

Board and Committee evaluationsinaccordancewithourCorporategovernancePrinciples,thegovernanceCommitteeconductsanannualevaluationoftheperformanceoftheBoardofDirectors.individualDirectorsareevaluatedperiodically,butnolessoftenthaneachtimetheyareslatedforre-election.inaddition,eachoftheAudit,Com-pensationandgovernanceCommitteesannuallyconductsself-evaluationsandeachoftheCorporateResponsibilityandFinanceCommitteesconductssuchevaluationsatleasteverytwoyears.ResultsoftheseevaluationsarediscussedatcommitteemeetingsandwiththefullBoard.

Code of Conduct for the Board of DirectorsEachyear,DirectorsconfirmthattheyhavereadtheCodeofConductfortheBoardofDirectorsandwillcomplywithitsstandards.

Director selection processtheCompanyhasapolicywithregardtotheconsiderationofDirectorcandidates.underthepolicy,thegovernanceCommitteeestablishescriteriaforDirectornominees,screenscandidatesandrecommendsDirectornomineeswhoareapprovedbythefullBoard.

thegovernanceCommitteeconsiderscandidatessuggestedbyitsmembers,otherDirectors,seniormanagementandshareholdersinanticipationofupcomingelectionsandactualorexpectedBoardvacancies.theCommitteemay,attheCompany’sexpense,retainsearchfirms,consultantsandotheradvisorstoidentify,screenand/orevaluatecandidates.

Allcandidates,includingthoserecommendedbysharehold-ers,areevaluatedonthesamebasisinlightoftheircredentialsandtheneedsoftheBoardandtheCompany.Ofparticularimportancearethecandidate’sintegrityandjudgment,profes-sionalachievementsandexperiencerelevanttotheCompany’sbusinessandstrategicchallenges,hisorherpotentialcontribu-tiontothediversityandcultureoftheBoard,andabilityandwillingnesstodevotesufficienttimetoBoardduties.CandidatesalsoareevaluatedinlightofBoardpolicies,suchasthoserelatingtoDirectorindependenceandserviceonotherboards.Candidateswithappropriatequalificationsareinterviewedinperson,typicallybytheChairman,theChiefExecutiveOfficer,amajorityofthemembersofthegovernanceCommitteeandotheravailableDirectors.

thegovernanceCommitteealsoevaluatessittingDirectorswhosetermsarenearingexpirationandwhoarebeingconsid-eredforrenominationinlightoftheaboveconsiderationsandtheirpastcontributionstotheBoard.ShareholderswhowishtonominateDirectorcandidatesshouldfollowtheproceduresdescribedinthesectiononConsiderationofDirectornomina-tions,whichcanbefoundonpage7ofthisProxyStatement.


Shareholder communications with the Board of Directors and non-management DirectorsinterestedpersonswishingtocommunicatedirectlywiththeBoardorthenon-managementDirectors,individuallyorasagroup,maydosobysendingwrittencommunicationsaddressedtothematMcDonald’sCorporation,P.O.Box4953,OakBrook,il60522-4953.undertheBoard’spolicyforshare-holdercommunicationsaddressedtotheBoard,theCompany’sSecretarycollectsmailfromtheDirectors’postofficebox,forwardscorrespondencedirectedtoanindividualDirectortothatDirector,andscreenscorrespondencedirectedtomultipleDirectorsorthefullBoardinordertoforwardittothemostappropriateCommitteeChairperson,theChairmanorthefullBoard.CommunicationstotheBoard,thenon-managementDirectorsortoanyindividualDirectorthatrelatetotheCom-pany’saccounting,internalaccountingcontrolsorauditingmattersarereferredtotheChairpersonoftheAuditCommittee.

Consideration of Director nominationsShareholderscansuggestDirectorcandidatesforconsiderationbywritingtothegovernanceCommittee,c/otheSecretary,McDonald’sCorporation,McDonald’sPlaza,OakBrook,il60523-1928.Shareholdersshouldprovidethecandidate’sname,biographicaldata,qualificationsandthecandidate’swrittenconsenttobeingnamedasanomineeintheCompany’sProxyStatementandtoserveasaDirector,ifelected.tobeeligibletobeanomineeforelectionasaDirector,theshare-holdermustalsodeliverstatementstotheSecretaryindicatingwhetherthecandidate:(a)willdeliveraresignationeffectiveuponfailuretoreceivetherequiredvoteforelectionafterare-election;(b)isapartytoanyvotingcommitmentthatcouldlimitthenominee’sabilitytocarryouthis/herfiduciaryduties;(c)intendstorefrainfromenteringintovotingcommitments;(d)isapartytoanyarrangementsforcompensation,reim-bursementorindemnificationinconnectionwithserviceasaDirector,orintendstoenterintoanysucharrangement;and(e)intendstocomplywiththeCompany’spubliclydisclosedpoliciesandguidelines.

The provisions relating to submission of Director nominations are included in the Company’s By-Laws, which are available on the Company’s website at www.governance.mcdonalds.com.

ForDirectornominationstobeproperlybroughtbeforeanannualmeetingbyashareholder,timelynoticemustbegivenbytheshareholdertotheCompany’sSecretary.tobetimely,thenoticemustbedeliveredtotheSecretaryattheaboveaddressnotlessthan90daysnormorethan120daysbeforetheone-yearanniversaryoftheprecedingyear’sannualmeet-ing.withrespecttothe2009AnnualShareholders’Meeting,noticewillbetimelyifitisdeliveredbetweenJanuary22,2009andFebruary21,2009.

Shareholder proposals for inclusion in next year’s Proxy Statementtobeconsideredforinclusioninnextyear’sProxyStatement,shareholderproposalsmustbereceivedbytheCompany’sSecretarynolaterthanDecember10,2008.theseproposalsshouldbesenttotheSecretarybyfaxat1-630-623-0497orbymailtotheSecretary,McDonald’sCorporation,McDonald’sPlaza,OakBrook,il60523-1928.thisnoticerequirementisseparatefromandinadditiontotheSEC’srequirementsthatashareholdermustmeetinordertohaveashareholderproposalincludedintheCompany’sProxyStatement.

Other shareholder proposals for presentation at the 2009 Annual Shareholders’ MeetingForanyproposalthatisnotsubmittedforinclusioninnextyear’sProxyStatement,butisinsteadsoughttobepresenteddirectlyfromthefloorofthe2009AnnualShareholders’Meeting,theCompany’sBy-lawsrequirethattimelynoticemustbegiventotheCompany’sSecretary.tobetimely,thenoticemustbedeliveredtotheSecretaryattheaboveaddressbetweenJanuary22,2009andFebruary21,2009.theBy-lawsalsoprovidethattheproposal,asdeterminedbytheChairmanofthemeeting,mustbeapropersubjectforshareholderactionunderDelawarecorporationlaw.

COMMuNiCAtiONS


PROPOSAlStOBEvOtEDON

Proposal No. 1. Election of DirectorstheBoardisdividedintothreeclasses,eachhavingthree-yeartermsthatexpireinsuccessiveyears.

NomineesThe nominees for Director are: Ralph Alvarez, Susan E. Arnold, Richard H. Lenny, Cary D. McMillan, Sheila A. Penrose and James A. Skinner.

FiveofthenomineesarestandingforelectionasDirectorsatthe2008AnnualShareholders’Meetingtoholdofficeforthree-yeartermsexpiringin2011.Onenominee,RalphAlvarez,isstandingforelectionasDirectortoholdofficeforatwo-yeartermexpiringin2010.

Yourshareswillbevotedaccordingtoyourinstructions.ifyoureturnyoursignedproxycardbutdonotprovidevotinginstructions,yourshareswillbevotedFORtheelectionofthesixnomineesnamedabove.tobeelectedtotheBoard,

thenomineeforDirectormustreceivemorevotes“for”than“against.”Abstentionswillhavenoeffectontheoutcomeofanelection.ifanomineewhoisacontinuingDirectorisnotre-elected,heorshewillremaininofficeuntilasuccessoriselectedoruntilhisorherearlierresignationorremoval.EachofthenomineeswhoisacontinuingDirectorhasagreedtotenderanirrevocableresignationthatwillbeeffective(i)ifthenomineeisnotre-electedattheAnnualShareholders’Meet-ingand(ii)iftheBoardacceptssuchresignationfollowingthemeeting.thenomineewhoisnotacontinuingDirectorhasagreedtopromptlytenderanirrevocableresignationeffectiveuponherfailuretoreceivetherequiredvoteforre-electionatthenextmeetingatwhichshewouldfacere-electionanduponacceptanceofsuchresignationbytheBoard.thegover-nanceCommitteewillactonanexpeditedbasistodeterminewhetherornottoacceptthenominee’sresignationandwillsubmitsuchrecommendationforpromptconsiderationbytheBoard.thegovernanceCommitteeandtheBoardmayconsideranyfactorstheydeemappropriateandrelevantindecidingwhetherornottoacceptanominee’sresignation.

theBoardofDirectorsexpectsallsixnomineesnamedabovetobeavailableforelection.ifanyofthemshouldbecomeunavailabletoserveasaDirectorforanyreasonpriortotheAnnualShareholders’Meeting,theBoardmaysubstituteanotherpersonasanominee.inthatcase,yourshareswillbevotedforthatotherperson.

BiographicalinformationfortheDirectorscontinuinginofficeandforthesixnomineesfollows.

The Board of Directors recommends that shareholders vote FOR all six nominees.

Biographical information

Hall Adams, Jr.Mr.AdamswastheChiefExecutiveOfficerofleoBurnett&Co.,inc.,anadvertisingfirm,from1987untilhisretirementin1992.Mr.Adams,74,hasservedasaDirectorofMcDonald’ssince1993andisretiringasaDirectoratthe2008AnnualShareholders’Meeting.

Ralph AlvarezNominee.Mr.AlvarezisPresidentandChiefOperatingOfficer,apositiontowhichhewaselectedinAugust2006,andalsohasservedasaDirectorsinceJanuary2008.HeservedasPresidentofMcDonald’sNorthAmericafromJanuary2005toAugust2006andasPresident,McDonald’suSAfromJuly2004toJanuary2005.FromJanuary2003toJuly2004,Mr.AlvarezservedasChiefOperationsOfficerforMcDonald’suSA.Mr.Alvarez,52,wasfirstemployedbytheCompanyin1994andisanomineefortheclassof2010.Mr.AlvarezalsoservesontheboardofKeyCorp.

Susan E. ArnoldNominee.Ms.ArnoldisthePresident–globalBusinessunitsoftheProcter&gambleCompany,amanufacturerandmarketerofconsumergoods,apostshehasheldsince2007.PriortothattimesheservedasviceChairofP&gBeautyandHealthsince2006,viceChairofP&gBeautysince2004andPresident–PersonalBeautyandglobalFeminineCaresince2002.SheisadirectorofthewaltDisneyCompany.Ms.ArnoldwasidentifiedasaDirectorcandidatebyanon-managementDirectoroftheCompany.Ms.Arnold,54,isanomineefortheclassof2011.

JacksonEckert Hernandez

SkinnerNominee Stone

lennyNominee Massey McKenna

McMillanNominee PenroseNominee Rogers

Adams ArnoldNomineeAlvarezNominee


Sheila A. PenroseNominee.Ms.Penroseisthenon-execu-tiveChairmanoftheBoardofJoneslanglaSalleincorporated,arealestateservicesandmoneymanagementfirm,sinceherelectiontothatpostinJanuary2005.ShehasservedonJoneslanglaSalle’sBoardsince2002.FromOctober2000toDecember2007,Ms.PenrosewasthePresidentofthePenrosegroup,aproviderofstrategicadvisoryservicesonfinancialandorganizationalstrategies.Ms.Penrose,62,joinedMcDonald’sBoardin2006andisanomineefortheclassof2011.

John W. Rogers, Jr.Mr.RogersistheChairmanandChiefExecutiveOfficerofArielCapitalManagement,llC,aprivatelyheldinstitutionalmoneymanagementfirmthathefoundedin1983.Mr.Rogers,50,joinedtheMcDonald’sBoardin2003andisamemberoftheclassof2010.Mr.RogersalsoservesasadirectorofAonCorporationandExelonCorporation,andasatrusteeofArielinvestmenttrust.

James A. SkinnerNominee.Mr.SkinnerisviceChairmanandChiefExecutiveOfficer,aposttowhichhewaselectedinNovember2004,andalsohasservedasaDirectorsincethatdate.HeservedasviceChairmanfromJanuary2003toNovember2004.Mr.Skinner,63,hasbeenwiththeCompanyfor36yearsandisanomineefortheclassof2011.Healsoservesasadirectorofillinoistoolworksinc.andwalgreenCo.

Roger W. StoneMr.StonehasbeenChairmanandChiefExecutiveOfficerofKapStonePaperandPackagingCorpora-tion,formerlyStoneArcadeAcquisitionCorporation,sinceApril2005.Mr.StonewasmanagerofStone-Kaplaninvest-ments,llCfromJuly2004toJanuary2007.HewasChairmanandChiefExecutiveOfficerofBoxuSAgroup,inc.,acorru-gatedboxmanufacturer,from2000to2004.Mr.StonehasalsobeentheNon-ExecutiveChairmanandDirectorofStonetanChinaAcquisitionCorp.sinceJanuary2007.Mr.Stone,73,joinedMcDonald’sBoardin1989andisamemberoftheclassof2010.

Proposal No. 2. Approval of the appointment of an independent registered public accounting firm to serve as independent auditors for 2008theAuditCommitteeisresponsiblefortheappointmentoftheindependentauditorsengagedbytheCompany.theAuditCommitteehasappointedErnst&YoungllPasindependentauditorsfor2008.theBoardisaskingshareholderstoapprovethisappointment.Ernst&YoungllPauditedtheCompany’sfinancialstatementsandinternalcontroloverfinancialreport-ingfor2007.ArepresentativeofthatfirmwillbepresentattheAnnualShareholders’Meetingandwillhaveanopportunitytomakeastatementandanswerquestions.

Seepage40ofthisProxyStatementforadditionalinforma-tionregardingtheindependentauditors,includingadescriptionoftheAuditCommittee’sPolicyforPre-ApprovalofAuditandPermittedNon-AuditServicesandasummaryofAuditorFeesandServices.

The Board of Directors recommends that shareholders vote FOR the appointment of Ernst & Young LLP, an independent registered public accounting firm, to serve as independent auditors for 2008.

Robert A. EckertMr.EckertisChairmanoftheBoardandChiefExecutiveOfficerofMattel,inc.,adesigner,manufacturerandmarketeroffamilyproducts,aposthehasheldsinceMay2000.Mr.Eckert,53,joinedtheBoardin2003andisamemberoftheclassof2009.

Enrique Hernandez, Jr.Mr.HernandezhasbeenChairmanandChiefExecutiveOfficerofinter-ConSecuritySystems,inc.,aproviderofhigh-endsecurityandfacilitysupportservicestogovernment,utilitiesandindustrialcustomers,since1986.HejoinedtheBoardin1996andisamemberoftheclassof2009.Mr.Hernandez,52,alsoservesastheChairmanoftheBoardofNordstrom,inc.andasadirectorofwellsFargo&Company.

Jeanne P. JacksonMs.JacksonisthegeneralPartnerofMSPCapital,aconsultingandinvestmentfirmshefoundedin2003.Ms.JacksonwasChiefExecutiveOfficerofwalmart.comfromMarch2000toJanuary2002.Ms.Jackson,56,joinedMcDonald’sBoardin1999andisamemberoftheclassof2009.ShealsoservesontheboardsofNiKE,inc.andNordstrom,inc.

Richard H. LennyNominee.Mr.lennywasChairman,PresidentandChiefExecutiveOfficeroftheHersheyCompany,amanufacturer,distributorandmarketerofchocolateandnon-chocolatecandy,snacksandcandy-relatedgroceryproducts,fromJanuary2002untilhisretirementinDecember2007.Mr.lenny,56,joinedMcDonald’sBoardin2005andisanomineefortheclassof2011.

Walter E. MasseyDr.MasseyretiredasPresidentofMore-houseCollegeinJune2007,aposttowhichhewasnamedin1995.HealsoservesasadirectorofBankofAmericaCorporation,BPp.l.c.andDeltaAirlines,inc.Dr.Massey,70,joinedMcDonald’sBoardin1998andisamemberoftheclassof2010.

Andrew J. McKennaMr.McKennahasbeenthenon-execu-tiveChairmanoftheBoardsince2004andisalsotheChair-manofSchwarzSupplySource(formerlyknownasSchwarzPaperCompany),aprinter,converter,produceranddistributorofpackagingandpromotionalmaterials.Mr.McKenna,78,joinedMcDonald’sBoardin1991andisamemberoftheclassof2009.HeisalsoadirectorofAonCorporationandSkylineCorporation.

Cary D. McMillanNominee.Mr.McMillanhasbeenChiefExecutiveOfficeroftruePartnersConsulting,llC,aprofes-sionalservicesfirmprovidingtaxandotherfinancialservices,sinceDecember2005.FromOctober2001toMay2004,hewastheChiefExecutiveOfficerofSaraleeBrandedApparel,andExecutivevicePresident,fromJanuary2000toMay2004,ofSaraleeCorporation,abrandedconsumerpackagedgoodscompany.Mr.McMillan,50,joinedMcDonald’sBoardin2003andisanomineefortheclassof2011.HealsoservesasadirectorofAmericanEagleOutfitters,inc.andHewittAssociates,inc.


StOCKOwNERSHiP

Stock ownership guidelinestheCompanyimposesminimumstockownershipguidelinesforDirectorsandseniorofficers.theseguidelinesareavailableontheCompany’swebsiteatwww.governance.mcdonalds.com.

Security ownership of certain beneficial ownersthefollowingtableshowsallbeneficialownersofmorethanfivepercentoftheCompany’scommonstockoutstandingasofDecember31,2007:

Amount and nature Name and address of of beneficial Percent of beneficial owner ownership class (2)

MarsicoCapitalManagement,llC(1) 66,007,689 5.6%120017thStreet,Suite1600 commonsharesDenver,CO80202

(1)ReflectssharesbeneficiallyownedbyMarsicoCapitalManagement,llCasofDecember31,2007,accordingtoastatementonSchedule13gfiledwiththeSEC,whichindicatesthatthecompany,aninvestmentadviser,hassolevotingpowerwithrespectto55,988,277sharesandsoledispositivepowerwithrespectto66,007,689shares.thecompanyholdssharedvotingpowerwithrespecttononeoftheshares.theSchedule13gcertifiesthatthesecuritieswereacquiredintheordinarycourseandnotwiththepur-poseorwiththeeffectofchangingorinfluencingthecontrolofMcDonald’s.

(2)BasedonthenumberofoutstandingsharesofcommonstockonDecember31,2007.

Security ownership of managementthefollowingtableshowstheownershipofthecommonstockandcommonstockequivalentunitsforthenamedindividualsandthegroupasofMarch1,2008.Directors,thenewDirectornomineeandexecutiveofficersasagroupowned(directly,indirectlyandthroughbenefitplans)lessthan1.0%oftheCompany’scommonstock:

Common Stock stock equivalents Name (1)(2)(3)(4) (5) Total

HallAdams,Jr. 30,000 14,840 44,840RalphAlvarez 331,210 40,838 372,048SusanE.Arnold – – –RobertA.Eckert 25,000 18,576 43,576timothyJ.Fenton 208,897 9,487 218,384DenisHennequin 284,721 2,963 287,684EnriqueHernandez,Jr. 37,108 40,940 78,048JeanneP.Jackson 26,250 29,044 55,294RichardH.lenny 2,000 9,033 11,033walterE.Massey 6,476 17,905 24,381AndrewJ.McKenna 53,519 69,294 122,813CaryD.McMillan 28,000 16,479 44,479MatthewH.Paull(6) 234,143 - 234,143SheilaA.Penrose 3,000 4,140 7,140Johnw.Rogers,Jr. 92,100 18,041 110,141JamesA.Skinner 1,260,740 35,695 1,296,435Rogerw.Stone 41,666 76,126 117,792Directorsandexecutiveofficersasagroup(thegroup) (25persons) 3,937,841 461,503 4,399,344

(1)Beneficialownershipofsharesthatareownedbymembersoftheirimmediatefamiliesdirectlyorthroughtrustsisdisclaimedasfollows:DirectorsMcKenna,640;andRogers,100.

(2)includesunallocatedsharesheldintheCompany’sProfitSharingandSavingsPlanasfollows:DirectorSkinner,11,379;Mr.Paull,1,502;andthegroup,24,548.

(3)includessharesthatcouldbepurchasedbyexerciseofstockoptionsonorwithin60daysafterMarch1,2008(forMr.Paull,onorwithin60daysafterDecember31,2007;seefootnote(6)below),undertheCompany’soptionplansasfollows:DirectorsAdams,26,000;Alvarez,322,546;Eckert,15,000;Hernandez,26,000;Jackson,24,000;Massey,1,666;McKenna,10,998;McMillan,15,000;Rogers,15,000;Skinner,1,033,172;andStone,23,666;Messrs.Fenton,170,222;Hennequin,280,071;andPaull,226,789;andthegroup,3,285,549.

(4)Directorsandexecutiveofficersasagrouphavesolevotingandinvestmentpoweroversharesofcommonstocklistedinthepriortableexceptasfollows:(i)sharedvotingandinvestmentpowersforsharesheldbyDirectorsEckert,10,000;Hernandez,11,108;Jackson,2,250;lenny,2,000;andSkinner,2,168;andthegroup,64,584;and(ii)forthebenefitofchildren,sharesheldbyMr.Fenton,725;andthegroup,731.

(5)includescommonstockequivalentunitscreditedundertheCompany’sretirementplansandtheDirectors’DeferredCompensationPlan,whicharepayableincash.inaddition,forMr.Hennequin,includessharescreditedtohisPlanEpargneEnterpriseaccount.

(6)AllamountsreportedforMr.PaullareasofDecember31,2007,asaresultofhisretirementasChiefFinancialOfficeroftheCompanyatthattime.


EXECutivECOMPENSAtiON

Compensation Committee report

Dear Fellow Shareholders:theCompensationCommitteereviewedanddiscussedtheCompany’sCompensationDiscussionandAnalysiswithMcDonald’smanagement.Basedonthisreviewanddiscussion,theCompensationCommitteerecommendedtotheBoardofDirectorsthattheCompensationDiscussionandAnalysisbeincludedinthisProxyStatementandtheCompany’sAnnualReportonForm10-KforthefiscalyearendedDecember31,2007.

Respectfullysubmitted,The Compensation CommitteeRobertA.Eckert, ChairpersonJeanneP.JacksonRichardH.lennyJohnw.Rogers,Jr.

Compensation DisCussion anD analysis

ExECutivE SuMMAryMcDonald’sdeliveredstrongperformanceandreturnstoshareholdersin2007.wehavecontinuedtobuildonoursuccessasatrustedglobalconsumerbrandandgrowourbusinessbycreatingoutstandingrestaurantexperiencesforourcustomers.wehavedesignedourexecutivecompensationprogramtoattractandretainexcellentmanagementandtomotivateourexecutivesandrewardthemforsuperiorperfor-mance.webelievethatourcompensationprogramhasplayedanimportantroleintheCompany’ssuccess.

wedescribebelowourexecutivecompensationprogramandhowitworkedin2007.Amongothermatters,weaddressthefollowing:

ⓦ theprinciplesunderlyingourexecutivecompensationprogram,whichwerefertointhisreportasthe“keyobjectives,”andwhicharedescribedonpage12ofthisProxyStatement.> Howeachofthekeyobjectivesisintegratedwithourbusi-

nessstrategyandourcorporateculture.

> Highlightsofhowexecutivecompensationin2007wasdrivenbyperformance,consistentwiththekeyobjectives.

> thegroupofcomparatorcompaniesweuseasabench-marktoensurethatourexecutivecompensationprogramiscompetitiveandinlinewithmarketpractices,andhowweselectthosecompanies.

ⓦ theelementsofcompensationthatmakeupourprogram.> Asummaryofhoweachelementreflectsthekeyobjectives.

> Ourpracticeforallocatingeachelementofcompensationamongthetotalcompensation.

> Quantitativeperformancemeasuresweusetodeterminepayoutsofperformance-basedcompensationandwhywechoseeachone.

> thetargetlevelsofperformanceundertherelevantquanti-tativemeasuresforperformance-basedawardsin2007.

> Qualitativeperformancefactorsandhowtheycanaffectpayoutstoourexecutives.

ⓦ theprocessbywhichtheCompensationCommitteeoftheBoardofDirectors(theCommittee)setsandreviewsexecutivecompensation.> theroleofmanagementintheprocess.

> theroleoftheCommittee’sindependentcompensationconsultant.

ⓦ Detailedinformationabouteachoftheindividualelementsofcompensation.

KEy tErMS inthediscussionthatfollows,weusethetermsbelowindescribingourcompensationplans,measuresofCompanyperformanceandotheraspectsofourcompensationprogram.

Company compensation plans

TIP.targetincentivePlan.Ourannualcashincentiveplan.

CPUP.CashPerformanceunitPlan.Ourthree-yearcashincentiveplan.

RSUs.Restrictedstockunits.AnRSuprovidestherighttoreceiveashareofMcDonald’sstock(or,attheCompany’sdiscretion,thecashequivalent)uponvestingoftheaward.RSusgrantedtoexecutivesgenerallyhavebothserviceandperformance-basedvestingrequirements.

Quantitative measures of Company performance

Operating income.Operatingincomeasreportedinourfinancialstatements.Operatingincomeforpurposesofourcompensationprogramsmaybedeterminedexcludingcertainitems,asdescribedonpage17ofthisProxyStatement.

ROTA.Returnontotalassets.Calculatedasoperatingincomefromcontinuingoperations,dividedbyaverageassets.ROtAforpurposesofourcompensationprogramsmaybedeter-minedexcludingcertainitems,asdescribedonpage17ofthisProxyStatement.

EPS.Earningspershare.Calculatedasincomefromcontinu-ingoperationsasreportedinourfinancialstatements,dividedbydilutedweighted-averageshares.Dilutedweighted-averagesharesincludeweighted-averagesharesoutstandingplusthedilutiveeffectofshare-basedcompensation.EPSforpurposesofourcompensationprogramsmaybedeterminedexcludingcertainitems,asdescribedonpage17ofthisProxyStatement.

TSR.totalshareholderreturn.Calculatedasthechangeinourstockpriceplusreinvestmentofdividendsoveraspecifiedperiod.


Groups of Company employees

Staff employees.Companyemployees,includinghomeoffice,divisionalofficeandregionalofficeemployees.

Officers.Employeesatthelevelofvicepresidentandabove;about200employees.

Senior management.Officersatthelevelofseniorvicepresi-dentandabove;about50employees.

Executives.the11mostseniorexecutivesoftheCompany.

Named executive officers.thefiveexecutiveswhosecompen-sationisdescribedinthisProxyStatement,pursuanttoSECrequirements.Ournamedexecutiveofficersfor2007are:

> JamesA.Skinner,ChiefExecutiveOfficerorCEO

> MatthewH.Paull,ChiefFinancialOfficerorCFOthroughDecember31,2007(succeededeffectiveasofJanuary1,2008byPeterJ.Bensen)

> RalphAlvarez,PresidentandChiefOperatingOfficer,orPresident/COO

> DenisHennequin,PresidentofMcDonald’sEurope(basedinEurope)

> timothyJ.Fenton,PresidentofMcDonald’sAsia/Pacific,MiddleEastandAfrica,orAPMEA(basedinHongKong)

OtherLatam transaction.thetransitionofapproximately1,600restaurantsin18latinAmericanandCaribbeancountriestoadevelopmentallicensestructure,completedin2007.

Total direct compensation.Basesalary,annualandlong-termcashincentiveandequity-basedcompensation.totaldirectcompensationdoesnotincludepotentialseverancepayments,retirementbenefitsorotherfringebenefits.

Systemwide sales.SalesatallMcDonald’srestaurants,includ-ingthoseoperatedbytheCompany,franchiseesandaffiliates.

Run rate.theaverageannualdilutionfromCompanystockoptionandRSugrantsoverthemostrecentthree-yearperiod.

Constant currency.Describesresultsthatexcludetheeffectsofforeigncurrencytranslation.unlessnoted,referenceshereintooperatingincomeandEPSareinconstantcurrencies.

McDONAlD’S ExECutivE COMPENSAtiON PrOgrAM

ⓦ Our key objectives Ourexecutivecompensationprogramisaimedatachievingthefollowingkeyobjectives,whichweviewascomplementary,butdistinct,goals:> Profitablegrowthandincreasingshareholdervalue

> Differentiationofcompensationbasedonperformance

> internalpayequity

> Effectivecompetitionfor,andretentionof,managerialtalent.

thekeyobjectivesreflectandsupportourbusinessstrat-egyandourcorporatecultureinavarietyofways,whichwedescribebelow.

Profitable growth and increasing shareholder value> Afundamentalprinciplereflectedinourexecutivecom-pensationprogramisrewardingourexecutivesforprofitablegrowth.Ourlong-termstrategicbusinessplan,thePlantowin,focusesonfivekeydriversofexceptionalrestaurantexperiences—people,products,place,priceandpromotion—whichinturndrivecomparablesalesandprofitability.togetherwithacommitmenttofinancialdisciplinethroughcontrollingcostsandrigorouscapitalallocationpractices,itsupportsourgrowthstrategyofbeingbetter,notjustbigger.

> Ourexecutivecompensationprogramisdesignedsothattheperformance-basedelementsofourcompensationpro-gramarecloselytiedtokeyperformancemetricsthatgaugeprofitability,shareholderreturnsandfinancialdiscipline.thequantitativemeasuresofCompanyandgeographicbusinessunitperformanceusedinourexecutivecompensationprogram,andthereasonseachofthemwasselected,aresummarizedonpage17ofthisProxyStatement.Seealsopages19to21ofthisProxyStatementformoredetailedanalysisofhowCompany,geographicbusinessunitandindividualperformancetranslateintopayoutsunderourcompensationplans.

> SincetheadoptionofthePlantowin,wehavedeliveredexceptionallystrongresultsforourshareholders.wehaveconsistentlyexceededthetargetsforaverageannualgrowthoftheCompanyaslaidoutin2003(excludingtheeffectsofthelatamtransactionin2007).intheperiodfromMay2003throughDecember2007,wedelivered56consecutivemonthsofglobalcomparablesalesincreases.FromJanuary2003throughDecember2007,ourtSRwasover300%.Ourexecu-tivecompensationprogramhassupportedtheseresultsbycreatingarobustlinkbetweentherewardsforourexecutivesandtheirfocusonprofitablegrowthandfinancialdiscipline.webelievethatourprogramwillcontinuetosupportstronglong-termresults.

Differentiation of rewards based on performance> wedesignourperformance-basedcompensationsothatdifferencesinperformancewillresultinsignificantdifferencesinthecompensationourexecutivesreceive.Forexample,annualcashincentivesunderourtiPcanrangefromnopay-outifthereisnogrowthinoperatingincometoamaximumof250%ofthetargetawardifperformanceisoutstandingonallmeasures.

> wechosethistypeofcompensationdesignbothbecausewewanttoprovideexecutiveswithopportunitiestoearnsig-nificantawardsforabove-targetperformanceandtoholdthemaccountableforpoorperformance.thisstructureisdesignedtoprovidestrongmotivationforourexecutivestoachieveexcellentresults.


Internal pay equity> Ourcompensationprogramsaredesignedsothatpayopportunitiesreflectrelativelevelsofresponsibilityamongourexecutives.Overallcompensationopportunitiesaregenerallysimilarforexecutiveswhohavecomparablelevelsofresponsi-bility(althoughactualpayoutsmaydifferdependingonrelativeachievementsofteamandindividualperformancegoals).

Effective competition for, and retention of, managerial talent> Ourexecutivecompensationprogramisdesignedtoattractandretainmanagerialtalentinahighlycompetitiveglobalmarket,whilereflectingMcDonald’sspecificcircumstancesandculture.

> Ourcontinuedsuccessdependsonourabilitytoretainourleadershipteamandtocontinuetoattracttop-qualityman-agement.tothisend,theCommitteeregularlyreviewshowthepaypackagesofourCEOandotherexecutivescomparetothosereceivedbytheirpeersatthecompaniesinourcomparatorgroup,andsolicitsadviceonmarketpracticesfromFredericw.Cook&Co.,inc.,itsindependentcompensa-tionconsultant.

> Althoughitisakeyobjectiveofourexecutivecompensationprogramtorewardexcellentperformance,wealsorecognizethatfinancialcompensationisnottheonlyfactorcontributingtotheretentionofourexecutives.wedonotbelievethatweneedtotargetcompensationsignificantlyabovethemid-pointofourcomparatorgroupinordertocompeteeffectively.Asageneralpractice,wetargettotaldirectcompensationforourexecutivesinthe55thto60thpercentileamongthecompaniesinourcomparatorgroup,withannualbasesalarytargetedatthe50thpercentile.Becauseourexecutivecompensationprogramreflectstheimportanceofdeliveringstrongresults,ifourperformanceisabovetargetthenactualtotaldirectcompensationpaidoutmaybeabovethetargetedrangeandifperformanceisbelowtargetedlevelsthenactualtotaldirectcompensationpaidoutmaybebelowthetargetedrange.

ⓦ 2007 highlightstheCompanydeliveredexcellentresultsin2007,buildingonourmomentumofstrongperformanceoverthelastfouryears.globalcomparablesalesincreasedby6.8%,andbytheendof2007wehadachieved56consecutivemonthsofincreasesinglobalcomparablesales.thesestrongsalesresultspro-ducedanincreaseinoperatingincomefor2007of19%over2006,inconstantcurrenciesandexcludingthelatamtransac-tion.in2007,ourleadershipteamincreaseditsfocusonthecoreMcDonald’sbusiness,disciplinedcapitalallocation,andoptimizingourownershipmixbetweenCompany-operatedandfranchisedrestaurants,allofwhichcontributedtotheincreaseinourtotalcashreturnedtoshareholders.Consistentwiththisfocus,importantstrategicdevelopmentsin2007includedthecompletionofthelatamtransactionandthesaleofourinvest-mentinBostonMarket.inaddition,in2007,theCompanyreturned$1.8billiontoshareholdersviadividendsand$3.9billionthroughsharerepurchasesinfurtheranceofourgoaltoreturn$15to17billiontoshareholdersfrom2007through2009.

thecompensationofournamedexecutiveofficersin2007wasconsistentwithourstrongresults.weexceededthetargetlevelsofCompanyperformanceunderthetiPbyaconsider-ablemargin,andtiPpayoutsweresignificantlyabovetarget.PerformancetargetsforRSuswerealsoexceeded,resultinginfullvestingofRSuawardsthatweregrantedin2004andvestedin2007basedontheattainmentofthree-yearperfor-mancegoals.

SincetheCPuPoperatesonnon-overlappingthree-yearcyclesandthepreviouscycleendedin2006,theoverallcompensationfiguresfor2007arelowerthanthosefor2006.thisisbecausethe2006datareflectsCPuPawardsthatwereearnedoverthethree-yearperiodendingattheendof2006,andawardsforthe2007-2009performanceperiodwillnotbeearnedorreflectedinthecompensationdatawediscloseuntiltheendof2009.

ⓦ Our comparator groupConsistentwithourgoalofprovidingcompetitivecompensa-tion,wecomparethecompensationpackagesforourexecu-tivestothoseprovidedtoexecutivesatacomparatorgroupof26companies.theCommitteereviewsthecomparatorgroupannuallytoensurethecompaniesrepresentedinthegroupareappropriatepeersandbelievesthatthecompaniesincludedinthecomparatorgroupshouldmeetoneormoreofthefollow-ingcriteria:> CompaniesofsimilarsizetoMcDonald’s(rangingfrom

abouthalftoabouttwiceoursize),measuredbyrevenuesandmarketcapitalization

> High-performingcompanieswithwhichwecompetefortalent

> Majorretailers

> Producersofconsumerbrandedgoods

> DirectbusinesscompetitorsofMcDonald’s

> Companieswithaglobalpresence.

iftheCommitteebelievesthatacompanyisnolongeranappropriatecomparatorbasedonthesecriteria,itisremovedfromthegroup.

inMarch2007,theCommitteeapprovedmodificationstoourcomparatorgroup,addingfournewcompanies(Anheuser-BuschCompanies,inc.;CostcowholesaleCorporation;lowe’sCompanies,inc.;andNiKEinc.)andremovingtwocompanies(generalElectricCompanyandthegap,inc.).inaddition,KraftFoods,inc.wasaddedtothecomparatorgroup,replacingAltriagroupincorporated,uponthecomple-tionofitsspin-offfromAltria.


thetablebelowliststhecompaniesinourcomparatorgroup,togetherwithreportedrevenuedatafortheirmostrecentlycompletedfiscalyearandmarketcapitalizationdataasofDecember31,2007(exceptineachcaseforNestléandunilever,whichareu.S.divisionsofnon-u.S.companiesforwhichsuchinformationisnotpubliclyavailable).in2007,McDonald’shadrevenueof$22.8billionandSystemwidesalesof$63.6billion.Becauseweareprimarilyafranchisor,wealsoanalyzeourresultsinlightoftheperformanceofallrestaurantsintheMcDonald’sSystem,includingthoseoperatedunderfranchiseandsimilararrangements.OnemeasurethatweuseforthispurposeisSystemwidesales.thisinformationisimportantbecauseitisthebasisonwhichtheCompanycal-culatesandrecordsfranchisedandaffiliatedrevenuesandisindicativeofthefinancialhealthofourfranchiseebase.wealsobelievethatitisanappropriatemeasuretoconsiderwhencomparingoursizetothatofthecompaniesinourcomparatorgroup.McDonald’smarketcapitalizationasoftheendof2007was$68.6billion(sharesoutstandingmultipliedbytheclosingsharepriceonNYSEonDecember31,2007).

Revenue Market Company data (a) capitalization (b)

(Dollars in billions)

3MCompany $24.5 $60.1Anheuser-BuschCompanies,inc. 19.0 38.4BestBuyCo.,inc. 36.0 22.0BurgerKingHoldings,inc. 2.2 3.9theCoca-ColaCompany 28.9 141.8CostcowholesaleCorporation 64.4 30.3generalMills,inc. 12.4 19.2theHomeDepot,inc. 90.8 45.5Johnson&Johnson 61.1 190.9KelloggCompany 11.8 20.7KraftFoodsinc. 37.2 50.5lowe’sCompanies,inc. 46.9 33.1Nestlé(unitedStates)(c) — —NiKEinc. 16.3 32.0PepsiCo,inc. 39.5 122.2theProcter&gambleCompany 76.5 228.0SaraleeCorporation 12.3 11.6SearsHoldingsCorporation 53.0 14.0StarbucksCorporation 9.4 15.0targetCorporation 59.5 41.5unilever(unitedStates)(c) — —walgreenCo. 53.8 37.8thewaltDisneyCompany 35.5 61.4wal-MartStores,inc. 345.0 190.3wendy’sinternational,inc. 2.5 2.3Yum!Brands,inc. 10.4 19.5

(a)Reflectsrevenues,salesorcomparabledataaspubliclydisclosedbytheapplicablecompanyinitsannualreportfiledwiththeSECforitsmostrecentlycompletedfiscalyear.

(b)Source:Bloomberg.com.DataasofDecember31,2007.

(c)u.S.divisionofnon-u.S.companyforwhichseparatelyreportedresultsarenotpubliclyavailable.

ElEMENtS Of COMPENSAtiONOurexecutivecompensationprogramin2007consistedofthefollowingelements:> Basesalary

> AnnualcashincentiveawardsunderthetiP

> long-termcashincentiveawardsundertheCPuP

> Stockoptions

> RSus

> Participationintax-advantagedretirementplansandinseveranceandchangeincontrolarrangements

> Perquisitesandotherfringebenefits.

thiscombinationofcompensationelementswasselectedsothattheprogramasawholereflectsanappropriatebalanc-ingofthekeyobjectives.Belowisasummaryofhoweachofthekeycompensationelementssupportsthekeyobjectivesofourexecutivecompensationprogramasdescribedbegin-ningonpage12ofthisProxyStatement.Forlong-termawards(CPuP,RSusandstockoptions)thesummarybelowreferstothenormalvestingperiods;acceleratedand/orproratavestingmaybeprovidedforonterminationbeforethenormalvestingdateincertaincircumstances,asdescribedin“PotentialPay-mentsonterminationofEmploymentorChangeinControl”beginningonpage31ofthisProxyStatement.

Base salaryInternal pay equity• Salarylevelsaresettakingintoaccountrelativelevelsofresponsibilityandindividualperformancebasedonqualitativeperformancefactors.

Effective competition for, and retention of, managerial talent• weconsidersalarylevelsforpeerexecutiveswithcompaniesinourcomparatorgroupwhensettingbasesalary.wetargetbasesalaryatthe50thpercentileamongourcomparatorgroup.

Annual cash incentive (TIP)Profitable growth and increasing shareholder value • tiPpayoutsaredeterminedprimarilybyincreasesinoperat-ingincome,whichpromotesprofitablegrowth.

Differentiation of rewards based on performance• Potentialpayoutsrangefrom0to250%ofthetargetaward;executiveshavetheopportunitytoearnincreasedawardsiftargetsareexceededbutreceivelowerornoawardsiftargetsarenotmet.individualperformanceisconsideredinadditiontoteamperformance.

Internal pay equity• targetopportunities,expressedasapercentageofsalary,aresettakingintoaccountrelativelevelsofresponsibility.

Effective competition for, and retention of, managerial talent• wetargetannualcashincentivecompensationwithinthe60thto65thpercentileamongourcomparatorgroupinordertocompeteeffectively.targetlevelsaresetsomewhatabovethe50thpercentilebecausewebelievethetargetperformancelevelsunderthetiPrepresentahighlevelofCompanyperformance.


Long-term cash incentive (CPUP)Profitable growth and increasing shareholder value• Payoutsaredeterminedbasedonacombinationofgrowthinoperatingincome,ROtAandtSR,rewardinglong-termprofitablegrowth,disciplinedcapitalallocationandreturntoourshareholders.inclusionoftheCPuPinthelong-termincentivemixaddsdiversificationbybalancingequity-basedawardsandpromotingfocusonimportantmeasuresoftheCompany’slong-termsuccess.

Differentiation of rewards based on performance• Potentialpayoutsrangefrom0to230%ofthetargetaward.NoawardsarepaidunlessthresholdlevelsofoperatingincomeandROtAaremet.

Internal pay equity• targetopportunities,expressedasadollaramount,takeintoaccountrelativelevelsofresponsibility.

Effective competition for, and retention of, managerial talent• Awardsareearnedoverathree-yearperformanceperiod,promotingretention.

Stock optionsProfitable growth and increasing shareholder value• Proceedsrealizedfromoptionexercisesdependontheincrease(ifany)inMcDonald’ssharepriceovertheexerciseprice(theclosingpriceofMcDonald’sstockontheNYSEonthedateofgrant)duringthelifeoftheoption.

Differentiation of rewards based on performance• individualawardsizeisdeterminedtakingintoaccountqualitativeperformancefactors,includinganexecutive’ssus-tainedlevelofperformanceovertimeandfuturepotential,aswellasretentionconsiderations.

Effective competition for, and retention of, managerial talent• Optionstypicallyvestinequalannualinstallmentsoverfouryears,promotingretention.

RSUsProfitable growth and increasing shareholder value• typically,RSusawardedtoexecutivesvestbasedontheattainmentofspecifiedlevelsofEPSgrowthduringtheserviceperiodandthevalueoftheRSusincreasesordecreasesasourstockpricechanges.

Differentiation of rewards based on performance• individualawardsizeisdeterminedtakingintoaccountqualitativeperformancefactors,includinganexecutive’ssus-tainedlevelofperformanceovertimeandfuturepotential,aswellasretentionconsiderations.

Effective competition for, and retention of, managerial talent• RSusvestattheendofathree-yearorlongerserviceperiod,promotingretention.

Retirement plans; post-employment and change in control arrangementsProfitable growth and increasing shareholder value• DiscretionaryCompanymatchingcontributionstoretire-mentplansarebasedonoperatingincomegrowth.

Effective competition for, and retention of, managerial talent• Offeringacompetitiveprogramfortax-advantagedretirementsavingsaidstheCompanyinattractingandretainingexecutives.

• Post-employmentarrangementsprovideourexecutiveswithassurancethattheywillbetreatedfairlyiftheiremploymentisterminatedinprotectedcircumstances.

• Changeincontrolarrangementsareintendedtoavoidasituationinwhichthecareerandfinancialincentivesofourofficersmaybecontrarytotheinterestsofourshareholders,whichcouldariseintheeventofapotentialtakeoverofMcDonald’s.

Perquisites and other fringe benefitsEffective competition for, and retention of, managerial talent• Providinglimitedperquisitesandpersonalbenefitstoourexecutivesisconsistentwiththepracticesofourcomparatorgroup.Perquisitesprovidedtoourexecutivesaredescribedonpage23ofthisProxyStatement.

ⓦ Allocation of total direct compensation among the compensation elements

Our practices for allocating total direct compensationOurpracticein2007wastoallocateatleast70%ofthenamedexecutiveofficers’totaldirectcompensationopportunitytovariablecompensationthatisatrisk.theproportionofanexecutive’sdirectcompensationthatisatriskincreaseswithhisorherlevelofresponsibility.inordertoimplementthispractice,wemustassignavaluetoeachelementofcompen-sation.Forthesepurposes,thevaluethatweassigntostockoptionsisequalto1/3oftheclosingpriceontheNYSEoftheunderlyingMcDonald’ssharesonthegrantdate(for2007,$14.99),ratherthanthevalueassignedtosuchoptionsforfinancialreportingpurposesunderFAS123R,whichfor2007wouldhaveresultedinaloweroptionvalue.

From2005through2007,itwasourpracticetosplitlong-termincentivecompensationopportunitiesforseniormanage-ment,includingthenamedexecutiveofficers,approximatelyequallyamongthreecomponents:CPuPawards,stockop-tionsandRSus.wedeterminedthatthissplitamongCPuPawards,stockoptionsandRSuswasagoodfitwithourbusinessobjectivesduringthisperiodbecauseitbalancedourexecutives’focusonseveralcomplementarymeasuresoftheCompany’slong-termperformance.includingCPuPasanequallyweightedelement,alongwithstockoptionsandRSus,andintegratingtheEPSperformancemeasureintoRSusincorporatedlong-termperformancefactorsotherthanstockperformancethatareimportanttosustainedsuccess.inaddition,theshiftawayfromstockoptionsastheonlylong-termvehicleresultedinlessdilutiontoourshareholders.


Startingwithour2008equitygrants,wehaverebalancedtheallocationoflong-termincentiveopportunitiesforthenamedexecutiveofficers,reflectingourevolvingbusinesscircum-stances.theequity-basedportionoflong-termincentiveopportunities( i.e.,stockoptionsandRSus)isnowallocated70%asstockoptionsand30%asRSus,consistentwiththemixwehadalreadyadoptedforemployeesbelowtheseniormanagementlevel.Overall,long-termincentiveopportunitiesforseniormanagementarenowawardedapproximatelyasfollows:30%CPuP,50%stockoptionsand20%RSus.thepurposeofthisrebalancingistobringourpracticeclosertotheaveragemixofstockoptionsandRSusatthecompaniesinourcomparatorgroup.weexpectthischangetohaveaminoreffectonourrunrate,resultinginanannualrunrateincreaseofapproximately0.02%.

theoverallmixofcompensationelementsmaybeadjustediftheCommitteedeterminesthatamoretailoredapproachisneededtoaddressthespecificcircumstancesofanexecutive.Forexample,asdescribedonpage22ofthisProxyStatement,in2007theCommitteeapprovedaspecialawardofRSus,increasingtheproportionofRSusinthetotalmixoflong-termincentiveopportunitiesabovethenormallevel,foraselectgroupofofficers,includingMessrs.HennequinandFenton,inordertopromotetheretentionofkeyCompanyleaders.likeotherRSusgrantedtoexecutives,theseRSusarealsosubjecttobothserviceandperformance-basedvestingrequirements.

itisnotourpracticetotakeintoaccountwealthaccumu-latedbythenamedexecutiveofficersunderourretirementsavingsplanswhendeterminingthevalueofcurrentawards.Currently,underourdefinedcontributionplans,amajorityofanexecutive’sretirementsavingsconsistsofexecutivecontribu-tions.SomeofthenamedexecutiveofficershavehadlongcareerswiththeCompany,overthecourseofwhichtheyhavebeenaccumulatingretirementsavingsunderCompanyplans.webelievethatitwouldbeinconsistentwiththepurposeofourexecutivecompensationprogram,whichistomotivateandrewardongoingperformance,tomakedecisionsaboutcurrent

awardstakingintoaccountthenamedexecutiveofficers’accumulatedsavingsandinvestmentreturns,whetherornotunderCompanyplans.

Allocation of total direct compensation in 2007thechartsbelowshowtheelementsoftotaldirectcompen-sationopportunitiesin2007andtheallocationoftotaldirectcompensationamongfixed,performance-basedcompensationandstockoptions,andbetweenlong-termandcurrentlypaidcompensation.

“totaldirectcompensationopportunities”meansthetargetedvalueofthecompensationthatthenamedexecutiveofficershadanopportunitytoearnin2007.Specifically,thechartsreflectthefollowing:> Actualbasesalaryearnedin2007

> targettiPawardopportunityfor2007• Actual payouts for 2007 were significantly above target, based on our outstanding results in 2007.

> AnannualizedportionoftargetCPuPawardopportunityforthe2007-2009performanceperiod• Actual payouts are scheduled to be paid after the end of the performance period and may be higher or lower than target, depending on our results over the three-year period.

> thetargetopportunityofRSusgrantedin2007• The named executive officers have the opportunity to earn all of the RSUs awarded if they remain employed by the Company and performance targets are met, as described on page 22 of this Proxy Statement. If actual performance is lower than the targeted level, the named executive officers will earn a reduced number of RSUs or will forfeit the award, depending on the level of perfor-mance achieved.

> thedeemedvalueofstockoptionsgrantedin2007 • Please refer to the discussion on the previous page

regarding how the Company values stock options.

ⓦ Options

ⓦ Performance-based

ⓦ Fixed

Compensation allocation between fixed and variable elements

17%23%

60%

23% 21%

56%

James A. Skinner All other NEOs

ⓦCurrent

ⓦ Long-term

63%

37%

57%

43%

James A. Skinner All other NEOs

Compensation allocation between short- and long-term elements


ⓦ Quantitative measures of Company performancethetablebelowpresentseachofthequantitativemeasuresofCompanyperformanceusedtodeterminepayoutsunderourperfor-mance-basedcompensationplans,thereasonswhyweselectedeachofthequantitativeperformancemeasures,andtheperfor-mance-basedelementsofcompensationinwhicheachperformancemeasureisused.

Performance Stock measure Why the measure was selected TIP CPUP options RSUs

growth Annualgrowthinoperatingincome,thekeyperformancemeasuredetermining ⓦ ⓦinoperating tiPawards,isagoodmeasureofourprofitablegrowthonayear-by-yearbasis.income(1) Measuredoverathree-yearperiodasthemainperformancemeasuredriving long-termcashincentivepaymentsunderourCPuP,growthinoperatingincome measurestheCompany’sachievementofasustainedincreaseinprofitability. includingelementsinourcompensationmixthatpayoutbasedonbothannual andonlonger-termoperatingincomegrowthbalancesourexecutives’focus onyear-to-yearandlong-termresults.

ROtA ROtAmeasuresimprovedreturnsontheCompany’scapitalspendingandoverall ⓦ assetbasethroughstrategicdecisions,suchasreinvestmentinexistingrestaurants andinnewrestaurantdevelopmentanddivestituresofunderperformingassets. theuseofROtAasaperformancemeasurefocusesourseniormanagementon disciplineduseofourcapitalresources,consistentwithourstrategyofbeingbetter, notjustbigger.

EPS (1) CompoundedannualgrowthinEPSisanimportantindicatoroftheCompany’s ⓦ strategicgrowthandwaschosenasaperformancemetricforawardstoexecutives, whoareinapositiontomakedecisionsaboutMcDonald’sstrategicdirection.

increase tyingawardstoincreasesinthepriceofMcDonald’sstockdirectlyalignsthe ⓦ (2) ⓦ ⓦinshareprice incentivesforourexecutiveswithourshareholders’interestinincreasingthevalue oftheirinvestmentinMcDonald’sstock.

tSR thetSRmultiplierundertheCPuPtiespayoutstotheoverallreturn(including ⓦ dividends)aninvestorwouldhavereceivedfrominvestmentinMcDonald’sstock overtheCPuPperiodascomparedtotheS&P500index,sothatexecutivesare rewardedwhentheCompanyoutperformsthemarketorpenalizediftheCompany underperformsthemarket.

(1)OperatingincomeandEPSaremeasuredtakingintoaccountcertainadjustments,asdescribedbelow.

(2)increaseinsharepriceisreflectedinthetSRmultiplierundertheCPuP.

ⓦ Certain adjustments in measuring performanceOperatingincomeandEPSareexpressedin“constantcurren-cies.”Constantcurrencyresultsexcludetheeffectsofforeigncurrencytranslation.webelievethatresultsexpressedinconstantcurrenciesmoreaccuratelyreflectunderlyingbusinesstrends.

indeterminingoperatingincomefortiPandCPuPpurposes,certainincomeand/orexpenseitemsthatarenotindicativeofongoingresultsmaybeexcludedinthediscretionoftheCommitteepursuanttoguidelinesapprovedbytheCommittee.itemsthatmaybeexcludedinclude:“strategic”items(chargesorcreditsrelatedtothehigh-levelstrategicdirectionoftheCompany,suchasrestructurings,acquisitionsanddivestitures);“regulatory”items(chargesorcreditsduetochangesintaxoraccountingrules);and“external”items(chargesorcreditsduetoexternaleventssuchasnaturaldisasters).webelievethattheexclusionoftheseitems—whethertheeffectoftheexclusionsispositiveornegative—enablesustomeasureresultsinawaythatmoreaccuratelyreflectstheaspectsofCompanyperformanceforwhichthenamedexecutiveofficersareresponsible.theprimaryexclusionfortiPpurposesin2007wastheimpactofthelatamtransaction.

Forthe2007-2009CPuP,theROtAmeasureiscalculatedusingafixedamountof$400millionforcashandcashequiva-lents.thisisconsistentwiththemethodologyforcalculatingtheROtAmeasureforthe2004-2006CPuPcycle,whichwebelieveprovidesareasonablerepresentationofourresultsbecauseitrepresentsthehistoriclevelofcashtheCompanyneedstoefficientlyrunourbusiness.

indeterminingtheEPSmeasureforRSus,certainitemsandfactors(whetherpositiveornegative)maybeexcluded,whereappropriate,atthediscretionoftheCommittee.itemsexcludedfrombaseEPSfortheRSusgrantedtothenamedexecutiveofficersin2007includenon-recurringorextraordinaryitems,chargesrelatedtoimpairmentsandincomefromdiscon-tinuedoperations.whilewehavenotadoptedpre-approvedguidelinesforEPSexclusions,wefollowthesameprinciplethatinformstheguidelinesforexclusionsfromoperatingincome:executivesshouldbeheldaccountableforthoseaspectsofCompanyperformanceforwhichtheyareresponsible,andshouldbeneitherrewardednorpenalizedforunusualornon-recurringevents.themostsignificantoftheseextraordinaryitemsexcludedfrom2006baseEPSfortheRSusgrantedtothenamedexecutiveofficersin2007wasincomefromdiscon-tinuedoperations.


ⓦ Qualitative performance factorsDeterminationsofannualbasesalarylevels,annualcashincen-tivesunderthetiPandannualequitycompensationgrantsalltakeintoaccountqualitativeaspectsofindividualperformance.Avarietyofqualitativefactorsareconsidered,generallywithaviewtoevaluatinghowindividualeffortsadvancedourstrate-gicfocus.Forexample,in2007,ourCEO’sperformancewasevaluatedtakingintoaccounthisthreeperformancepriorities:sustainableprofitablegrowth,progressinour“balancedactivelifestyles”initiatives;andtalentmanagementandleadershipdevelopment.

thE PrOCESS fOr SEttiNg COMPENSAtiONtheCommitteeisresponsibleforreviewingandapproving

compensationforourseniormanagement.Additionalinforma-tionabouttheCommitteeanditsresponsibilitiesappearsonpage4ofthisProxyStatement.

ⓦ the role of managementAlthoughmanagementprovidesrecommendationsandinfor-mationtotheCommitteeonthecompensationofourexecu-tives,theCommitteehastheultimateauthoritytoapproveormodifymanagement’srecommendedcompensationpack-ages.ManagementhasaverylimitedrolewithrespecttothecompensationoftheCEO,whichisdeterminedbytheCom-mitteeasdiscussedbelow.theCEO,inconsultationwiththeexecutivevicepresidentofhumanresources,developsandrecommendsthecompensationpackagesforthePresident/COOandtheCFO,thenamedexecutiveofficerswhoreportdirectlytohim.thePresident /COOdevelopsandrecom-mendscompensationpackagesforMessrs.HennequinandFenton,inconsultationwithboththeCEOandtheexecutivevicepresidentofhumanresources.

The CEO’s compensation packagetheCommitteedeterminestheCEO’scompensationpackageinconsultationwithnon-managementmembersoftheBoard.theexecutivevicepresidentofhumanresourcesprovidesinputtotheChairmanoftheCommitteewithrespecttotheCEO’ssalary,tiP,CPuPandequityawardopportunities.theexecutivevicepresidentofhumanresourcesalsopresentsinformation,includingmarketanalysis,fortheCommitteetoconsiderwhenmakingitsdecisions.Otherwise,managementgenerallydoesnotprovideanyinputintothedeterminationoftheCEO’scompensation.

Role of the executive vice president of human resourcesOurexecutivevicepresidentofhumanresourcesmakesrecom-mendationsaboutthedesignandamountofcompensationbasedonhisreviewofrelevantmarketdata,businessandindi-vidualachievementrelativetoperformancetargetsandrelativelevelsofcompensationwithintheCompany.

Role of the CEOAsdescribedearlier,theCEOdevelopsandmakesrecommen-dationsregardingthecompensationoftheexecutiveofficerswhoreportdirectlytohim,andconsultswiththePresident /COOregardingthecompensationofthePresident /COO’sdirectreports.inaddition,theCEOmeetswiththeexecutivevicepresidentofhumanresourcespriortoeachCommitteemeet-ingtodiscussthematerialstobepresentedtotheCommitteeinadvanceofthemeeting(exceptforanymaterialsrelatingtotheCEO’scompensation).

ⓦ the Committee’s compensation consultantFredericw.Cook&Co.,inc.istheCommittee’sindependentcompensationconsultant.OtherthanitsconsultingservicestotheCommitteeandprovidingassistancetotheBoardincarryingoutcertainroutinefunctions,theCookfirmdoesnotprovideanyservicestotheCompany.

SpecificmattersonwhichtheCookfirmadvisedin2007included:changestotheCompany’scomparatorgroup;basesalaryincreases;equityawardguidelines;therevisionofoursecurityownershiprequirementsformanagement;reviewoftheCompany’sseverancepolicy(asdescribedonpage24ofthisProxyStatement);andreviewofthecompensationdiscussionandanalysisportionofthe2007proxystatement.

inFebruary2008,theCommitteeadoptedanewpolicyregardingitsindependentcompensationconsultant.underthepolicy,theCommitteehasthesoleauthoritytoselect,retainanddismisstheconsultant.theCommitteealsohasauthoritytoapprovethetermsoftheretentionoftheconsultant.theconsultantmaynotbeengagedbymanagementtoprovideanyserviceswithoutthepriorapprovaloftheCommittee’sChair-person,andanycompensationpaidtotheconsultantforservicesprovidedtotheCompany’smanagementmustbeapprovedbytheCommittee.thepolicyalsoestablishesguide-linestominimizethepotentialforconflictsofinterest.

inaddition,theCompanyconsiderssurveydataandsimilarinformationaboutcompensationprogramsthatitobtainsfromvarioussources,includingHewittAssociatesllC,whichalsoprovidessignificantbenefitplanadministrationservicestoMcDonald’s.Fromtimetotime,dataobtainedfromtheseothersourcesisprovidedtotheCommittee.

ⓦ tally sheetstheCommitteeannuallyreviewstallysheetstounderstandhoweachelementofcompensationrelatestootherelementsandtothecompensationpackageasawhole.thetallysheetssummarizeourexecutives’totalcompensation,includingdirectcompensation;cumulativebenefitsandsavingsunderretirementplansandequitycompensationprograms;perqui-sites;andpotentialpaymentsonterminationofemployment,whetheronachangeincontrolofMcDonald’sorotherwise.


DEtAilED iNfOrMAtiON ABOut COMPENSAtiON ElEMENtS

ⓦ Annual base salarywereviewbasesalaryannually.insettingbasesalarylevels,wetakeintoaccountindividualperformance,competitiveconsiderations(includinglocalmarketconditions),internalpayequity,andtheeffectofsalaryexpensesonourgeneralandadministrativeexpenses.

in2007,basesalarywasincreasedforeachofthenamedexecutiveofficers,basedprimarilyonexcellentperformanceratingsandmarketconditions.increaseswereasfollows:

JamesA.Skinner 6.25%MatthewH.Paull 5.07RalphAlvarez 3.33DenisHennequin 5.02timothyJ.Fenton 4.00

Mr.Alvarezreceivedabasesalaryincreaseof50%in2006inconnectionwithhispromotiontohiscurrentposition.inlightofthissignificantrecentraise,hisbasesalaryincreasein2007wasbelowtheincreasesfortheothernamedexecu-tiveofficers.

ⓦ Annual cash incentives (tiP)Staffemployees,includingthenamedexecutiveofficers,aregenerallyeligibleforawardsunderthetiP.thetiPestablishesaframeworkforannualcashincentivestopromoteaconsistentworldwideapproachtocompensationthatsupportsourstrate-gicbusinessobjectives.

tiPpayoutsareprimarilydeterminedbyoperatingincomegrowth.thisismeasuredonaconsolidatedorgeographicbusi-nessunitbasis(oracombination)dependingontheemployee’sresponsibilities.

Atthestartoftheyear,anannualindividualtargetaward,expressedasapercentageofbasesalary,isestablishedforeachtiPparticipant.targetawardsforourexecutivesaresetatthe60thto65thpercentileofcomparablepositionsatcompaniesinourcomparatorgroup.theCommitteeapprovesindividualtiPtargetsandtheparametersfordeterminingfinalawardsbytheendofJanuaryeachyear.thetargetawardsforanindividualparticipantmayberevisedduringtheyearasaresultofapromotionorotherchangeoftheindividual’sposi-tion.theapplicableperformancemeasuresmayalsoreflectaparticipant’schangeinresponsibilitieswithintheCompany,whetheramovebetweengeographicbusinessunitsoramovetoorfromtheCorporatefunction.

thecalculationoffinalpayoutsisbasedonthefollowingsteps:> First,thetiPteamfactorisdetermined.initiallytheteamfactorisdeterminedbasedongrowthinoperatingincomemeasuredbytheCorporatefactor,geographicbusinessunitfactorsorablenddependingontheparticipant’sresponsibili-ties.itcanthenbeadjustedupordownbasedon“modifiers”reflectingothermeasuresofCorporateand/orgeographicbusinessunitperformance.themaximumteamfactorfor2007was175%beforetheimpactofmodifiers.thetargetamountismultipliedbytheteamfactor.theproductisthe“adjustedtargetaward.”

> Second,theindividualperformancefactor(between0and150%)fortheparticularparticipantisdeterminedbasedonqualitativeperformancefactors.theadjustedtargetawardismultipliedbytheindividualperformancefactor.theproductisthefinalpayout.

> For2007,thefinalpayoutwascappedat250%ofthetargetaward.

theflowchartbelowillustratesthisprocess:

tiPpayoutsarecloselycorrelatedtogrowthinoperatingincome.underthetiPformulatherearenopayoutsifthereisnogrowthinoperatingincome.AlthoughtheCommitteeisauthorizedtoexercisediscretioninspecialcircumstancestomaketiPawardswhenthereisnogrowthinoperatingincome(asadjustedfortiP),itwouldusethisdiscretionrarely.theteamfactor(priortoadjustmentbasedonthemodifiers)isdeterminedentirelybygrowthinoperatingincomeovertheperformanceperiod(calendaryear2007).theteamfactorincreaseswithgrowthinoperatingincome,to100%atthetargetlevelandtohigherpercentagesathigherlevelsofgrowth,uptoamaximum,whichwas175%in2007.levelsofgrowthinoperatingincomebetweentheminimum,targetandmaximumpointswouldresultincorrespondinglylowerorhigherteamfactors.

teamfactor(upto175%)determinedbasedongrowthinoperatingincomemeasuredbyCorporatefactor,geographicbusinessunitfactororablend

teamfactoradjustedupordownbasedonmodifiers(Corporatefactor,geographicbusinessunitorablenddependinguponresponsibilities)

individualtiPtargetamount($)

tiPtargetmultipliedbyteamfactor(%)

Adjustedtargetaward

Adjustedtargetawardmultipliedbyindividualperformancefactor(%)

FinalindividualtiPpayout($)(upto250%oftargetaward)


thetabletotherightshowshowincreasesinoperatingincomedeterminedtheteamfactorforthenamedexecutiveofficersin2007,priortoadjustmentbasedontheapplicablemodifiers.thetableshowsthetargetandmaximumlevelsofgrowthinoperatingincome.OperatingincomeforpurposesofcomputingtheCorporatefactor(basedonapplicablecom-ponentsofconsolidatedresults)wasincludedinthetiPteamfactorcalculationforallofthenamedexecutiveofficers.inaddition,theresultsforEuropewereincludedinthecalculationforMr.Hennequin,andtheresultsforAPMEAwereincludedforMr.Fenton(fortherespectiveweightsoftheCorporatefactorandgeographicbusinessunitsforthesenamedexecu-tiveofficers,pleaseseethenexttable).

TIP team factor and growth in operating income for 2007

100% 175% Team factor as % of target: 0% (target) (maximum)

growthinoperatingincomeover2006Corporatefactor 0% 8.5% 15.2%Europefactor 0 7.3 12.7APMEAfactor 0 13.1 19.9

Basedonthismatrix,forpurposesofcomputingthe2007Corporatefactor,operatingincomegrowthwas11.9%,pro-ducingaCorporateteamfactorof138.1%(beforemodifiers).

thetargettiPawards,theteamfactorsandthefinalpayoutsasapercentageofthetargetawardsforthenamedexecutiveofficersin2007aresummarizedinthetablebelow.thefinaltiPpayoutsfor2007areincludedintheSummaryCompensationtableonpage25ofthisProxyStatement.

Target TIP award Team factor

Final TIP payoutNamed executive officer (% of base salary) Corporate factor / geographic business unit factor / blend % (% of target award)

JamesA.Skinner 120% Corporatefactor 150.1% 200.0%

MatthewH.Paull 75 Corporatefactor 150.1 165.5

RalphAlvarez 100 Corporatefactor 150.1 193.5

DenisHennequin 75 Corporatefactor(weighted25%);Europefactor(weighted75%) 182.6 237.4

timothyJ.Fenton 75 Corporatefactor(weighted25%);APMEAfactor(weighted75%) 185.3 241.0

themodifiersthatwereappliedtotheCorporatefactorandgeographicbusinessunitstodeterminethefinalpayoutsforthenamedexecutiveofficersareshowninthefollowingtable:

Potential weight Potential overall of each modifier adjustment of team factor Modifiers (range) by modifiers (range) Actual impact of modifiers

Corporatefactor •ControlofgrowthinCorporategeneral andadministrativeexpenses

•increasesincomparable-restaurant upto+/-5% upto+/-15% 12% guestcounts

•Customerserviceimprovements

geographicbusiness •increasesincomparable-restaurantunitfactors guestcounts

•Customerserviceimprovements upto+/-10% upto+/-25% Europe 18.5%

•Selectedmetricsrelatingtoemployee APMEA 22.0% commitment/leadershipmarketing

OnJanuary23,2008,theCompanyadoptedtheMcDonald’sCorporationtargetincentivePlan,whichgovernstheframeworkforannualcashincentiveawardsformembersofseniormanagementgrantedin2008andlateryears,includingrulesregardingtimingofpayment,terminationofemploymentandothersimilarmatters.generally,thisplanformalizestheCompany’sexistingpracticeswithrespecttoannualcashincentiveawardsunderthetiP.Potentialpaymentsonterminationofemployment(includingpaymentsinrespectoftiPawards)aredescribedbeginningonpage31ofthisProxyStatement.


ⓦ long-term cash incentives (CPuP)Membersofseniormanagement,includingthenamedexecu-tiveofficers,areeligibleforcashlong-termincentiveawardsundertheCPuP.theCPuPoperatesonnon-overlappingthree-yearcycleswithacumulativepayoutattheendofthecycle,basedonachievementofperformancemeasuresovertheentireperformanceperiod.wedesignedtheCPuPtooperatebasedonseparatethree-yearperformanceperiods,ratherthanoverlappingcycles,becausethisplandesignsupportssustainedfocusontheperformanceobjectivesovertheentirethree-yearperformancecycle.

theCommitteeapprovednewCPuPawardsinFebruary2007fortheperformanceperiodJanuary1,2007toDecember31,2009.Awardsforthisperformanceperiodarescheduledtobepaid(ifperformancetargetsaremet)aftertheendoftheperformanceperiod,aroundMarch2010.

theCommitteedeterminedatargetaward(expressedasadollaramount)foreachnamedexecutiveofficerbasedontheirrespectivelevelofresponsibilityandonourpracticetoallocateapproximatelyonethirdofthevalueoflong-termincentivecompensationopportunitiestoCPuP,asdescribedonpage16ofthisProxyStatement.FinalpayoutsaredeterminedbasedonacombinationofthreequantitativemeasuresofCompanyperformance:consolidatedthree-yearcompoundedannual

growthinoperatingincome,averageROtAoverthethree-yearperformanceperiodandrelativetSRoverthethree-yearperformanceperiod.

theflowchartbelowillustratesthisprocess:

underthe2007-2009CPuP,nofinalawardswillbeearnedunlessthresholdlevelsoftheoperatingincomeandROtAmeasuresarebothmet.Abovethesethresholds,finalawardsaredeterminedbasedonacombinationofthetwoperformancemeasures(subjecttoadjustmentbasedonthetSRmultiplier).

thematrixbelowshowsexamplesofCPuPpayouts(priortoadjustmentbasedonthetSRmultiplier)asapercentageofthetargetawardatdifferentlevels(threshold,targetandmaximum)ofoperatingincomeandROtA:

CPUP payout as percentage of target award (prior to adjustment based on TSR multiplier)

Consolidated compound annual operating income growth for 2007–2009

Threshold 3.7% Target 7.7% Maximum 11.7%

Averageadjusted2007–2009ROtA threshold 18.5% 0% 75% 150%

target 20.0 25 100 175

Maximum 21.5 50 125 200

theoperatingincomeandROtAtargetsforthe2007-2009CPuPwereincreasedoverthetargetsforthepreviousperformancecycleduetothestrengthofourbusinessoverthepastthreeyears.

CPuPtargetamount($)

Payoutfactordeterminedbasedonconsolidatedthree-yearcompoundedannualMcDonald’soperatingincome

growth(weighted75%)andaveragereturnontotalassets(weighted25%),cappedat200%oftarget

PayoutfactoradjustedbycumulativetSRmultiplier(upto+/-15%)

FinalCPuPpayout($),cappedat230%oftarget


ⓦ Stock optionsStockoptionshaveanexercisepriceequaltotheclosingpriceofourcommonstockonthegrantdateandtypicallyhaveatermoftenyearsandvestratablyoverfouryears.theCom-pany’spoliciesandpracticesregardingstockoptiongrants,includingthetimingofgrantsandthedeterminationofexerciseprices,aredescribedonpage24ofthisProxyStatement.

ⓦ rSustheRSusgrantedtoexecutivesin2007vestbasedbothonserviceandtheattainmentofperformanceconditions.theRSuscliffvestattheendofathree-yearserviceperiod,subjecttoachievementoftheperformancethresholds.

theperformance-basedvestingconditionfortheRSusisattainmentofaspecifiedlevelofcompoundedannualgrowthindilutedEPSduringthethree-yearvestingperiod.theperformance-basedRSusdonotvestunlesstheCompanyachievesaminimumtargetlevelofpercentagegrowthinEPSoverbaselineEPS,or“baseEPS.”theEPStargetforper-formance-basedRSusgrantedin2007is7%compoundedannualgrowthoverbaseEPS.iflessthan2%compoundedgrowthisachieved,noneoftheseRSuswillvest.ifEPSgrowthisatorabovethe2%thresholdbutbelowthe7%target,aportionoftheawardswillvestinproportiontothelevelofEPSgrowthachieved.

inFebruary2007,theCommitteeapprovedaspecialgrantofRSustoaselectgroupofapproximately35officersinclud-ingMessrs.HennequinandFenton.theadditionalRSusaresubjecttothesametermsandconditionsastheotherRSusgrantedtothenamedexecutiveofficersin2007.However,thespecialawardsrepresentadditionalvalueabovetheregularRSuawardsthatMessrs.HennequinandFentonreceivedpursuanttoourgrantingpractice,describedonpage16ofthisProxyStatement,forallocatingthemixoflong-termincentiveopportunities(inaccordancewithourpracticein2007,theregularawardsrepresentedapproximatelyonethirdoftheexecutive’stotallong-termincentiveopportunity).theCommit-teedeterminedthatitwasinthebestinterestsoftheCompanytomakethisspecialRSugrantin2007topromotethereten-tionofkeyCompanyleaders.

ⓦ retirement savings plans McDonald’sdoesnotmaintainanydefinedbenefitpensionplansforourexecutives.

AllthenamedexecutiveofficersexceptMr.HennequinparticipateinourProfitSharingandSavingsPlan,abroad-based,tax-qualifieddefinedcontributionplanandourExcessBenefitandDeferredBonusPlan,anunfunded,non-qualifiedplan.theProfitSharingPlanincludesa401(k)featurethatpro-videseligibleemployeeswiththeopportunitytomakepretaxcontributionsuptothelimitsimposedundertheinternalRevenueCodeandreceiveCompanymatchingcontributions.inadditiontotheProfitSharingPlan,theCompanymaintainstheExcessBenefitandDeferredBonusPlanforcertainmanage-mentandhighlycompensatedemployees,asdefinedunderinternalRevenueServiceregulations.undertheExcessBenefitPlan,participantshavetheopportunityto(i)maketaxdeferredcontributionsfromsalary,tiPandCPuPand(ii)receive

CompanycontributionsthatcannotbemadeundertheProfitSharingPlanbecauseoflimitationsapplicabletotax-qualifiedplans.AdditionaltermsoftheExcessBenefitandDeferredBonusPlanaredescribedonpage30ofthisProxyStatement.

Mr.HennequinisnoteligibletoparticipateintheProfitSharingandSavingsPlanortheExcessBenefitandDeferredBonusPlanbecauseheisnotemployedintheunitedStates.Mr.Hennequinparticipatesinasavingsarrangementthatistax-efficientunderFrenchlawandisofferedgenerallytotheCompany’semployeesinFrance.underthisarrangement,Mr.HennequinhastheopportunitytoinvestinaninterestinatrustthatholdsCompanyshares.Mr.Hennequin’sabilitytowithdrawhisinterestinthetrustisbyitstermssubjecttosig-nificantlimitationsforfiveyearsfollowinghisinvestment,otherthaninconnectionwiththeterminationofhisemploymentwiththeCompany.Mr.Hennequinisalsoeligibleforlimitedretire-mentbenefits,whicharegenerallyavailabletoouremployeesinFrance,underthecollectivebargainingagreementthatappliestoouremployeesinFrance.

ⓦ Severance and change in control arrangements

Severance planMessrs.AlvarezandFentonareeligibleundercoveredcircum-stancestoreceiveseverancepaymentsandotherbenefitsundertheMcDonald’sCorporationSeverancePlan,abroad-basedplanthatprovidesseverancebenefitstou.S.employeesbasedontheiryearsofservice.theSeverancePlanisdescribedonpages33and34ofthisProxyStatement.BenefitsundertheSeverancePlanarenotavailabletoMr.SkinnerbecauseheparticipatesintheExecutiveRetentionReplacementPlan,describedbelowandonpages34and35ofthisProxyState-ment.(Mr.PaullalsoparticipatedintheExecutiveRetentionReplacementPlanpriortohisretirement.)Mr.HennequinisnoteligibleforbenefitsundertheSeverancePlanbecauseheisnotau.S.employee,butiseligibleforseverancebenefitsunderthecollectivebargainingagreementthatappliestoouremployeesinFrance,asdescribedonpage35ofthisProxyStatement.

Change in control employment agreementstheCompanyhasenteredintochangeincontrolemploymentagreementswithsomeofitsseniormanagement,includingallofthenamedexecutiveofficersotherthanMr.Hennequin.

undertheseagreements,eachnamedexecutiveofficerwouldbeentitledonterminationincertaincircumstancesfollowingachangeincontroltocashseverancepaymentsequaltothreetimesbasesalaryandtargetbonusandtheCompany’scontri-butiontotheProfitSharingandSavingsPlanandtheExcessBenefitandDeferredBonusPlan,aswellasotherbenefits.thepaymentsandbenefitsthatthenamedexecutiveofficerswouldreceiveundertheagreementswouldpotentiallybesubjecttoSection280goftheinternalRevenueCode,whichdisallowstheCompany’scompensationdeductionfor“excessparachutepayments”madeinconnectionwithachangeincontrol,andtoSection4999oftheinternalRevenueCode,whichimposesanadditionalexcisetax,payablebytheexecu-tive,onsuchamounts.undertheagreements,theCompanywouldcompensateor“grossup”anexecutivefortheSection


4999excisetaxandanyadditionaltaxesonthegross-uppay-ment.However,theCompanywouldcutbackthepaymentsandbenefitsbyasmuchas10%ifthiswouldresultinthetotalamountnotbeingsubjecttothesetaxprovisions.Detailsoftheagreementsandthepotentialbenefitstothenamedexecutiveofficers(includingthegross-upprovisions)aredescribedunder“PotentialPaymentsonterminationofEmploymentorChangeinControl”beginningonpage31.

theseagreementsareintendedtoavoidasituationinwhichthecareerandfinancialincentivesofourseniormanagementmaybecontrarytotheinterestsofourshareholders,whichcouldariseintheeventofapotentialtakeoverofMcDonald’s.weselectedthelevelofpaymentsandbenefitsandthegross-upprovisionsbasedprimarilyoncompetitiveconsiderations.theCommitteeperiodicallyconsidersthechangeincontrolagree-mentsinlightofevolvingmarketpractices.

Executive Retention Replacement PlanMr.SkinnerparticipatesintheExecutiveRetentionReplace-mentPlanorERRP.theERRPreplacedforcertainparticipantsthebenefitsprovidedundertheCompany’sExecutiveReten-tionPlanwitheconomicallyequivalentbenefitspaidinalumpsumiftheexecutive’semploymentterminatesinthecoveredcircumstances.thesechangesweremadetocomplywithSection409AoftheinternalRevenueCode,recentlegislationthatappliestonon-tax-qualifieddeferredcompensation,asdescribedbelow.

Mr.PaullwasalsoaparticipantintheERRPthroughhisretirementonFebruary28,2008.inconnectionwithhisretire-ment,Mr.PaullisentitledtobenefitsundertheERRPwhichwillbepaidsixmonthsfollowinghisretirementdate,asrequiredunderSection409A.

AsofDecember31,2007,noneofthenamedexecutiveofficersparticipatedintheERRP’spredecessorplan,theExecutiveRetentionPlan.theparticipationofMessrs.SkinnerandPaullintheExecutiveRetentionPlanendedwhentheybecameparticipantsintheExecutiveRetentionReplacementPlan.theCommitteehasdeterminednottoextendbenefitsundertheseplanstoanyofficersotherthanthosewhoarealreadycoveredbytheseplans.

ⓦ Perquisites and other fringe benefitsMcDonald’sprovideslimitedcategoriesofperquisitestoexecutives.theseperquisitesincludeCompany-providedcars,financialplanning,annualphysicalexaminationsand,inthecaseoftheCEOonly,personaluseoftheCompany’saircraft.theCEOistheonlynamedexecutiveofficerwhoispermittedtousetheCompany’saircraftforpersonaltravel.However,oncertainoccasions,atthediscretionoftheCEO,otherexecu-tivesmaybeaccompaniedbytheirspouseswhentravelingtobusinesseventsontheCompany’saircraft.theCEOalsohasthediscretiontopermitotherexecutivestousetheaircraftforpersonalreasonsintheeventofanemergency.theCEOisrequiredtoreimbursetotheCompanythemaximumreim-bursementamountpermittedunderFederalAviationAuthorityregulationsapplicabletotheCompany’soperationofitsaircraft

forpersonaluseoftheCompanyaircraft.NamedexecutiveofficersmustalsoreimburseMcDonald’sforaportionoftheexpenseassociatedwithpersonaluseofCompany-ownedcarsaccordingtopre-establishedpaymentschedules.in2007,theCommitteereviewedtheCompany’spracticeswithrespecttoperquisitesandconcludedthattheyareappropriateinlightofmarketpractice.inaddition,theCommitteeconsidersperquisitesasreportedinthetallysheetsitreviewsannually.

OtherbenefitsreflectedintheSummaryCompensationtableinclude,inthecaseofnamedexecutiveofficersbasedoverseas,certainhousingexpensesthatarepaidbytheCom-panyandthatcanbeasignificantcomponentofanexecutive’stotalcompensationpackage.

Executivesalsoparticipateinallofthebroad-basedbenefitandwelfareplansavailabletoMcDonald’semployeesingeneral.

COMPENSAtiON POliCiES AND PrACtiCES

ⓦ relative levels of compensation among named executive officers

generally,the“ElementsofCompensation”asdescribedearlierinthisProxyStatement,beginningonpage14,applytoalloftheCompany’snamedexecutiveofficers.OurCEOisthemosthighlypaidofthenamedexecutiveofficers,reflectinghislevelofresponsibility.Mr.SkinnerhastheultimateresponsibilityforthestrategicdirectionoftheCompanyandamorevisiblerolethanothernamedexecutiveofficers.Mr.Skinner’scompen-sationalsoreflectstheimportanceofhisretentiontothesuc-cessfulexecutionofourbusinessstrategyandhislongtenurewiththeCompany.Mr.Skinner’stotalcompensationpackageisinthemiddlerangeofCEOcompensationpaidbythecompaniesinourcomparatorgroupbasedoninformationfrom2007proxystatements(orcomparablepublicreports).

ⓦ Section 409A of the internal revenue CodeSection409AoftheinternalRevenueCodeimposescertainrequirementson“nonqualifieddeferredcompensationplans”andpotentiallyappliestoanumberofourcompensationplansandprograms.FinalregulationsunderSection409AwerereleasedinApril2007andwillbecomeeffectiveonJanuary1,2009.in2007,wemadechangestoplansinwhichthenamedexecutiveofficersparticipatetocomplywithSection409A.

themostsignificantchangewasthereplacementofbenefitsundertheCompany’sExecutiveRetentionPlanforMessrs.SkinnerandPaullwithbenefitsunderournewERRP.theERRPprovidesbenefitsthatareeconomicallyequivalenttothebenefitstheseexecutiveswereentitledtoundertheExecutiveRetentionPlan,withthetimingofpaymentandcertainotherprovisionsmodifiedtocomplywithSection409A.undertheExecutiveRetentionPlan,participantscouldelectinspecifiedcircumstancestoendtheiremploymentasexecutiveswiththeCompanyand“transition”toadifferentrolewithcompensationandbenefitspaidoutoverapost-transitionperiod.theERRPreplacesthisarrangementwithaplanunderwhichacoveredexecutivemayelecttoterminatehisorheremploymentwiththeCompanyundercertaincircumstancesandreceivealump-sumpaymentthatiseconomicallyequivalenttotheben-efitstheexecutivewouldhavereceivedundertheExecutive


RetentionPlan.liketheExecutiveRetentionPlan,theERRPalsoprovidesseverancebenefitsiftheexecutiveisterminatedinvoluntarilyorconstructivelyincertaincircumstances.infor-mationaboutthebenefitsundertheERRPappearsonpages34and35ofthisProxyStatement.

inaddition,in2007weadoptedminorchangestotheExcessBenefitPlanandDeferredBonusPlanandtheSeverancePlaninordertocomplywithSection409A.

Section409AalsoimpactsbenefitsundertheCompany’sprogramsintheeventofachangeincontrol.Nochangeincontroloccurredin2007,andweintendtomodifythechangeincontrolprovisionsin2008tocomplywithSection409A.

ⓦ Policy with respect to deductibility of compensationSection162(m)oftheinternalRevenueCodegenerallylimitsto$1millionthetaxdeductibilityofannualcompensationpaidtocertainofficers.Performance-basedcompensationmay,however,beexcludedfromthelimitsolongasitmeetscertainrequirements.whiletheCommitteeretainsflexibility,wegener-allydesignourcompensationplansandprogramssoastoallowtheCompanytodeductcompensationexpense.

ⓦ Policy regarding security ownership of managementtheCompanyhasadoptedminimumshareownershiprequire-mentsbecausewebelievethatmanagementwillmoreeffectivelypursuethelong-terminterestsofshareholdersiftheyareshareholdersthemselves.in2007,theCommitteereviewedourshareownershiprequirementsandadoptedchangestobringourpolicyintolinewithemergingmarketpractice.

ⓦ Policies and practices regarding equity awardsin2006,theCompanyadoptedapolicywithrespecttograntsofequitycompensationawardstoouremployeesanddirec-tors,whichgenerallyreflectsourpre-existingpractices.underthepolicy,awardsmaybegrantedtoCompanyemployeesanddirectorsonlyattimeswhentheCompanydoesnothaveanymaterialnonpublicinformation.ConsistentwiththetermsoftheCompany’sAmendedandRestated2001OmnibusStockOwnershipPlan,orthe“Amended2001Plan,”andourexistingpractices,stockoptionsmaybegrantedonlywithanexercisepriceatorabovetheclosingmarketpriceoftheCompany’scommonstockonthedateofgrant.

underthepolicy,broad-basedequitygrantsmustbemadeatascheduledmeetingoftheCommitteeoccurringatapproximatelythesametimeeachyearfollowingtheCompany’sreleaseoffinancialinformationandotherwiseatatimewhenwearenotinpossessionofmaterialnon-publicinformation.

theCommitteemaychoosetomakegrantsofequityawardsoutsidetheannualbroad-basedgrant,includinginthecaseofnewlyhiredemployeesandinconnectionwithpro-motions.AninterimgrantCommitteeoftheBoardhasbeendelegatedauthoritytomakesuchgrantsbetweenregularlyscheduledmeetingsoftheCommittee,butonlytoemployeeswhorankbelowthelevelofseniorvicepresident.thecurrentmembersoftheinterimgrantCommitteeareMessrs.McKennaandSkinner.

in2007,ourannualbroad-basedgrantofequityawards,includinggrantstoallthenamedexecutiveofficersotherthanMr.Hennequin,wasmadeattheCommittee’sscheduledmeet-inginFebruary.Mr.Hennequin’s2007awardwasgrantedonMarch12,2007,followingtheissuanceoftheCompany’s2007AnnualReportonForm10-K,inordertoobtainfavorabletaxtreatment.

ⓦ Policy regarding future severance paymentstheCommitteehasadoptedapolicyunderwhichtheCompanywillseekshareholderapprovalforfutureseverancepaymentstoanamedexecutiveofficerifsuchpaymentswouldexceed2.99timesthesumof(a)thenamedexecutiveofficer’sannualbasesalaryasineffectimmediatelypriortoterminationofemployment;and(b)thehighestannualbonusawardedtothenamedexecutiveofficerbytheCompanyinanyoftheCom-pany’sthreefullfiscalyearsimmediatelyprecedingthefiscalyearinwhichterminationofemploymentoccurs.Certaintypesofpaymentsareexcludedfromthispolicy,suchasamountspayableunderarrangementsthatapplytoclassesofemployeesotherthanthenamedexecutiveofficersorthatpredatetheimplementationofthepolicy,aswellasanypaymentthattheCommitteedeterminesisareasonablesettlementofaclaimthatcouldbemadebythenamedexecutiveofficer.

ⓦ recoupment of compensationSomeoftheCompany’scompensationplansandprogramscontemplatethatanexecutivemayberequiredtorepaypreviouslyawardedcompensationtotheCompanyincertaincircumstances.Awardsunderthe2007-2009CPuParesubjecttoforfeitureandrecoupmentbytheCompanyiftherecipientengagesinwillfulfraudthatcausesharmtotheCom-panyorisintendedtomanipulatetheperformancemeasuresthatdeterminetheaward,orifheorsheviolatescustomaryrestrictivecovenantswiththeCompany.PaymentsundertheERRP,includingsomestockoptiongainsandRSupayouts,aresubjecttoforfeitureandrecoupmentiftherecipientviolatesarestrictivecovenantorisdiscoveredtohavecommittedcon-ductwhileemployedthatwouldhaveentitledtheCompanytoterminatehimorherfor“cause.”

undertheMcDonald’sCorporationtargetincentivePlan,describedonpages19and20ofthisProxyStatement,start-ingin2008tiPawardsarealsosubjecttorecoupmentbytheCompanyiftherecipientengagesinwillfulfraudthatcausesharmtotheCompanyorisintendedtomanipulatetheperfor-mancemeasuresthatdeterminethefinaltiPpayout.

undertheMcDonald’sCorporationSeverancePlan,describedonpages33and34oftheProxyStatement,ifanemployeecommitsanyactoromissionthatwouldconstitutecausewhileemployedbytheCompanyorarelatedemployer,theCompanymayceasepaymentofanybenefitsotherwisepayableandrequiretheemployeetorepayanyamountsprevi-ouslypaidtosuchemployeeundertheSeverancePlan.


Compensation tables

SuMMAry COMPENSAtiON tABlE

thefollowingtablesummarizesthetotalcompensationearnedbyorpaidtoournamedexecutiveofficersin2006and2007:

Stock Option Non-equity incentive All other Name and principal position Year Salary ($)(1) awards ($)(2) awards ($)(3) plan compensation ($)(4) compensation ($)(5) Total ($) (a) (b) (c) (e) (f) (g) (i) (j)

JamesA.Skinner 2007 $1,262,500 $3,185,835 $1,351,267 $3,060,000 $583,884 $ 9,443,486viceChairmanand 2006 1,177,692 918,376 1,402,129 Annual: 3,500,000 378,100 12,709,492ChiefExecutiveOfficer Long-term: 5,333,195 Total: 8,833,195

MatthewH.Paull 2007 719,167 1,147,926 1,139,950 900,000 230,792 4,137,835CorporateSeniorExecutive 2006 683,333 534,851 510,864 Annual: 1,155,000 173,008 4,816,472vicePresidentand Long-term: 1,759,416ChiefFinancialOfficer(6) Total: 2,914,416

RalphAlvarez 2007 925,000 2,051,481 741,745 1,800,000 296,575 5,814,801PresidentandChief 2006 703,077 959,565 546,585 Annual: 1,500,000 168,563 6,046,901OperatingOfficer Long-term: 2,169,111 Total: 3,669,111

DenisHennequin 2007 611,922 407,415 291,074 1,098,478 350,427 2,759,316President,McDonald’s 2006 534,427 153,974 297,902 Annual: 919,754 298,914 3,815,147Europe(7) Long-term: 1,610,176 Total: 2,529,930

timothyJ.Fenton 2007 516,667 438,152 538,052 940,000 905,124 3,337,995President,McDonald’s 2006 462,500 182,554 296,668 Annual: 765,000 865,151 3,568,936Asia/Pacific,MiddleEast Long-term: 997,063andAfrica(8) Total: 1,762,063

(1)thebasesalaryearnedin2007bythenamedexecutiveofficersreflectsregularannualincreasesinbasesalary.theannualizedratesofbasesalaryineffectasofDecember31,2007forthenamedexecutiveofficerswhowereservingassuchattheendoftheyearwereasfollows:

JamesA.Skinner $1,275,000MatthewH.Paull 725,000RalphAlvarez 930,000DenisHennequin 616,833timothyJ.Fenton 520,000

(2)RepresentstheexpensetotheCompanyineachof2006and2007,ascomputedinaccordancewithFAS123Randreportedinourfinancialstatements,ofRSusgrantedtothenamedexecutiveofficersundertheAmended2001Plan.thevaluesinthiscolumnarebasedontheclosingmarketpriceoftheCompany’scommonstockonthedateoftheaward,lessthepresentvalueofexpecteddividendsoverthevestingperiod.generally,RSusvestonthethirdanniversaryofthegrantdateandaresubjecttoperfor-mance-basedvestingconditionslinkedtotheCompany’sachievementoftargetlevelsofdilutedearningspersharegrowth.generally,theexpenseforRSuawardsisrecog-nizedoverthevestingperiodunlesstherecipientiseligibleforretirement,inwhichcasetheexpensemayberequiredtoberecognizedintheyearofgrant.informationwithrespecttotheRSusgrantedtothenamedexecutiveofficersin

2007isdisclosedinthegrantsofPlan-BasedAwardstableonpage27ofthisProxyStatementandtheaccompany-ingnotes.informationwithrespecttoRSusreflectedinthiscolumnthatweregrantedinyearsbefore2007isdisclosedintheOutstandingEquityAwardsat2007FiscalYear-Endtableonpages28and29ofthisProxyStatementandtheaccompanyingnotes.

(3)RepresentstheexpensetotheCompanyineachof2006and2007,ascomputedinaccordancewithFAS123Randreportedinourfinancialstatements,ofstockoptionsgrantedtothenamedexecutiveofficers.OptionshaveanexercisepriceequaltotheclosingpriceoftheCompany’scommonstockonthedateofgrant,generallyvestinequalannualinstallmentsoverafour-yearperiod,andaresubjecttotheprovisionsoftheAmended2001Plan.generally,theexpenseforoptionawardsisrecognizedoverthevestingperiodunlesstherecipientiseligibleforretirement,inwhichcasetheexpensemayberequiredtoberecognizedintheyearofgrant.thevaluesinthiscolumnforstockoptionsgrantedin2007aredeterminedusingaclosed-formpricingmodelbasedonthefollowingassumptions,asdescribedinthefootnotestofinancialstatements:expectedvolatilitybasedonhistoricalexperienceof24.7%;anexpectedannualdividendyieldof2.26%;arisk-freereturnof4.76%;andexpectedoptionlifebasedonhistoricalexperienceof6.26years.informationwithrespecttotheoptionsgrantedtothenamedexecutiveofficersin2007isdisclosedinthe


grantsofPlan-BasedAwardstableonpage27ofthisProxyStatementandtheaccompanyingnotes.informationwithrespecttooptionsreflectedinthiscolumnthatweregrantedinyearsbefore2007isdisclosedintheOutstand-ingEquityAwardsat2007FiscalYear-Endtableonpages28and29ofthisProxyStatementandtheaccompanyingnotes.

(4)Non-equityincentiveplancompensationfor2007reflectsannualcashincentivecompensationearnedbyeachnamedexecutiveofficerunderthe2007tiP.For2006,theamountsinthiscolumnconsistofbothannualandlong-termcom-ponents.theannualcomponentreflectstheamountearnedbyeachnamedexecutiveofficerunderthe2006tiP.thelong-termcomponentreflectsawardsundertheCPuPforthethree-yearperformanceperiodthatbeganonJanuary1,2004andendedonDecember31,2006.Anewthree-yearperformanceperiodundertheCPuPbeganonJanuary1,2007andwillendonDecember31,2009.CPuPawardsinrespectofthisperformancecyclewillnotbeearneduntiltheendoftheperformancecycleattheendof2009andarenotreflectedintheSummaryCompensationtable.informationaboutawardsgrantedtothenamedexecutiveofficersunderthe2007-2009CPuPisinthegrantsofPlan-BasedAwardstableonpage27ofthisProxyStatement.Foradditionalinformationaboutequityandnon-equityincen-tiveawardsandpaymentstothenamedexecutiveofficers,includingtheperformancetargetsonthebasisofwhichtheseawardswereearned,pleaseseethediscussionintheCompensationDiscussionandAnalysisbeginningonpage19andthegrantsofPlan-BasedAwardstableonpage27ofthisProxyStatement.

(5)“AllOtherCompensation”includestheCompany’scontri-butionstotheProfitSharingandSavingsPlanandtheExcessBenefitandDeferredBonusPlanonbehalfofthenamedexecutiveofficersotherthanMr.Hennequin.For2007,suchamountswereasfollows:

JamesA.Skinner $523,875MatthewH.Paull 206,159RalphAlvarez 266,750timothyJ.Fenton 18,567

“AllOtherCompensation”alsoincludeslimitedcategoriesofperquisitesandpersonalbenefitsprovidedbytheCom-panytoitsexecutives.theincrementalcostofperquisitesisincludedintheamountprovidedinthetableandbasedonactualchargestotheCompany,exceptasfollows:(i)personaluseofCompany-providedcarsincludesaprorataportionofthepurchaseprice,fuelandmaintenance,basedonpersonaluseand(ii)withrespecttoMr.Skinner,personaluseofcorporateaircraftincludesfuelcosts,on-boardcatering,landing/handlingfeesandflightatten-dants,andexcludesfixedcosts,whichdonotchangebaseduponusage,suchaspilotsalariesandthecostofcapitalinvestedincorporateaircraft(bothnetofreimburse-mentasdescribedonpage23ofthisProxyStatement).

thecategoriesofperquisitesprovidedtotheexecutivesincludepersonaluseofCompany-providedcars;Company-paidlifeinsurance;financialcounseling;annualphysical

examinations;andlimitedcommutingcosts.theCEOistheonlynamedexecutiveofficerwhoispermittedtousetheCompany’saircraftforpersonaltravel(intheamountof$28,863).However,oncertainoccasions,atthediscretionoftheCEO,otherexecutivesmaybeaccompaniedbytheirspouseswhentravelingtobusinesseventsontheCom-pany’saircraft.theCEOalsohasthediscretiontopermitotherexecutivestousetheaircraftforpersonalreasonsintheeventofanemergency.

ForMessrs.AlvarezandFenton,thisamountalsoincludesthecosttotheCompanyoftravelexpensesfortheirspousestoaccompanythemoncertainbusinesstrips.inaddition,forMr.Alvarezthisamountalsoincludeslimitedpersonaltravelcosts.

inthecaseoftheCompany’snamedexecutiveofficersbasedoverseas,Messrs.HennequinandFenton,thisamountalsoincludescertainbenefitsinconnectionwiththeirinternationalassignments,asfollows:

> ForMr.Hennequin:Companyprovidedresidenceinlondon(intheamountof$259,707);utilities,security,gardeningandcleaningservicesforhislondonresidence;certainlocaltaxesandbankingfeesreimbursedbytheCompanyinconnectionwithhislondonresidence;Company-paidexpensesincurredintravelingtoandfromhishomeinParisandtheCompany’sEuropeanofficeinlondon.theseamountswereconvertedfromEurosasdescribedinnote7below.

> ForMr.Fenton:CompanyprovidedresidenceinHongKong(intheamountof$335,448);housinginsurance,andutilitiesforhisHongKongresidence;acost-of-livingadjustment(intheamountof$54,052);homeleaveexpensesforMr.Fentonandhisfamily,includingtransportationandmeals(intheamountof$73,266).AmountspaidinHongKongdollarswereconvertedintou.S.dollarsasdescribedinnote8below.

“AllOtherCompensation”alsoincludesataxequaliza-tionforMr.Fenton(intheamountof$368,491)whichisdesignedtosatisfytaxobligationsarisingsolelyasaresultofhisinternationalassignment.

(6)Mr.PaullretiredfromhisemploymentwiththeCompanyeffectiveFebruary28,2008.inconnectionwithhisretirement,Mr.PaullwillreceivecertainpaymentsundertheERRP,asdescribedonpages34and35ofthisProxyStatement.Mr.PaullservedasourChiefFinancialOfficerthroughDecember31,2007.EffectiveasofJanuary1,2008,PeterJ.BensenbecametheChiefFinancialOfficeroftheCompany.

(7)ReflectsamountspaidtoMr.HennequininEuros,whichwereconvertedintou.S.dollarsatarateofEuR0.72953tou.S.$1.thisistheaverageofthedailyconversionratesforeachbusinessdayoffiscal2007,asquotedbyOanda.com.

(8)Certainamountsincludedin“AllOtherCompensation”forMr.FentonwerepaidinHongKongDollarsandconvertedintou.S.dollarsatarateofHKD7.80153tou.S.$1.thisistheaverageconversionratefortheyear,asquotedbyOanda.com.


grANtS Of PlAN-BASED AwArDS

All other Grant option awards: date fair

Estimated future payouts Estimated future payouts number of Exercise or value of

under non-equity incentive under equity incentive

securities base price stock and

plan awards plan awards (1) underlying of option option

Plan Grant Threshold Target Maximum Threshold Target Maximum options awards awards Name (a) name date (b) ($)(c) ($)(d) ($)(e) (#)(f) (#)(g) (#)(h) (#)(2)(j) ($/sh)(k) ($)(3)(l)

JamesA. tiP 0 $1,530,000 $3,825,000 Skinner CPuP 0 3,600,000 8,280,000 Amd2001Plan (4) 2/14/07 9,718 38,872 38,872 $1,603,081 2/14/07 116,589 $45.02 1,351,267

Matthew tiP 0 543,750 1,359,375 H.Paull CPuP 0 1,200,000 2,760,000 Amd2001Plan (4) 2/14/07 2,777 11,107 11,107 458,053 2/14/07 33,312 45.02 386,086

Ralph tiP 0 930,000 2,325,000 Alvarez CPuP 0 2,000,000 4,600,000 Amd2001Plan (4) 2/14/07 4,165 16,660 16,660 687,058 2/14/07 49,967 45.02 579,118

Denis tiP 0 462,625 1,156,562 Hennequin CPuP 0 1,200,000 2,760,000 Amd2001Plan (4) 3/12/07 2,799 11,194 11,194 457,723 3/12/07 33,580 (5) 44.67(5) 386,170 2/14/07 2,777 11,107 11,107 458,053

timothyJ. tiP 0 390,000 975,000 Fenton CPuP 0 1,200,000 2,760,000 Amd2001Plan (4) 2/14/07 5,138 20,548 20,548 847,400 2/14/07 28,315 45.02 328,171

(1)ReflectsgrantsofRSussubjecttoperformance-basedvest-ingconditionsundertheAmended2001Planin2007.theRSusvestonFebruary14,2010(11,194ofMr.Hennequin’sRSusvestonMarch12,2010),subjecttotheCompany’sachievementofspecifiedEPSgrowthduringtheperformanceperiodendingonDecember31,2009.theperformancetargetforalltheRSuawardsgrantedtothenamedexecu-tiveofficersin2007iscompoundedannualEPSgrowthof7%,determinedbycomparingEPSasmeasuredattheendoftheperformanceperiodtobaseEPS.BothbaseEPSandEPSfortheperformanceperiodareadjustedtoexcludecertainextraordinaryitems.ifthetargetof7%growthisachievedtheRSuswillvestinfull;iflessthan2%growthisachieved,noneoftheRSuswillvest;andifEPSgrowthatorabovethe2%threshold,butbelowthe7%targetisachieved,RSuswillpartiallyvest.BaseEPSwasbasedonEPSforfiscal2006andwasmodifiedtoexcludecertainextraordinaryitemsasdescribedonpage17ofthisProxyStatement.

(2)Reflectsgrantsofstockoptionsin2007undertheAmended2001Plan.OptionshaveanexercisepriceequaltotheclosingpriceoftheCompany’scommonstockonthedateofgrant.Optionsvestinfourequalannualinstallmentsonthefirst,second,thirdandfourthanniversariesofthegrantdate,whichwasFebruary14forallthenamedexecu-tiveofficersexceptMr.Hennequin.thegrantdateforMr.Hennequin’sstockoptionswasMarch12,inordertoobtainfavorabletaxtreatment.

(3)Representstheaggregategrantdatefairvalue,computedinaccordancewithFAS123R,ofRSusandstockoptionsgrantedtothenamedexecutiveofficersin2007undertheAmended2001Plan.thevaluesinthiscolumnforRSusandstockoptionsweredeterminedasdescribedinnotes2and3,respectively,totheSummaryCompensationtableonpage25ofthisProxyStatement.

(4)“Amd2001Plan”denotestheAmended2001Plan.

(5)Mr.Hennequin’s2007optionawardwasgrantedonMarch12,2007,asdescribedinnote2,andtheexercisepricefortheawardisequaltotheclosingpriceoftheCompany’scommonstockonthatdate.


OutStANDiNg EQuity AwArDS At 2007 fiSCAl yEAr-END

Option awards Stock awards

Number Number Number Market value Equity incentive Equity incentive of securities of securities of shares of shares plan awards: plan awards: market underlying underlying or units of or units of number of unearned or payout value of unexercised unexercised Option Option stock that stock that shares, units unearned shares, units options (#) options (#) exercise expiration have not have not or other rights that or other rights that Name exercisable unexercisable price ($) date vested (#) vested ($) have not vested (#) have not vested ($) (a) (b)(1) (c)(1) (e) (f) (g)(2) (h)(3) (i)(4) (j)(3)

JamesA. 100,000 0 40.4375 5/19/12 Skinner 106,193 0 35.25 3/21/13 150,000 0 29.43 2/2/11 235,000 0 28.75 3/20/12 40,000 0 14.31 3/18/13 46,875 15,625 26.63 2/16/14 46,875 15,625 25.31 5/20/14 187,500 62,500 31.21 12/1/14 37,979 113,931 34.54 3/23/16 0 116,589 45.02 2/14/17 89,538 5,274,684

MatthewH. 27,000 0 40.4375 5/19/12 Paull 41,800 0 35.25 3/21/13 41,000 0 28.75 3/20/12 28,125 9,375 26.63 2/16/14 28,125 9,375 25.31 5/20/14 14,951 14,948 32.60 2/16/15 10,306 30,915 36.37 2/14/16 0 33,312 45.02 2/14/17 34,825 2,051,541

Ralph 24,000 0 40.4375 5/19/12 Alvarez 25,300 0 35.25 3/21/13 21,500 0 29.43 2/2/11 85,000 0 28.75 3/20/12 18,000 0 14.31 3/18/13 27,000 9,000 26.63 2/16/14 27,000 9,000 25.31 5/20/14 18,401 18,398 32.60 2/16/15 10,306 30,915 36.37 2/14/16 25,041 75,120 37.42 9/18/16 0 49,967 45.02 2/14/17 20,000 1,178,200 223,450 13,163,440

Denis 40,000 0 40.4375 5/19/12 Hennequin 38,500 0 35.25 3/21/13 38,000 0 29.43 2/2/11 48,500 0 29.29 5/3/12 40,800 0 18.73 5/30/13 8,160 0 23.93 9/24/13 15,000 5,000 26.63 2/16/14 15,000 5,000 25.45 5/21/14 6,900 6,900 32.60 2/16/15 6,183 18,550 36.37 2/14/16 0 33,580 44.67 3/12/17 13,602 801,294 30,550 1,799,701

timothyJ. 40,549 0 35.25 3/21/13 Fenton 47,500 0 28.75 3/20/12 18,750 6,250 26.63 2/16/14 18,750 6,250 25.31 5/20/14 12,651 12,648 32.60 2/16/15 6,184 18,549 36.37 2/14/16 0 28,315 45.02 2/14/17 8,436 496,965 28,797 1,696,431

(1)ingeneral,optionsexpireonthetenthanniversaryofgrant(withtheexceptionofoptionsduetoexpireonMay19,2012andMarch21,2013,whichweregrantedonMay19,1999andMarch21,2000,respectivelyandexpire13yearsafterthegrantdate).ingeneral,optionsvestinequalinstallmentsonthefirst,second,thirdandfourthanniversariesofthegrantdate(withtheexceptionofoptionsduetoexpirein2008,whichvestedinequalinstallmentsonthefirst,third,fifthandseventhanniversariesofthegrantdate).


(2)theawardsreflectedincolumn(g)areRSusthatvestsolelybasedonCompanyserviceonthedatessetforthinthetablebelow:

Named executive officer Vesting date Number of RSUs

RalphAlvarez 7/14/08 20,000

DenisHennequin 2/16/08 4,602 3/18/08 9,000

timothyJ.Fenton 2/16/08 8,436

(3)themarketvalueoftheseawardswascalculatedbymultiplyingthenumberofsharescoveredbytheawardby$58.91,theclosingpriceofMcDonald’sstockontheNYSEonDecember31,2007.

(4)theawardsreflectedincolumn(i)areunvestedperformance-basedRSusthatvestonthedatessetforthinthetabletotheright,assumingcontinuedCompanyserviceandthattheapplicabletargetperformancemeasurefortheawardsismetasdescribedonpage22ofthisProxyStatement.

Named executive officer Vesting date Number of RSUs

JamesA.Skinner 3/23/09 50,666 2/14/10 38,872

MatthewH.Paull 2/16/08 9,970 2/14/09 13,748 2/14/10 11,107

RalphAlvarez 2/16/08 12,270 2/14/09 13,748 9/18/09 33,405 2/14/10 16,660 2/14/11 13,748 9/18/11 133,619

DenisHennequin 2/14/09 8,249 2/14/10 11,107 3/12/10 11,194

timothyJ.Fenton 2/14/09 8,249 2/14/10 20,548

OPtiON ExErCiSES AND StOCK vEStED—fiSCAl 2007

Option awards Stock awards

Number of shares Value realized Number of shares Value realized acquired on exercise on exercise acquired on vesting on vesting Name (a) (#)(b) ($)(c) (#)(d) ($)(e)

JamesA.Skinner 120,000 $5,077,548 40,000 $2,338,800MatthewH.Paull 175,800 6,379,941 25,000 1,461,750RalphAlvarez 31,500 860,580 0 0DenisHennequin 115,000 2,729,213 0 0timothyJ.Fenton 121,900 2,904,563 0 0


NONQuAlifiED DEfErrED COMPENSAtiON—fiSCAl 2007(1)

Executive Registrant Aggregate Aggregate Aggregate contributions contributions earnings withdrawals/ balance in last FY in last FY in last FY distributions at last FYE Name (a) ($)(b)(2) ($)(c)(2) ($)(d) ($)(e) ($)(f)(3)

JamesA.Skinner $693,875 $505,308 $1,139,980 0 $14,832,744MatthewH.Paull 260,625 187,592 378,095 0 3,463,708RalphAlvarez 110,000 242,000 725,685 0 4,265,065timothyJ.Fenton 0 0 171,894 0 1,111,268

(1)thedescriptionsoftheplansbelowprovidedetailsonthetermsofthedeferralamountsprovidedinthetable.

(2)Alloftheamountsreportedincolumns(b)and(c)arealsoreportedascompensationfor2007intheSummaryCompensationtableonpage25ofthisProxyStatement.

(3)thefollowingamountsreportedincolumn(f)werepreviouslyreportedascompensationtothenamedexecutiveofficersintheSummaryCompensationtablefor2006andarealsoreportedascompensationfor2006intheSummaryCom-pensationtableonpage25ofthisProxyStatement.theseamountsconsistofexecutivecontributionsfor2006(alsoreportedas2006basesalaryandincolumn(b)ofthe2006NonqualifiedDeferredCompensationtable)andCompanycontributionsfor2006(alsoreportedas“allothercompen-sation”for2006andincolumn(c)ofthe2006NonqualifiedDeferredCompensationtable).

JamesA.Skinner $ 788,067MatthewH.Paull 337,133RalphAlvarez 1,262,084timothyJ.Fenton 174,799

ⓦ McDonald’s Excess Benefit and Deferred Bonus Plan

theMcDonald’sExcessBenefitandDeferredBonusPlanwasestablishedasofJanuary1,2005asasuccessorplantotheMcDonald’sCorporationSupplementalProfitSharingandSavingsPlan,whichisdescribedbelow.thePlanisanon-tax-qualified,unfundedplanthatallowscertainmanagementandhighlycompensatedemployeesoftheCompany,includingallofthenamedexecutiveofficersexceptMr.Hennequin,to(i)maketax-deferredcontributionsfromtheirbasesalaryandincentiveawardsunderthetiPandCPuP;and(ii)receiveCompanymatchingcontributions,ineachcaseinexcessoftheannualinternalRevenueServicelimitsthatapplytodefer-ralsandCompanycontributionsunderour401(k)plan.CertainparticipantswerealsopermittedtomakeanelectiononorbeforeMarch15,2005todeferreceiptofthevalueofallornone(butnotaportion)ofcertainawardsoftime-vestedRSusgrantedbeforeJuly15,2004.

ParticipantsmayelecttoreceivedistributionsofamountsdeferredunderthePlaneitherinalumpsumorinregularmonthly,quarterlyorannualinstallmentsoveraperiodofupto15yearsfollowingtheir“separationfromservice”withtheCompany(withinthemeaningofSection409AoftheinternalRevenueCode).Participantsmustelecttheirdistribution

schedulesatthetimetheamountsaredeferredandsuchelectionsareirrevocable.DistributionsforparticipantsinthePlanmaybedelayedforsixmonthsfollowingtheparticipant’sseparationfromserviceinordertocomplywithSection409AoftheinternalRevenueCode.

AmountsdeferredunderthePlanarecreditedtoaccountsestablishedintheparticipants’namesandnominallyinvestedininvestmentfundsselectedbytheparticipantsfromthethreeavailableoptions.Participants’accountsarecreditedwitharateofreturnbasedonthenominalinvestmentoptionoroptionsselected.AlloftheavailableinvestmentoptionsarealsooptionsofferedundertheCompany’s401(k)plan.thenominalinvestmentoptionscurrentlyavailableunderthePlanprovideparticipantswiththesamereturnsasaninvestmentin(i)theCompany’scommonstockfund;(ii)astablevaluefund;and/or(iii)anindexfundbasedontheS&P500index.

ⓦ McDonald’s Corporation Supplemental Profit Sharing and Savings Plan

PriortoJanuary1,2005,undertheMcDonald’sCorporationSupplementalProfitSharingandSavingsPlan,participantscoulddeferamountsofcompensationinexcessoftheinternalRevenueCodelimitsapplicabletoourProfitSharingPlan.thisSupplementalPlanallowedparticipantstodeferaportionoftheirbasesalaryuptocertainpercentagesofbasesalaryspecifiedundertheplan,andalloraportionoftheirtiPawardsandlong-termincentiveawards.thenominalinvestmentoptionsundertheSupplementalPlanareidenticaltothosedescribedabovefortheMcDonald’sExcessBenefitPlan.theSupplementalPlandistributionrulesareasfollows.Partici-pantsmayelecttohavedistributionspaidinalumpsumon,orininstallmentscommencing,April1followingtheyearinwhichtheyterminateemployment.ifnoelectionismadebyDecember31oftheyearinwhichaparticipantterminatesemployment,paymentswillbeintheformofalumpsum.Alldistributionsmustbecompletednolaterthanthe25thanniversaryofthefirstpaymentdate.in-servicewithdrawalsarepermittedaslongastheparticipant’swithdrawalelectionismadeinthecalendaryearpriortoandatleastsixmonthsinadvanceofthepaymentdate.Participantsmayrequestahardshipwithdrawaloracceleratethedistributionofinstallmentpaymentstomeetasuddenandunexpectedfinancialneed,subjecttoapprovaloftheofficercommitteeandaforfeiturepenaltyof10%oftheamountsoaccelerated.Attheendof2004,theCompanyfrozetheSupplementalPlanduetochangesunderSection409AoftheinternalRevenueCode,sothatnonewcontributionsorchangeswillbemadetotheplan.


POtENtiAl PAyMENtS ON tErMiNAtiON Of EMPlOyMENt Or ChANgE iN CONtrOlOurnamedexecutiveofficerswouldbecomeentitledtocertainpaymentsandbenefits,describedbelow,inconnectionwithachangeincontrolofMcDonald’sand/oriftheiremploymentwiththeCompanyweretoterminateincertaincircumstances,includingfollowingachangeincontrolofMcDonald’s.

ⓦ Potential payments upon or in connection with a change in control

Equity incentive plans: awards granted on or after May 20, 2004undertheAmended2001Plan,intheeventofa“changeincontrol”ofMcDonald’s,alloutstandingunvestedstockoptionsandRSusgrantedonorafterMay20,2004(otherthanawardssubjecttoperformance-basedvestingcondi-tions)automaticallyvestand,inthecaseofstockoptions,becomeexercisableif(i)McDonald’scommonstockceasestobepubliclytradedasaresultofthechangeincontroltransaction;and(ii)theawardsarenotreplacedbyequivalentawardsbasedonpubliclytradedstockofasuccessorentity.Service-vestedRSuswouldalsovestandbepaidoutuponthechangeincontrolifitisa“changeinownershiporeffectivecontrol”asdefinedunderSection409AoftheinternalRevenueCode;otherwise,theRSuswouldbepaidoutontheoriginallyscheduledpaymentdateor,ifearlier,ontheexecutive’sdeath,disability(withinthemeaningofSection409A)orterminationofemployment.

AlloutstandingRSussubjecttoperformance-basedvestingconditionswouldimmediatelyvestupona“changeincontrol”(asdefinedunderthe2001OmnibusStockOwnershipPlanandtheAmended2001Plan).ifthechangeincontrolwerea“changeinownershiporeffectivecontrol”asdefinedunderSection409AoftheinternalRevenueCode,thetargetnumberofshareswouldbepaidoutimmediately.Otherwise,thetargetnumberofshareswillbepaidoutontheoriginallyscheduledpaymentdate(or,ifearlier,ontheexecutive’sdeath,disability(withinthemeaningofSection409A)orterminationofemployment).

ifequityawardsundertheAmended2001Planarereplacedbyequivalentawards,thosereplacementawardswillvestandbecomeexercisable(inthecaseofstockoptions)orbepaidout(inthecaseofservice-basedRSus)ifthegrantee’semploymentwiththeCompanyisterminatedforanyreasonotherthan“cause”withintwoyearsfollowingthechangeincontrol.inaddition,ifthegrantee’semploymentisterminatedotherthanfor“cause”withintwoyearsfollowingthechangeincontrol,alloutstandingoptions(whetherornottheyarereplacementawards)willremainoutstandingfornotlessthantwoyearsfollowingthedateofterminationoruntiltheendoftheoriginaltermoftheaward,ifsooner.

AchangeincontrolisgenerallydefinedundertheAmended2001Planaseither(i)theacquisitionof20%ormoreofourcommonstockorvotingsecuritiesbyasinglepurchaseroragroupofpurchasersactingtogether;(ii)theincumbentmembersoftheBoard(andcertainnewdirectorsapprovedinaspecifiedmannerbythosemembers)ceasetoconstitute

atleastamajorityoftheBoardasaresultofanactualorthreatenedelectioncontest;(iii)asignificantmergerorotherbusinesscombinationinvolvingtheCompany;or(iv)acom-pleteliquidationordissolutionoftheCompany.

Equity incentive plans: awards granted before May 20, 2004inaccordancewiththe2001OmnibusStockOwnershipPlanpriortoitsamendmentandrestatementin2004,whichwerefertoasthe“2001Plan,”stockoptionsgrantedbeforeMay20,2004wouldimmediatelyvestandbecomeexercisableonachangeincontrol.thedefinitionofa“changeincontrol”underthe2001PlanisthesameasthedefinitionundertheAmended2001Plan.

AllunexercisedstockoptionsgrantedundertheMcDonald’sCorporation1975StockOwnershipOptionPlan,or“1975Plan,”orundertheMcDonald’sCorporation1992StockOwnershipincentivePlan,or“1992Plan,”wouldimmediatelyvestandbecomeexercisableonachangeincontrol.Achangeincontrolisgenerallydefinedunderthe1975Planandthe1992Planaseither(i)theacquisitionof20%ormoreofourvotingsecurities;(ii)theincumbentmembersoftheBoard(andcertainnewdirectorsapprovedinaspecifiedmannerbythosemembers)ceasetoconstituteatleastamajorityoftheBoardwithinatwo-yearperiod;or(iii)approvalbyourstock-holdersofasignificantmerger,saleorsimilartransaction.inaddition,allunexercisedoptionsgrantedunderthe1992Planwouldvestandbecomeimmediatelyexercisableonapprovalbyourstockholdersofaplanofliquidation.

Summary of potential change in control payouts under equity incentive plans ifachangeincontrolhadoccurredonDecember31,2007(and,forawardsgrantedonorafterMay20,2004,iftheawardshadnotbeenreplaced),assumingthatthetransactionmetthedefinitionofachangeincontrolundereachoftheapplicableCompanyplansandalsometthedefinitionofa“changeinownershiporeffectivecontrol”underSection409A,theoutstandingstockoptionsandRSusheldbythenamedexecutiveofficerswouldhavebeenaffectedasfollows:(i)stockoptionswouldhavevestedandbecomeexercisable;(ii)service-vestedRSuswouldhavevestedandwouldhavebeenpaidoutimmediately;and(iii)RSussubjecttoperformance-basedvestingconditionswouldhavevestedandbeenpaidoutimmediatelybasedonthenumberofsharesthatwouldhavebeenpaidoutiftargetperformancelevelshadbeenachieved.theequityawardsheldbythenamedexecutiveofficersasofDecember31,2007aresetforthintheOutstandingEquityAwardsat2007FiscalYear-Endtableonpages28and29ofthisProxyStatement

thetableonthenextpagesummarizesthevalueofthechangeincontrolpayoutsthatthenamedexecutiveofficerscouldhavereceivedinrespectoftheiroutstandingequityawards,basedon(i)inthecaseofstockoptions,the“spread”betweentheexercisepriceandtheclosingpriceoftheCompany’scommonstockonDecember31,2007and(ii)inthecaseofRSus,theaggregatenumberofsharesunderlyingtheawards(orthetargetnumberofsharesforRSussubjecttoperformance-basedvestingconditions)multipliedbytheclosingpriceoftheCompany’scommonstockontheNYSEon


December31,2007.thetablesetsforththetotalhypotheticalvaluethatthenamedexecutiveofficerscouldhaverealizedasaresultoftheexerciseorpayoutofacceleratedequityawards,basedontheassumptionsdescribedabove.theamountssetforthinthetablewouldhavevestedovertime,subjectonlytocontinuedemployment(andwithrespecttotheRSus,subjecttoperformance-basedvestingconditions).Asaresult,thevaluesshowninthetablebelowaregreaterthantheincrementalbenefitattributablesolelytoaccelerationoftheawards.

RSUs (number of shares/ target number Stock Options of shares (closing price on multiplied by Named 12/31/07 minus closing price on executive officer exercise price)($) 12/31/07)($) Total ($)

JamesA.Skinner $7,156,545 $ 5,274,684 $12,431,229MatthewH.Paull 2,170,435 2,051,541 4,221,976RalphAlvarez 4,082,166 13,163,440 17,245,606DenisHennequin 1,406,530 2,600,994 4,007,524timothyJ.Fenton 1,555,909 2,193,396 3,749,305

CPUPunderthe2007-2009CPuP,allofthenamedexecutiveofficerswouldbeentitledtoacceleratedvestingand,incertaincircum-stances,paymentofCPuPawardsonachangeincontrol.Forthispurposethedefinitionofa“changeincontrol”isthesameasitisundertheAmended2001Plan.ifachangeincontrolweretooccurbeforeJanuary1,2010,eachnamedexecutiveofficerwouldbeentitledtoreceiveaproratapor-tion(basedonthenumberofdaysintheperformanceperiodprecedingthechangeincontrol)oftheawardhewouldhavereceivedhadtheCPuPperformancegoalsbeenachievedoverthefullperformanceperiodatthesamelevelachievedduringtheperiodpriortothechangeincontrol.ifthechangeincontrolwerea“changeinownershiporeffectivecontrol”asdefinedunderSection409AoftheinternalRevenueCode,weintendtopaythisamountimmediately.Otherwise,theproratedawardwouldbepaidoutontheoriginallyscheduledpay-mentdate(or,ifearlier,ontheexecutive’sdeath,disabilityorterminationofemployment).

thetablebelowsetsforththepaymentsthatthenamedexecutiveofficerswouldhavebeenentitledtoreceiveunderthe2007-2009CPuPifachangeincontrol(thatwasalsoa“changeinownershiporeffectivecontrol”underSection409A)hadoccurredonDecember31,2007:

JamesA.Skinner $1,200,000MatthewH.Paull 400,000RalphAlvarez 666,667DenisHennequin 400,000timothyJ.Fenton 400,000

Note:theinformationprovidedrepresentstheproratatargetCPuPawards.thetermsofthe2007-2009CPuPprovidetheparticipantsproratapayoutsthatwouldbebasedonactualCompanyperformanceduringtheperiodpriortothechangeincontrol.

Change in control employment agreements theCompanyhasenteredintochangeincontrolemploymentagreementswithsomeofitsemployees,includingallofthenamedexecutiveofficersexceptMr.Hennequin.theseagree-mentsprovidethat,onachangeofcontroloftheCompany,theexecutiveswouldbeentitledtothebenefitsdescribedbelow.AnexecutivewhoalsoparticipatesintheERRPwouldbeentitledtoreceivethegreateroftheaggregatebenefitsundertheERRPortheaggregatebenefitsunderthechangeincon-trolagreement,butnotboth.thechangeincontrolemploymentagreementsperpetuallyretainatwo-yeartermuntilterminatedbytheCompanywithaminimumoftwoyearsnotice.

Subjecttoexceptionssetoutintheagreements,thedefini-tionof“changeofcontrol”undertheagreementsisgenerallythesameasthatofa“changeincontrol”underthe2001PlanandtheAmended2001Plan.

theagreementsprovidethat,duringthethree-yearperiodfollowingachangeofcontrolor“protectedperiod,”(i)theexecutive’spositionandauthoritymaynotbereduced;(ii)theexecutive’splaceofworkmaynotberelocatedbymorethan30miles;(iii)theexecutive’sbasesalarymaynotbereduced;(iv)theexecutive’sannualbonusopportunitymaynotbereducedandtheannualbonuspaidwillnotbelessthanthetargetannualbonus;and(v)theexecutivewillcontinuetopar-ticipateinemployeebenefitplansontermsnotlessfavorablethanbeforethechangeofcontrol.inaddition,within30daysafterachangeofcontrol,theCompanywillpaytoeachexecu-tiveaproratedportionoftheexecutive’stargetannualbonusforthepartialyearinwhichthechangeofcontroloccurs.

iftheCompanyfailstocomplywiththeaboveprovisionsfollowingachangeofcontrol,theexecutivemayterminatehisorheremploymentfor“goodreason”atanytimeduringtheprotectedperiod.

iftheexecutiveterminateshisorheremploymentforgoodreasonoristerminatedbytheCompanywithout“cause”atanytimeduringtheprotectedperiod,then,inadditiontotheexecutive’sentitlementtoreceiveaccruedbutunpaidsalary,bonus,deferredcompensationandotherbenefitamountsdueontermination,theexecutivewillbeentitledto:(i)alump-sumcashpaymentequaltothreetimesthesumoftheexecutive’sbasesalary,annualbonus(computedatthetargetlevel)andcontributionreceivedundertheCompany’sdeferredcompen-sationplan;(ii)aprorataportionoftheannualbonus(computedatthetargetlevel)fortheyearoftermination,reduced(butnotbelowzero)bytheamountofannualbonuspaidtotheexecu-tiveforthatyear;(iii)continuedmedical,lifeinsurance,fringeandotherbenefitsforthreeyearsafterthetermination;and(iv)alump-sumcashpaymentforanysabbaticalleavethathasbeenearnedbutnotyettaken.inaddition,forpurposesofdeterminingtheexecutive’seligibilityforanyavailablepost-retirementmedicalbenefits,theexecutivewillbetreatedashavingthreeadditionalyearsofserviceandbeingthreeyearsolder.theexecutivewillbeeligibleforthesebenefitssubjecttoexecutionofanagreementthatincludesacovenantnottocompete,acovenantnottosolicitemployees,anondisclosurecovenantandareleaseofclaims.inordertocomplywithSection409A,weintendtodelaypaymentofthesebenefitsforsixmonths.


uptothelimitationsspecifiedintheagreements,theCom-panywillreimburseanexecutiveonanafter-tax( i.e.,grossed-up)basisforany“parachute”excisetaxesincurredbythatexecu-tivebecauseofanypaymentsorotheramountsundertheagreementorotherwiseprovided,whichareconsideredtobecontingentuponachangeofcontrol.iftheaggregateafter-taxamountofbenefitstowhichanexecutivebecomesentitledunderhisorherchangeincontrolemploymentagreement,includingtaxgross-ups,isnotmorethan110%ofwhattheexecutivewouldreceiveifhisorherbenefitswerereducedtoalevelthatwouldnotbesubjectto“parachute”excisetaxes,theexecutivewillnotbeentitledtoreceiveagross-upandtheaggregateamountofbenefitstowhichheorsheisentitledwillbereducedtothegreatestamountthatcanbepaidwith-outtriggering“parachute”excisetaxes.

inthecaseofthedeathordisabilityofanexecutiveduringtheprotectedperiod,theexecutiveorhisestatewillbeentitledtoreceiveaccruedbutunpaidsalary,bonus,deferredcom-pensationandotherbenefitamountsdueatthetimeofsuchdeathordisabilityatlevelsprovidedtohispeeremployeesandatleastasfavorableasthoseinplaceimmediatelypriortothechangeofcontrol.

if(i)theCompanyterminatesanexecutiveforcausefollow-ingachangeofcontrol;(ii)anexecutivevoluntarilyterminatesemploymentwithoutgoodreasonfollowingachangeofcontrol;or(iii)anexecutivewhoisotherwiseeligibletoreceiveseverancebenefitsfailstoexecutethenoncompetitionandreleaseagreement,thenthatexecutivewillreceiveonlyalump-sumpaymentofaccruedbutunpaidsalary,bonus,deferredcompensationandotherbenefitamountsdueatthetimeofthetermination.

thefollowingtablesetsforththevalueofthebenefitsthatwouldhavebeenpayabletothenamedexecutiveofficersotherthanMr.Hennequinunderthechangeincontrolagreements,assumingthatonDecember31,2007theyhadbeenterminatedwithoutcauseorresignedwithgoodreasonintheprotectedperiodfollowingachangeincontrolofMcDonald’s.Proratabonuspaymentsinrespectof2007arenotincludedinthetablebecauseifthenamedexecutiveofficershadterminatedemploymentonDecember31,2007theywouldhaveearnedtheseawardsinfullpursuanttothetermsofthetiP.Accordingly,theamountofprorataawardstheywouldhavebeenentitledtounderthechangeincontrolemploymentagreementswouldbezero.

Severance payment (3 x base, bonus and Company contribution Benefit Tax gross-up to deferred compensation plan)($) continuation ($) Sabbatical ($) payments ($) Total ($)

JamesA.Skinner $9,704,758 $107,644 $196,154 $ 8,154,385 $18,162,941MatthewH.Paull 4,369,412 111,683 111,538 3,562,689 8,155,322RalphAlvarez 6,290,098 103,292 143,077 10,073,385 16,609,852timothyJ.Fenton 2,863,327 106,471 80,000 1,782,137 4,831,935

ⓦ Potential payments upon termination of employment (other than following a change in control)

McDonald’s Corporation Severance PlanundertheMcDonald’sCorporationSeverancePlan,Messrs.AlvarezandFentonwouldreceiveseverancebenefitsiftheywereterminatedasaresultofa“coveredtermination,”whichincludesterminationofemploymentbytheCompanywithout“cause”;terminationduetoareductioninworkforce;andeliminationoftheparticipant’sposition,butexcludingtermina-tionsforperformancereasons.thebenefitspayableundertheSeverancePlanconsistofalumpsumpaymentinrespectof(i)severancepay,basedonthepayrateasineffectimmediatelypriortoterminationand(ii)continuedmedicalanddentalbenefitsatthesamecostastheparticipantpaidforsuchbenefitspriortotermination.theamountofthebenefitsarebasedontheparticipant’slengthofservicewiththeCompanyandlevelofseniority.inaddition,eacheligiblenamedexecutiveofficer,ifterminatedinacoveredtermination,wouldreceiveaproratedtiPpaymentequaltoaprorataportionofhisbonusbasedonactualperformanceoftheCompanyduringtheapplicable

performanceperiod,paidatthesametimetiPpaymentsaremadetoothertiPparticipantsfortheyearinwhichterminationoccurs;apro-ratedpaymentundertheCPuPbasedontheactualperformanceoftheCompanyduringtheapplicableper-formanceperiod,paidatthesametimeCPuPpaymentsaremadetootherCPuPparticipants;alump-sumcashpaymentforanysabbaticalleavethathehasearnedbutnotyettaken;andoutplacementassistance.PaymentswouldbedelayedforsixmonthsfollowingterminationofemploymenttotheextentrequiredunderSection409AoftheinternalRevenueCode.

Messrs.SkinnerandPaullarenoteligibletoparticipateintheSeverancePlanbecausetheyparticipateintheERRP.Mr.HennequinisnoteligibletoparticipateintheSeverancePlanbecauseheisnotau.S.employee.theSeverancePlanwouldnotapplytoanyterminationofanamedexecutiveofficer’semploymentfollowingachangeincontrolofMcDonald’sbecauseemployeeswhoarecoveredbyachangeincontrolemploymentagreementwiththeCompanyarenoteligibletoreceivebenefitsundertheSeverancePlanforsuchatermination.


thevalueofthebenefitsthatwouldbepayabletoMessrs.AlvarezandFentoniftheiremploymenthadterminatedinacoveredterminationundertheplanonDecember31,2007wouldbeassetforthinthetablebelow.Proratabonuspay-mentsinrespectof2007arenotincludedinthetablebecauseifthenamedexecutiveofficershadterminatedemploymentonDecember31,2007theywouldhaveearnedtheirfullannualbonuspaymentsunderthetiPand,accordingly,theamountofproratabonustheywouldhavebeenentitledtoundertheseveranceplanwouldbezero.

Other Salary Benefit (sabbatical and continuation continuation outplacement) Total

RalphAlvarez $486,362 $40,178 $168,077 $694,617timothyJ.Fenton 520,000 33,184 105,000 658,184

Benefits under the Executive Retention Replacement PlanMr.SkinnerparticipatesintheERRP,which,asdescribedatpage23ofthisProxyStatement,wasadoptedtoreplacebenefitsprovidedundertheCompany’sExecutiveRetentionPlanwitheconomicallyequivalentbenefitsinamannercon-sistentwiththerequirementsofSection409AoftheinternalRevenueCode.

undertheERRP,Mr.SkinnerwouldbeentitledtocertainbenefitsiftheCompanyterminatedhisemploymentforanyreasonotherthandeath,disabilityor“cause”orifMr.Skinnerresignedfor“goodreason.”inaddition,becauseheisover62,Mr.SkinnerhastherighttoelecttoretireatanytimeandreceivebenefitsundertheERRP.

ifMr.Skinnerweretobeterminatedwithoutcause,undertheERRPhewouldbeentitledtoreceiveacashlumpsumequaltothepresentvalueof(i)basesalaryfor18months;(ii)50%offinalbasesalaryforfiveyears;(iii)pro-ratedtiPfortheyearoftermination,(iv)targettiPfor18months;(v)theequivalentofCompanymatchingcontributionsunderdeferredcompensationplansfor6.5years,basedonfullfinalsalaryfor18monthsand50%offinalsalaryforfiveyearsand(vi)theestimatedvalueofcontinuedparticipationinCompanyhealthandwelfareplansfor6.5years.inaddition,allstockoptionsheldbyMr.Skinnerthatwouldhavevestedwithinfiveyearsfollowingterminationwouldvestandbecome

exercisable,andallvestedstockoptionswouldremainout-standinguntilfiveyearsfollowingterminationoruntiltheexpi-rationoftheoption’soriginalterm,ifsooner.RSuswouldvestonaproratabasisbasedonthenumberofmonthsemployedduringthevestingperiodandwouldbepaidoutinaccordancewithactualperformanceresultsachievedduringthevestingperiod.Mr.SkinnerwouldnotbeentitledtoaCPuPpayment.

ifMr.Skinnerweretoelecttoretire,hewouldreceivethebenefitsdescribedin(i)through(vi)aboveplussecretarialservicesfortwoyearsfollowinghisretirementand$135,000inlieuoffringebenefitsandprovisionofanoffice.Aprorataportion(basedontheportionoftheseveranceperiodpriortohisretirement)ofanyoutstandingCPuPawardwouldvestandwouldbepaidattheendoftheperformanceperiod,basedontheCompany’sachievementoftheapplicableperformancegoals.AllofMr.Skinner’soutstandingRSuswouldvestandwouldbepaidoutontheoriginallyscheduledpaymentdates,basedontheCompany’sachievementoftheapplicableper-formancegoalsinthecaseofRSussubjecttoperformance-basedvestingconditions.AllofMr.Skinner’soutstandingstockoptionswouldbecomeexercisableinaccordancewiththeiroriginaltermsandremainoutstandingfor9½yearsfollowinghisretirement(oruntiltheexpirationoftheoption’soriginalterm,ifsooner).

AnypaymentstoMr.SkinnerundertheERRPwouldbedelayedforsixmonthsfollowingtheterminationofhisemploy-mentasrequiredunderSection409AoftheinternalRevenueCode.Mr.Skinner’sreceiptofbenefitsundertheERRPissubjecttotheexecutionofanagreementthatincludesacov-enantnottocompete,acovenantnottosolicitemployees,anondisparagementcovenant,anondisclosurecovenantandareleaseofclaims.

Mr.PaullwasalsoaparticipantintheERRPthroughhisretirementonFebruary28,2008.inconnectionwithhisretire-ment,heexecutedanagreementandisentitledtotheretire-mentbenefitsundertheERRP,whichwillbepaidsixmonthsfollowinghisretirementdate,asrequiredunderSection409A.Mr.Paull’sERRPbenefitsarecalculatedasdescribedaboveforMr.Skinner,exceptthatthepaymentsdescribedin(ii)and(v)abovearebasedon35%,not50%,ofMr.Paull’ssalaryandMr.Paullisentitledto$50,000inlieuoffringebenefitsbutnopaymentinrespectofprovisionofanofficeandnocontinuedsecretarialservices.

thecashandfringebenefitsthatwouldhavebeenpayabletoMessrs.SkinnerandPaullundertheERRPiftheiremploymenthadterminatedonDecember31,2007incircumstancescoveredundertheERRPisasfollows:

Lump-sum ERRP payment ($) Other (1) Total ($)

terminationwithoutcause JamesA.Skinner 7,242,816 N/A 7,242,816 MatthewH.Paull 2,822,043 N/A 2,822,043

Retirement JamesA.Skinner 7,242,816 (2) $135,000 7,377,816 MatthewH.Paull 2,822,043 (2) $50,000 2,872,043

(1)Paymentsinlieuoffringebenefitsand(forMr.Skinneronly)provisionofanoffice,plus(forMr.Skinneronly)continuedprovisionofsecretarialservices,asdescribedabove.

(2)thisamountdoesnotincludeaprorataCPuPaward.theexecutivewouldbeentitledtoreceiveaprorataCPuPawardbaseduponactualCompanyperformanceagainstthespecificmetrics.theawardwouldbepaidfollowingcompletionoftheperformanceperiod.


thetablebelowshowstheeffectonoutstandingequityawardsheldbyMessrs.SkinnerandPaulliftheiremploymenthadter-minatedonDecember31,2007incircumstancescoveredundertheERRPbasedon:(i)inthecaseofstockoptions,the“spread”betweentheexercisepriceandtheclosingpriceoftheCompany’scommonstockonDecember31,2007and(ii)inthecaseofRSus,theaggregatenumberofsharesunderlyingtheawards(orthetargetnumberofsharesforRSussubjecttoperformance-basedvestingconditions)multipliedbytheclosingpriceoftheCompany’scommonstockonDecember31,2007.

Amount of outstanding equity upon termination without cause ($) Effect of retirement Effect of termination without cause

JamesA.Skinner $9,533,737 Noaccelerationofvesting; outstandingstockoptions wouldbeexercisablein accordancewiththeoriginal vestingscheduleandremain outstandingfor9½years oruntilexpirationofthe originaltermifsoonerand RSuswouldvestinaccord- ancewiththeoriginalvesting schedule.

MatthewH.Paul $3,286,151 Noaccelerationofvesting; outstandingstockoptions wouldbeexercisablein accordancewiththeoriginal vestingscheduleandremain outstandingfor9½years oruntilexpirationofthe originaltermifsoonerand RSuswouldvestinaccord- ancewiththeoriginalvesting schedule.

ifMr.Skinner’semploymentweretoterminateduetodeathordisability,undertheERRPheorhisestatewouldbeentitledtoreceive:(i)accruedbutunpaidbasesalaryandannualincentiveawards;and(ii)paymentorprovisionofdeathordisabilitybenefits,asapplicable,equaltothebenefitsprovidedbytheCompanytotheestatesandbeneficiariesofotheremployeesoftheCompanyservingatacomparablelevel.ifMr.Skinner’semploymentweretobeterminatedfor“cause,”hewouldbeentitledtoreceiveonlyaccruedbutunpaidbasesalaryandannualincentiveawardsandnootherbenefits.thesameprovisionsappliedtoMr.PaullwhenheparticipatedintheERRP.

Severance benefits for Mr. HennequinMr.HennequinisnoteligibletoparticipateintheSeverancePlanortheERRP,butiseligibleforlimitedseverancebenefitsunderthecollectivebargainingagreementthatappliestoourmanagerialcategoryemployeesinFrance.underthecollectivebargainingagreement,ifMr.HennequinhadbeenterminatedotherthanforgrossorwillfulmisconductonDecember31,2007hewouldhavebeenentitledtoaseverancepayment,basedonhisyearsofservicewiththeCompany,approxi-matelyequaltohis2007annualcompensation( i.e.,his2007basesalaryandtiPaward)for7.69months,orapproximately$1,096,081.Mr.Hennequinwouldbeentitledtothesameben-efitsifhisemploymentweretoterminateduetohisdisability.ifMr.Hennequinwereterminatedduetogrossorwillfulmisconductorresignedvoluntarily,hewouldnotbeeligibletoreceiveanyseverancebenefits.

Effect of termination of employment under equity incentive plansOutstandingRSusandstockoptionsheldbythenamedexecutiveofficersaregenerallyforfeitedinconnectionwithterminationofemployment,withstockoptionsthatarevestedatthetimeofterminationremainingoutstandingandexercis-ablefor90daysexceptifemploymentisterminatedforcause.inconnectionwithcertainterminations,however,RSusandstockoptionsaresubjecttoacceleratedvestingand/orwillremainoutstandingforaperiodfollowingtermination,asspeci-fiedintheapplicableplans.theprovisionsundertheseplansregardingterminationofemploymentaresummarizedbelow.

> Stock optionsCertainstockoptionsmayremainoutstanding,andvestingofcertainstockoptionsmaybeacceleratedinthefollowingevents:retirement,death,disabilityor“specialcircumstances”(whichmayincludeterminationbytheCompanywithoutcause,terminationduetojobeliminationordisaffiliationofasubsid-iaryofMcDonald’s,orifthenamedexecutiveofficerleavestobecomeanowner-operatorofaMcDonald’srestaurant).

Allstockoptionsthatwouldhavevestedwithinfiveyearsfollowingterminationwouldvestandbecomeexercisable,andallvestedstockoptionswouldremainoutstandinguntilfiveyearsfollowingterminationoruntiltheexpirationoftheoption’soriginalterm,ifsooner.RSuswouldvestonaproratabasisbasedonthenumberofmonthsemployedduringthevestingperiodandwouldbepaidoutinaccordancewithactualperformanceresultsachievedduringthevestingperiod.

Allstockoptionsthatwouldhavevestedwithinthreeyearsfollowingterminationwouldvestandbecomeexercisable,andallvestedstockoptionswouldremainoutstandinguntilthreeyearsfollowingterminationoruntiltheexpirationoftheoption’soriginalterm,ifsooner.RSuswouldvestonaproratabasisbasedonthenumberofmonthsemployedduringthevestingperiodandwouldbepaidoutinaccordancewithactualperformanceresultsachievedduringthevestingperiod.


> RSUs CertainRSusmayremainoutstanding,andvestingofcertainRSusmaybeacceleratedinthefollowingevents:retirement,death,disabilityor“specialcircumstances”(whichmayincludeterminationbytheCompanywithoutcause,terminationduetojobeliminationordisaffiliationofasubsidiaryofMcDonald’s,orifthenamedexecutiveofficerleavestobecomeanowner-operatorofaMcDonald’srestaurant).

thetablebelowsummarizesthevalueofthepayoutsthatMessrs.Alvarez,HennequinandFentoncouldhavereceivedinrespectoftheiroutstandingservice-basedRSusiftheiremploymenthadterminatedinanyofthecoveredcircumstancesonDecember31,2007.thevaluesinthetablearebasedontheaggregatenumberofsharesunderlyingtheawardsmultipliedbytheclosingpricepershareoftheCom-pany’scommonstockonDecember31,2007.thetablesetsforththetotalhypotheticalvaluethatthesenamedexecutiveofficerscouldhaverealizedasaresultofaccelerationoftheirRSusinconnectionwithaterminationofemploymentinaccordancewiththetermsoftheapplicableplans.thevaluesshowninthetablebelowaregreaterthantheincrementalbenefitattributablesolelytoaccelerationoftheawards.AsofDecember31,2007,Messrs.SkinnerandPaullonlyhaveRSusthathaveperformance-basedvestingconditions.Asnotedabove,paymentsinrespectofRSussubjecttoperformance-basedvestingconditionswouldnotbeacceleratedinconnec-tionwithaterminationofemployment.

RSUs

Named RSUs (number of shares underlying award multiplied executive officer by closing price on 12/31/07)($)

RalphAlvarez $1,178,200DenisHennequin 801,294timothyJ.Fenton 496,965

Deferred compensationFollowingtheirseparationfromservicewiththeCompanyforanyreason,thenamedexecutiveofficerswouldreceivedistributionsfromtheiraccountsundertheSupplementalProfitSharingandSavingsPlanandtheExcessBenefitandDeferredBonusPlaninaccordancewiththeirelecteddistributionschedules,asdescribedonpage30ofthisProxyStatement.

thetablebelowsummarizesthevalueofthepayoutsthatthenamedexecutiveofficerscouldhavereceivedinrespectoftheiroutstandingstockoptionsonterminationofemploymentundercircumstancesthatwouldresultinaccelerationoftheawardsundertheapplicableCompanyplans( i.e.,retirement,“specialcircumstances,”deathordisability),iftheterminationhadoccurredonDecember31,2007.thevaluesinthetablearebasedonthe“spread”betweentheexercisepriceandtheclosingpriceoftheCompany’scommonstockontheNYSEonDecember31,2007.thetablesetsforththetotalhypothet-icalvaluethatthenamedexecutiveofficerscouldhaverealizedasaresultofaccelerationoftheirawardsinconnectionwithaterminationofemploymentinaccordancewiththetermsoftheapplicableplans.thevaluesshowninthetablebelowaregreaterthantheincrementalbenefitattributablesolelytoaccelerationoftheawards.

Stock options

Stock options (closing Named Type of price on 12/31/07 executive officer termination minus exercise price)($)

JamesA.Skinner Retirement N/A (1)

Specialcircumstances $6,751,689 Death/disability 7,156,545

MatthewH.Paull Retirement 2,054,759 Specialcircumstances 2,054,759 Death/disability 2,170,435

RalphAlvarez Retirement 0(2)

Specialcircumstances 2,964,783 Death/disability 4,082,166

DenisHennequin Retirement 1,167,440 Specialcircumstances 1,286,985 Death/disability 1,406,530

timothyJ.Fenton Retirement 1,457,585 Specialcircumstances 1,457,585 Death/disability 1,555,909

(1)Pleaserefertothetableonpage35foradescriptionofMr.Skinner’streatmentuponretirementundertheERRP.

(2)Mr.Alvarezdoesnotqualifyforretirementunderthetermsoftheapplicableplans.


Policies and procedures for related person transactionstheMcDonald’sSystemhasmorethan31,000restaurantsworldwide,manyofwhichareindependentlyownedandoper-ated.withinthisextensiveSystem,itisnotunusualforourbusinesstotouchmanycompaniesinmanyindustries,includ-ingsuppliersoffoodandotherproductsandservices.theBoardofDirectorsisresponsiblefortheoversightandapproval(orratification)ofanytransaction,relationshiporarrangementinwhichtheCompanyisaparticipantandthatinvolvesBoardmembers,ourexecutiveofficers,beneficialownersofmorethan5%ofourcommonstock,theirimmediatefamilymem-bers,domesticpartnersandcompaniesinwhichtheyhaveamaterialinterest.werefertotheseasrelatedpersontransac-tionsandtothepersonsorentitiesinvolvedasrelatedpersons.

theBoardhasadoptedapolicythatsetsoutproceduresforthereporting,reviewandratificationofrelatedpersontrans-actions.thepolicyoperatesinconjunctionwithotheraspectsoftheCompany’scomplianceprogram,suchasitsStandardsofBusinessConductandCodeofConductforDirectors,whichrequireDirectorsandemployeestoreportanycircum-stancesthatmaycreateorappeartocreateaconflictbetweentheinterestsoftherelatedpersonandthoseoftheCompany,regardlessoftheamountinvolved.OurDirectorsandexecutiveofficersmustalsoperiodicallyconfirminformationaboutrelatedpersontransactions,andmanagementreviewsitsbooksandrecordsandmakesotherinquiriesasappropriatetoconfirmtheexistence,scopeandtermsofrelatedpersontransactions.

undertheBoard’spolicy,theAuditCommitteeevaluatesrelatedpersontransactionsforpurposesofrecommendingtothedisinterestedmembersoftheBoardthatthetransactionsarefair,reasonableandwithinCompanypoliciesandpracticesandshouldbeapprovedorratified.

theBoardhasconsideredcertaintypesofpotentialrelatedpersontransactionsandpre-approvedthemasnotpresentingmaterialconflictsofinterest.thosetransactionsinclude(a)compensationpaidtoDirectorsandexecutiveofficersthathasbeenapprovedbytheBoardortheCompensationCommittee,asapplicable;(b)CompanycontributionstoRonaldMcDonaldHouseCharities,inc.andcertainothercontributionsmadeinlimitedamountstoothercharitableornot-for-profitorganizations;and(c)transactionsinwhichtherelatedperson’sinterestarisessolelyfromownershipoftheCompany’scommonstockandallholdersofthecommonstockreceivethesamebenefitonaproratabasis.theAuditCommitteeconsiderstheappropriatenessofanyrelatedper-sontransactionnotwithinthesepre-approvedclassesinlightofallrelevantfactorsandthecontrolsimplementedtoprotecttheinterestsofMcDonald’sanditsshareholders,including:

> thebenefitsofthetransactiontotheCompanyortheMcDonald’sSystem;

> thetermsofthetransactionandwhethertheyarearm’s-lengthandintheordinarycourseofMcDonald’sbusiness;

> thedirectorindirectnatureoftherelatedperson’sinterestinthetransaction;

> thesizeandexpecteddurationofthetransaction;and

> otherfactsandcircumstancesthatbearonthematerialityoftherelatedpersontransactionunderapplicablelawandlistingstandards.

RelatedpersontransactionsinvolvingDirectorsarealsosubjecttoBoardapprovalorratificationwhensorequiredunderDelawarelaw.

tRANSACtiONSwitHRElAtEDPERSONS,PROMOtERSANDCERtAiNCONtROlPERSONS

COMPliANCEwitHSECtiON16(A)OFtHEEXCHANgEACt

Section16(a)oftheSecuritiesExchangeActof1934requiresourexecutiveofficersandDirectors,andpersonswhoownmorethan10%ofourcommonstock(ReportingPersons)tofilereportswiththeSECregardingtheirownershipofandtransactionsinourcommonstockandourothersecuritiesrelatedtoourcommonstock.ReportingPersonsarealsorequiredbySECrulestofurnishuswithcopiesofthereportstheyfilewiththeSEC.Basedsolelyonourreviewofthecopiesofthereportsprovidedtousandinquiriesthatwehavemade,webelievethatduringourfiscalyearendedDecember31,

2007,allReportingPersonstimelyfiledallofthereportstheywererequiredtofile,exceptthat,duetoanadministrativeerroronourpart,eachofRichardFloerschandDonaldthompsonwaslateinfilingoneForm4toreporthisacquisitionofcommonstockequivalentsresultingfromthedeferralofhis2006bonuspursuanttoourExcessBenefitandDeferredBonusPlan.Mr.Fentonwaslateinfilingonereporttodisclosethreegifttransactions.inaddition,MaryDillonfiledonelatereportin2008duetoatranspositionofnumbersinaForm4filingcausingtheunderreportingofasale.


related person transactionsin2007,theCompanyanditssubsidiariespurchasedapproxi-mately$1.1millionworthofpaperandotherprintedproducts(principallymeat,breadandbiscuitliners,trayliners,frenchfrybags,hashbrownbagsandbagstuffers)fromSchwarzSupplySource(formerlyknownasSchwarzPaperCompany).DirectorMcKennaisChairmanofSchwarz,aswellasa39.8%shareholder.MembersofDirectorMcKenna’sfamilyarealsoshareholdersofSchwarz.Schwarz’sbusinesswiththeCom-panyanditssubsidiariesrepresentslessthan1%ofSchwarz’stotalrevenues.theCompanybelievesthatthesepurchasesweremadeontermsatleastasfavorableaswouldhavebeenavailablefromotherpartiesandintendstocontinueitsdealingswithSchwarzin2008onsimilarterms.

throughJune2007,theCompanyanditssubsidiariespurchasedapproximately$6.6millionworthofcoffeeandsoftdrinkcups,saladpackagingandparfaitcupsfromPrairiePackaging,inc.DirectorStonewasadirectorofPrairiePackag-ingaswellasa6.39%shareholderuntilJune2007whenitwassoldtoPactivCorporation.Mr.Stone’schildrenalsoceasedtobeshareholdersofPrairiePackaginguponitssaletoPactivCorporation.theCompanybelievesthatthesepurchases,whichrepresentlessthan2.8%oftherevenuesofPrairiePackagingthroughJune2007,weremadeontermsatleastasfavorableaswouldhavebeenavailablefromotherparties.

in2007,inter-ConSecuritySystems,inc.,providedphy-sicalsecurityservicesfortheCompany’shomeofficecampus.DirectorHernandezistheChairmanandChiefExecutiveOfficer,aswellasa26.99%shareholderofinter-Con.PaymentsbytheCompanytointer-Confor2007forsuchservicestotaled$1.0million.theCompanybelievesthattheseservices,whichrepresentlessthan1%oftherevenuesofinter-Con,weremadeontermsatleastasfavorableaswouldhavebeenavailablefromotherparties,andintendstocontinueitsdeal-ingswithinter-Conin2008onsimilarterms.

During2007,Mr.StephenStratton,aformeremployeeoftheCompanyandthebrotherofMr.JeffreyStratton,Corpo-rateExecutivevicePresidentandChiefRestaurantOfficer,ownedandoperatedtwoMcDonald’srestaurantsintheu.S.throughout2007,Mr.StephenStrattonpaidrentandservicefeesunderthetermsofstandardfranchiseagreementswithMcDonald’suSA,llC,asubsidiaryoftheCompany,forbothoftherestaurants.thesepaymentstotaled$825,210in2007,weremadepursuanttothetermsofhisstandardfranchiseagreements,andwerenetofrefundsthatareassociatedwithparticipationinvariousinitiativesandpromotions,whicharegenerallyavailabletoallowner-operatorsofu.S.McDonald’srestaurants.

Mr.JeffreyStratton’sson-in-law,JeffRingel,isemployedasaSeniorDirectorofBusinessProcessimprovementsofthePersecobusinessunitofHAviglobalSolutions.HAviglobalSolutionsanditsbusinessunits(HgS)havebeensignificantsuppliersofproductsandservicestotheMcDonald’sSystemsince1975,andHgShasadvisedtheCompanythatvirtuallyallofitsbusinessisattributabletotheMcDonald’sSystem.Mr.RingelisemployedbyHgS—Persecoonanat-willbasis,andhiscompensationisdeterminedatthediscretionofHgS.in2007,theCompanyanditssubsidiariesmadeaggregatepaymentstoHgSofapproximately$483.0million.


AuDitCOMMittEEREPORt

Dear Fellow Shareholders:theAuditCommitteeiscomposedofsixDirectors,eachofwhommeetstheindependenceandotherrequirementsoftheNewYorkStockExchange.Asstatedpreviously,EnriqueHernandez,Jr.,CaryD.McMillan,andRogerw.Stonequalifyasthe“auditcommitteefinancialexperts.”theCommitteehastheresponsibilitiessetoutinitscharter,whichhasbeenadoptedbytheBoardofDirectorsandisreviewedannually.

ManagementisprimarilyresponsiblefortheCompany’sfinancialstatements,includingtheCompany’sinternalcontroloverfinancialreporting.Ernst&YoungllP(Ernst&Young),theCompany’sindependentauditors,isresponsibleforperforminganauditoftheCompany’sannualconsolidatedfinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples(gAAP)andforissuingareportonthosestatements.Ernst&YoungalsoreviewstheCompany’sinterimfinancialstatementsinaccordancewithStatementonAuditingStandardsNo.100(interimfinancialinformation).theCommit-teeoverseestheCompany’sfinancialreportingprocessandinternalcontrolstructureonbehalfoftheBoardofDirectors.theCommitteemetninetimesduring2007,includingmeet-ingregularlywithErnst&Youngandtheinternalauditors,bothprivatelyandwithmanagementpresent. infulfillingitsoversightresponsibilities,theCommitteereviewedanddiscussedwithmanagementandErnst&Youngtheauditedandinterimfinancialstatements,includingManage-ment’sDiscussionandAnalysis,includedintheCompany’sReportsonForm10-KandForm10-Q.thesereviewsincludedadiscussionof:> criticalaccountingpoliciesoftheCompany;

> thereasonablenessofsignificantfinancialreportingjudg-mentsmadeinconnectionwiththefinancialstatements,includingthequality(andnotjusttheacceptability)oftheCompany’saccountingprinciples;

> theclarityandcompletenessoffinancialdisclosures;

> theeffectivenessoftheCompany’sinternalcontroloverfinancialreporting,includingmanagement’sandErnst&Young’sreportsthereon,thebasisfortheconclusionsexpressedinthosereportsandanychangesmadetotheCompany’sinternalcontroloverfinancialreportingduring2007;

> itemsthatcouldbeaccountedforusingalternativetreat-mentswithingAAP,theramificationsthereofandthetreat-mentpreferredbyErnst&Young;

> theannualmanagementletterissuedbyErnst&Young,management’sresponsetheretoandothermaterialwrittencommunicationsbetweenmanagementandErnst&Young;

> unadjustedauditdifferencesnotedbyErnst&YoungduringitsauditoftheCompany’sannualfinancialstatements;and

> thepotentialeffectsofregulatoryandaccountinginitiativesontheCompany’sfinancialstatements.

inconnectionwithitsreviewoftheCompany’sannualcon-solidatedfinancialstatements,theCommitteealsodiscussedwithErnst&YoungothermattersrequiredtobediscussedwiththeauditorsunderStatementonAuditingStandardsNo.61,asmodifiedorsupplemented(communicationwithauditcommittees)andthoseaddressedbyErnst&Young’swrittendisclosuresanditsletterprovidedunderindependenceStandardsBoardStandardNo.1,asmodifiedorsupplemented(independencediscussionswithauditcommittees). theCommitteeisresponsiblefortheengagementoftheindependentauditorsandappointedErnst&Youngtoserveinthatcapacityduring2007and2008.inthatconnection,theCommittee:> reviewedErnst&Young’sindependencefromtheCompany

andmanagement,includingErnst&Young’swrittendisclo-suresdescribedabove;

> reviewedperiodicallytheleveloffeesapprovedforpaymenttoErnst&Youngandthepre-approvednon-auditservicesithasprovidedtotheCompanytoensuretheircompatibilitywithErnst&Young’sindependence;and

> reviewedErnst&Young’sperformance,qualificationsandqualitycontrolprocedures.

Amongothermatters,theCommitteealso:> reviewedthescopeofandoverallplansfortheannualaudit

andtheinternalauditprogram;

> consultedwithmanagementandErnst&YoungwithrespecttotheCompany’sprocessesforriskassessmentandriskmanagement;

> reviewedtheadequacyofcertainoftheCompany’sfinancialpolicies;

> reviewedandapprovedtheCompany’spolicywithregardtothehiringofformeremployeesoftheindependentauditors;

> reviewedandapprovedtheCompany’spolicyforthepre-approvalofauditandpermittednon-auditservicesbytheindependentauditors;

> receivedreportspursuanttoourpolicyforthesubmissionandconfidentialtreatmentofcommunicationsfromemployeesandothersaboutaccounting,internalcontrolsandauditingmatters;

> reviewedwithmanagementthescopeandeffectivenessoftheCompany’sdisclosurecontrolsandprocedures,includingforpurposesofevaluatingtheaccuracyandfairpresentationoftheCompany’sfinancialstatementsinconnectionwithcertificationsmadebytheCEOandCFO;

> reviewedsignificantlegaldevelopmentsandtheCompany’sprocessesformonitoringcompliancewithlawandCompanypolicies;and

> reviewedtheCompany’srelatedpersontransactions.

AuDitCOMMittEEMAttERS


Basedonthereviewsanddiscussionsreferredtoabove,theCommitteerecommendedtotheBoardofDirectorsthattheauditedfinancialstatementsbeincludedintheCompany’sAnnualReportonForm10-KfortheyearendedDecember31,2007forfilingwiththeSEC.

Respectfullysubmitted,The Audit Committee

EnriqueHernandez,Jr.,ChairpersonHallAdams,Jr.walterE.MasseyCaryD.McMillanSheilaA.PenroseRogerw.Stone

Policy for pre-approval of audit and permitted non-audit servicestheAuditCommitteehasimplementedapolicyforthepre-approvalofallauditandpermittednon-auditservicesproposedtobeprovidedtotheCompanybyitsindependentauditors.underthepolicy,theAuditCommitteemaypre-approveengagementsonacase-by-casebasisoronaclassbasisiftherelevantservicesarepredictableandrecurring.

Pre-approvalsforclassesofservicesaregrantedatthestartofeachfiscalyear.inconsideringpre-approvalsonaclassbasis,theAuditCommitteereviewsadescriptionofthescopeofservicesfallingwithineachclassandimposesspecificbudgetaryguidelinesthatarelargelybasedonhistoricalcosts.Pre-approvalsgrantedonaclassbasisareeffectivefortheapplicablefiscalyear.

Anyauditorpermittednon-auditservicethatisnotincludedinanapprovedclass,orforwhichtotalfeesareexpectedtoexceedtherelevantbudgetaryguideline,mustbepre-approvedonanindividualbasis.Pre-approvalofanyindividualengage-mentmaybegrantednotmorethanoneyearbeforecom-mencementoftherelevantservice.Pre-approvalsofservicesthatmaybeprovidedoveraperiodofyearsmustberecon-sideredeachyearinlightofallthefactsandcircumstances,includingcompliancewiththepre-approvalpolicyandthecompatibilityoftheserviceswiththeauditors’independence.

theCorporateControllermonitorsservicesprovidedbytheindependentauditorsandoverallcompliancewiththepre-approvalpolicy.theCorporateControllerreportsperiodicallytotheAuditCommitteeaboutthestatusofoutstandingengage-ments,includingactualservicesprovidedandassociatedfees,andmustpromptlyreportanynoncompliancewiththepre-approvalpolicytotheChairpersonoftheAuditCommittee.

thecompletepolicyisavailableontheCompany’swebsiteatwww.governance.mcdonalds.com.

Auditor fees and servicesthefollowingtablepresentsfeesbilledforprofessionalser-vicesrenderedfortheauditoftheCompany’sannualfinan-cialstatementsfor2007and2006andfeesbilledforotherservicesprovidedbyourindependentauditorsineachofthelasttwoyears:

In millions 2007 2006

Auditfees(1) $ 9.8 $10.8Audit-relatedfees(2) .3 .3taxfees(3) 1.6 1.6Allotherfees – –

$11.7 $12.7

(1)Feesforservicesassociatedwiththeannualaudit(includ-inginternalcontrolreportingunderSection404oftheSarbanes-OxleyAct),statutoryauditsrequiredinternation-ally,reviewsoftheCompany’sQuarterlyReportsonForm10-Q,andaccountingconsultations.

(2)Feesforemployeebenefitplanauditsandcertainattesta-tionservicesnotrequiredbystatuteorregulation.

(3)Primarilyfeesfortaxcomplianceinvariousinternationalmarketsincludingexpatriatetaxservices.


SOliCitAtiONOFPROXiESANDvOtiNg

Notice and AccesstheSEChasadopteda“NoticeandAccess”rulethatallowscompaniestodeliveranoticeofinternetavailabilityofproxymaterials(Notice)toshareholdersinlieuofapapercopyoftheProxyStatementandtheCompany’s2007AnnualReport.webelievethatthisnewrulewillallowustoexpeditethedeliveryofourproxymaterials,whilereducingprintingandpostagecostsandsavingnaturalresources.theNoticeprovidesinstructionsastohowshareholderscanaccesstheproxymaterialsonline,describesmatterstobeconsideredatthemeetingandgivesinstructionsastohowsharescanbevoted.ShareholdersreceivingtheNoticecanrequestapapercopyoftheproxymaterialsbyfollowingtheinstructionssetforthintheNotice.

Important Notice Regarding the Availability of Proxy Materials

The Proxy Statement and our 2007 Annual Report to Shareholders are available at: www.investor.mcdonalds.com

record date and voting at the Annual Shareholders’ MeetingShareholdersowningMcDonald’scommonstockatthecloseofbusinessonMarch24,2008(therecorddate),mayvoteatthe2008AnnualShareholders’Meeting.Onthatdate,1,133,327,350sharesofcommonstockwereoutstanding.EachshareisentitledtoonevoteoneachmattertobevoteduponattheAnnualShareholders’Meeting.

Mostshareholdershaveachoiceofvotingovertheinternet,bytelephoneorbyusingatraditionalproxycard.RefertotheNoticeoryourproxyorvotinginstructioncardtoseewhichoptionsareavailabletoyouandhowtousethem.

theinternetandtelephonevotingproceduresaredesignedtoauthenticateshareholders’identitiesandtoconfirmthattheirinstructionshavebeenproperlyrecorded.

AllvalidproxiesproperlyexecutedandreceivedbytheCompanypriortotheAnnualShareholders’Meetingwillbevotedasyoudirect.ifyoudonotspecifyhowyouwantyoursharesvoted,theywillbevotedFORtheelectionofallnomi-neesforDirectorassetforthunder“ElectionofDirectors”andFORtheapprovaloftheindependentauditors.YoumayrevokeyourproxyandchangeyourvoteatanytimebeforetheAnnualShareholders’MeetingbysubmittingwrittennoticetotheSecretary,bysubmittingalaterdatedandproperlyexecutedproxy(byinternet,telephoneormail)orbyvotinginpersonattheAnnualShareholders’Meeting.

AllvotescastattheAnnualShareholders’MeetingwillbetabulatedbyComputersharetrustCompany,N.A.(Computershare),whichhasbeenappointedtheindependentinspectorofelection.Computersharewilldeterminewhetherornotaquorumispresent.

withrespecttotheelectionofDirectors,shareholdersmay(a)vote“FOR”eachofthenominees;(b)vote“AgAiNSt”eachofthenominees;or(c)abstainfromvotingontheelectionofoneormoreofthenominees.tobeelected,thenomineeforDirectormustreceivemorevotes“FOR”than“AgAiNSt”hiselection.Abstentionswillbetreatedassharespresentforpurposesofdeterminingaquorum,butwillhavenoeffectontheoutcomeoftheelectionofeachDirector.

withrespecttotheapprovaloftheindependentauditors,shareholdersmay(a)voteinfavor;(b)voteagainst;or(c)abstainfromvoting.Computersharewilltreatabstentionsassharespresentforpurposesofdeterminingaquorum.Sincetheaffirmativevoteofamajorityofthesharesrepresentedatthemeetingandentitledtovoteisrequiredforapprovaloftheindependentauditors,anabstentionwillhavetheeffectofavoteagainstapproval.

underNYSErules,theproposalstoelectDirectorsandtoapprovetheappointmentofindependentauditorsareconsid-ered“discretionary”items.thismeansthatbrokeragefirmsmayvoteintheirdiscretiononbehalfofclientswhohavenotfurnishedvotinginstructionsatleast15daysbeforethedateoftheAnnualShareholders’Meeting.

Proxy solicitationtheCompanywilleitherprovidetheNotice,electronicdeliveryoftheproxymaterialsormailthe2008ProxyStatement,the2007AnnualReportandaproxycardtoshareholdersbegin-ningonoraboutApril9,2008inconnectionwiththesolicitationofproxiesbytheBoardofDirectorstobeusedatthe2008AnnualShareholders’Meeting.thecostofsolicitingproxieswillbepaidbytheCompany.theCompanyhasretainedgeorgesoninc.toaidinthesolicitationatafeeof$15,000plusreasonableout-of-pocketexpenses.ProxiesalsomaybesolicitedbyemployeesandDirectorsoftheCompanybymail,telephone,facsimile,e-mailorinperson.

Confidential votingitistheCompany’spolicytoprotecttheconfidentialityofshareholdervotes.throughoutthevotingprocess,yourvotewillnotbedisclosedtotheCompany,itsDirectors,officersoremployees,excepttomeetlegalrequirementsortoassertordefendclaimsfororagainsttheCompanyorexceptinthoselimitedcircumstanceswhere(1)aproxysolicitationiscontested;or(2)youauthorizedisclosure.theinspectorofelectionhasbeenandwillremainindependentoftheCompany.NothinginthispolicyprohibitsyoufromdisclosingthenatureofyourvotetotheCompany,itsDirectors,officersoremploy-ees,orimpairsvoluntarycommunicationbetweenyouandtheCompany;nordoesthispolicypreventtheCompanyfromascertainingwhichshareholdershavevotedorfrommakingeffortstoencourageshareholderstovote.


ADDitiONAliNFORMAtiON

Executive officersthefollowinglistsetsforththenamesofourcurrentexecutiveofficers,theiragesandtheirpositions.

Ralph Alvarez Age:52.PresidentandChiefOperatingOfficer

Jose Armario Age:48.groupPresident–McDonald’sCanadaandlatinAmerica

Peter J. Bensen Age:45.CorporateExecutivevicePresidentandChiefFinancialOfficer

Mary N. Dillon Age:46.CorporateExecutivevicePresident–globalChiefMarketingOfficer

Timothy J. Fenton Age:50.President,McDonald’sAsia/Pacific,MiddleEastandAfrica

Richard Floersch Age:50.CorporateExecutivevicePresidentandChiefHumanResourcesOfficer

Denis Hennequin Age:49.President,McDonald’sEurope

Kevin M. Ozan Age:44.CorporateSeniorvicePresident–Controller

Gloria Santona Age:57.CorporateExecutivevicePresident,generalCounselandSecretary

James A. Skinner Age:63.viceChairmanandChiefExecutiveOfficer

Jeffrey P. Stratton Age:52.CorporateExecutivevicePresident–ChiefRestaurantOfficer

Donald Thompson Age:45.President,McDonald’suSA

McDonald’s Corporation Annual report on form 10-K, other reports and policiesShareholdersmayaccessfinancialandotherinformationontheinvestorsectionoftheCompany’swebsiteatwww.investor.mcdonalds.com.Alsoavailable,freeofcharge,arecopiesoftheCompany’sAnnualReportonForm10-K,QuarterlyReportsonForm10-Q,CurrentReportsonForm8-K,andamend-mentstothosereportsfiledorfurnishedpursuanttosection13(a)or15(d)oftheSecuritiesExchangeActof1934assoonasreasonablypracticableafterfilingsuchmaterialelectroni-callyorotherwisefurnishingittotheSEC.Copiesoffinancialandotherinformationareavailablefreeofchargebycalling1-630-623-2553orbysendingarequesttoMcDonald’sCorporation,investorRelationsServiceCenter,Department300,OneMcDonald’sPlaza,OakBrook,il60523-1928.AlsopostedonMcDonald’swebsitearetheCompany’sCorporategover-nancePrinciples;thechartersofMcDonald’sAuditCommittee,CompensationCommittee,governanceCommittee,CorporateResponsibilityCommittee,FinanceCommitteeandExecutiveCommittee;theStandardsonDirectorindependence;theCompany’sStandardsofBusinessConduct;theCodeofEthicsfortheChiefExecutiveOfficerandSeniorFinancialOfficers;theCodeofConductfortheBoardofDirectors;thePolicyforPre-ApprovalofAuditandPermittedNon-AuditServicesandtheCompany’sBy-laws.Copiesofthesedocumentsarealsoavailablefreeofchargebycalling1-630-623-2553orbysend-ingarequesttoMcDonald’sCorporation,investorRelationsServiceCenter,Department300,OneMcDonald’sPlaza,OakBrook,il60523-1928.

householding of Annual Shareholders’ Meeting materialsShareholderswhosharethesamelastnameandaddresswillreceiveonepackagecontainingaseparateNoticeforeachindividualshareholderatthataddress.ShareholderswhohaveelectedtoreceivepapercopiesandwhosharethesamelastnameandaddresswillreceiveonlyonesetoftheCompany’sAnnualReportandProxyStatement,unlesstheyhavenotifiedusthattheywishtocontinuereceivingmultiplecopies.thismethodofdelivery,knownas“householding,”willhelpensurethatshareholderhouseholdsdonotreceivemultiplecopiesofthesamedocument,helpingtoreduceourprintingandpost-agecosts,aswellassavingnaturalresources.

ifyouareaMCDirectSharesparticipant,holdMcDonald’sstockcertificatesorhavebook-entrysharesatComputershare,youcanoptoutofthehouseholdingpracticebycalling1-800-621-7825(toll-free)fromtheu.S.andCanada,or1-312-360-5129(collect)fromothercountries,orwritingtoComputersharetrustCompany,N.A.,Attn.:McDonald’sShareholderServices,250RoyallStreet,Canton,MA02021.ifyouwouldliketooptoutofthispracticeandyoursharesareheldinstreetname,pleasecontactyourbrokerorbank.

ifyouwouldlikeacopyoftheAnnualReportandProxyStatement,pleasegotowww.investor.mcdonalds.comorcall1-630-623-2553.ifyouarereceivingmultiplecopiesofproxymaterialsatyourhouseholdandwouldprefertoreceiveasinglecopyofthesematerials,pleasecontactComputershareattheabovenumbersoraddress.ifyoursharesareheldinstreetname,contactyourbankorbroker.


Datethursday,May22,2008

time9:00a.m.Centraltime

PlacePrairieBallroomthelodgeMcDonald’sOfficeCampusOakBrook,illinois60523

ParkinglimitedparkingisavailableonCampus.

webcasttoviewalivewebcastoftheAnnualShareholders’Meeting,gotowww.investor.mcdonalds.comonMay22justpriorto9:00a.m.Centraltime,andclicktheappropriatelinkunder“webcasts.”theAnnualShareholders’Meetingwebcastwillbeavailableondemandforalimitedtimeafterthemeeting.

if you plan to attendAsseatinginthePrairieBallroomisverylimited,weencourageshareholderstoparticipateinthemeetingviathelivewebcast.However,ifyoudodecidetoattend,pleasebringyourNotice,thetear-offportionofyourproxycardoryourbrokeragestate-mentreflectingyourMcDonald’sholdingsasproofofshareownership.Admissionticketswillbegiventoshareholdersonafirst-come,first-servedbasis.Overflowroomswillbeavail-ableforviewingthemeeting.theregistrationdeskwillopenat7:30a.m.Pleasebeawarethatallpurses,briefcases,bags,etc.willbesubjecttoinspection.Camerasandotherrecordingdeviceswillnotbepermittedatthemeeting.

Directions

> From downtown Chicago (and near west suburbs) i-290west(EisenhowerExpressway)toi-88west(RonaldReaganMemorialtollway)towardsAurora.Exiti-88atCermakRoad/22ndStreet(firstexitimmediatelyafterYorkRoadtollbooth).AtCermakRoad/22ndStreet(firststoplight),turnright.gotwostoplightstoJorieBoulevard,turnright.gothreestoplightstoKrocDrive,turnleft.Atstopsign,Ronaldlane,turnleft.thelodgeisonleft,parkingisonright.

> From I-294 (south suburbs) i-294northtoi-88west(RonaldReaganMemorialtollway)towardsAurora.Exiti-88atCermakRoad/22ndStreet(firstexitimmediatelyafterYorkRoadtollbooth).AtCermakRoad/22ndStreet(firststoplight),turnright.gotwostoplightstoJorieBoulevard,turnright.gothreestoplightstoKrocDrive,turnleft.Atstopsign,Ronaldlane,turnleft.thelodgeisonleft,parkingisonright.

> From O’Hare Airport/I-294 (north suburbs) i-294southtoi-88west(RonaldReaganMemorialtollway)towardsAurora.Exiti-88atCermakRoad/22ndStreet(firstexitimmediatelyafterYorkRoadtollbooth).AtCermakRoad/22ndStreet(firststoplight),turnright.gotwostoplightstoJorieBoulevard,turnright.gothreestoplightstoKrocDrive,turnleft.Atstopsign,Ronaldlane,turnleft.thelodgeisonleft,parkingisonright.

> From I-355 north or south or I-88 west (Ronald Reagan Memorial Tollway)(far west suburbs) Fromeitherdirection,takei-88east(RonaldReaganMemorialtollway)towardsChicago.ExitatMidwestRoadandturnleft(firststoplight).takeMidwestRoadto31stStreet(stoplight),turnleft.take31stStreettoJorieBoulevard(stoplight),turnleft.gotoKrocDrive(stoplight),turnright.Atstopsign,Ronaldlane,turnleft.thelodgeisonleft,parkingisonright.

iNFORMAtiONABOutAttENDiNgtHEANNuAlSHAREHOlDERS’MEEtiNg

Route 83

Midw

est Road Route 56

Butterfield Road York R

d.

EisenhowerExpressway

I-290

Route 38Roosevelt Road

22nd StreetCermak Road

31st StreetOak Brook Road

TriState

Tollway I-294

Ronald ReaganMemorial Jorie Blvd.

Spring Rd. McDonald’sPlaza

The Lodge

HamburgerUniversity

CampusOfficeBuilding

Ronald Lane

KrocDrive

North


home OfficeMcDonald’sCorporationMcDonald’sPlazaOakBrook,il60523630-623-3000www.mcdonalds.com

The following trademarks used herein are property of McDonald’s Corporation and its affiliates: Golden Arches Logo, i’m lovin’ it, MCDirect Shares, McDonald’s, mcdonalds.com and Ronald McDonald House Charities.

All other trademarks are the property of their respective owners.

© 2008 McDonald’s McD08-4515

Cert no. SCS-COC-00648

30%

McDonald’s CorporationMcDonald’s PlazaOak Brook, IL 60�23www.mcdonalds.com

mcdonald's 2008 shareholders' meeting & proxy statement

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