A significant proportion of our executive compensation is performance-based.

We use a
mix of different performance-based elements of compensation that reward different aspects of
both Company and individual performance. Our annual bonus plan, TIP, pays out awards based
primarily on annual increases in operating income. Our long-term cash incentive plan, CPUP,
rewards a combination of long-term operating income growth, disciplined capital allocation and
total returns to McDonald’s shareholders. Stock options and RSUs connect the amount of
compensation our executives earn to the performance of McDonald’s stock. RSUs for our
executives also include a performance-based vesting condition that rewards growth in EPS.

Our executive compensation program has been successful in focusing the named executive
officers on the Plan to Win and helping us achieve positive business results for the last five
years. In 2008, despite a difficult economy, McDonald’s delivered strong performance and
positive returns for shareholders. For 2008, the Company’s global comparable sales increased
6.9%. Our operating income increased to $6.4 billion. We returned $5.8 billion to our
shareholders through share repurchases and dividends paid, and our total shareholder return in
2008 was 8.55%. Our 2008 TSR ranked 15th among the companies in the S&P 500. Our
executives’ compensation in 2008 reflects the Company’s strong performance. Our business
performance exceeded expectations, and, accordingly, payouts to the executives under our
performance-based compensation plans were above target levels.