MCDONALDS CORP

5. Compensation Setting Process

The Committee reviews our overall executive compensation program to evaluate whether it remains aligned with current business objectives and evolving best practices, including seeking feedback from our shareholders. The Committee is responsible for determining the compensation of our CEO and each of our other NEOs, informed by the respective performance evaluation of each executive. The Committee’s responsibilities regarding executive compensation are further described in the “Board and Governance” section of this Proxy Statement.

The following highlights the Committee’s annual review process.

input from our compensation** consultant**

The Committee’s independent compensation consultant reviews and provides input on overall compensation design and NEO target compensation opportunities.

Market****considerations

The Committee considers peer data and market benchmarking pay data obtained from various sources.

Role of****management

Management provides the Committee with its perspective on compensation matters. However, no member of management is involved in the decisions regarding their own compensation.

Mr. Kempczinski, while not a member of the Committee, attended portions of each Committee meeting in 2024 to contribute to and understand the Committee’s oversight of, and decisions relating to, executive compensation. In addition, Mr. Kempczinski supports the Committee’s compensation-setting process by providing an assessment of the performance of each of the NEOs other than himself and recommendations regarding their compensation. Further, the Committee regularly meets in executive session in order to discuss matters without any participation from members of management.

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Throughout the year, management engages in dialogue with a significant portion of our shareholders on a variety of topics, including our executive compensation program (for more details, see “Proxy Summary” beginning on page 7). The Committee considers feedback received through these direct discussions with investors in addition to prior “Say-on-Pay” results. At the 2024 Annual Shareholders Meeting, our shareholders continued to show strong support of our executive compensation program. The Committee considered the 2024 voting results as part of its annual review of the program and determined that our compensation guiding principles and compensation program design continued to be appropriate and aligned with our strategy.

Internal Pay Equity

The Committee considers the following in determining our executives’ direct compensation opportunities: competitive pay levels; relative scope of responsibilities; individual performance; tenure in position; and the effect on our general and administrative expenses. In addition, as circumstances warrant, we may provide compensation to executives outside of our regular compensation structure in connection with their hiring, promotion, or retention. This approach permits us to meet specific business objectives without distorting pay equity. In line with our core values, our global pay principles emphasize the importance of compensation that is competitive, non-discriminatory, performance-based, transparent, and compliant with legal and regulatory standards.

Independent Compensation Consultant

The Committee has the sole authority to retain and dismiss an independent compensation consultant. The Committee has engaged Semler Brossy Consulting Group LLC (“Semler Brossy”) as its independent compensation consultant. Consistent with its Charter, the Committee regularly considers its compensation consultant’s independence. In October 2024, the Committee concluded that Semler Brossy is independent and that its work for the Committee did not raise any conflicts of interest. Management may not engage the Committee’s consultant for any purpose.

Peer Companies

Consistent with our goal of providing competitive compensation to motivate and retain executive talent, we review compensation practices and levels for a group of peer companies that we believe best reflect our business. In setting target compensation levels for our executives, we use the market median for each compensation element as a reference point; however, we do not specifically target any element of compensation at a particular percentile.

Annually, based on input from Semler Brossy and management, the Committee selects a peer group comprised of companies with which we compete for talent, including our direct competitors, major retailers, producers of consumer branded goods and companies with a significant global presence, based on the following screens:

The following table sets forth our 2024 peer group, which was the same peer group used to evaluate executive compensation decisions for 2023. The graphic below compares the market capitalization of these companies to McDonald’s.

In July 2024, the Committee approved updates to the Company’s peer group by adding The Walt Disney Company and removing Johnson & Johnson and Walgreens Boots Alliance. These changes will be effective and used for 2025 compensation decisions.

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