AGM 2016

May 26, 2016

Welcome to McAnno's Annual Shareholder Meeting. I now call this meeting to order. So we appreciate your patience in arriving this morning. In addition to everyone here, we are joined by those of you listening on our webcast. For those in the room, you have a copy of the agenda for our meeting today and information about our procedures. With me on stage are our President and Chief Executive Officer, Steve Easterbrook General Counsel and Corporate Secretary, Gloria Santona and Chief Financial Officer, Kevin Ozan. Now Steve will discuss McDonald's performance and plans in a few moments following the presentation of the proxy proposals. Our new Board is comprised of a diverse, independent minded and experienced group of business leaders, and they remain committed to representing you and enhancing shareholder value. I'm now pleased to introduce the Board of Directors, who are nominees for our election at this meeting. In addition to Steve Easterbrook, your directors are Lloyd Dean, President and CEO of Dignity Health Bob Eckert, operating partner with Freeman, Fleischer and Loew Margot Georgiadis, President, Americas at Google Rick Hernandez, President and CEO of InterContin Security Systems Gene Jackson, President of Product and Merchandising at Nike Rick Lenny, Non Executive Chairman of Information Resources Walter Massey, President of the School of the Art Institute, Chicago John Mulligan, Chief Operating Officer of Target Sheila Penrose, Non Executive Chairman of Jones Lang LaSalle John Rogers, Founder, Chairman and CEO of Ariel Investments and Myles White, Chairman and CEO of Aper Laboratories. I'd like the direct you to stand and be recognized. We all appreciate your service. Thanks to all of you. In addition, I'd like to take a moment to recognize Roger Stone, who retired from our Board last August after serving for 26 years with integrity and commitment to McDonald's and all of our shareholders. Roger is the right nominee secretary. And Don Lubitz, who served on the Board from 1967 to 2004. Many of those early years side by side with Ray Crock and Fred Turner as they created this great brand. Thanks, Roger and Don. And thanks to both of you for being with us today. And thanks to Matt Paul for helping that. I now turn to Gloria Santone, our Corporate Secretary, to describe our procedures. Thank you, Andy. I can advise that a quorum of the company's shares outstanding is present to conduct the meeting. The polls are open and will close following the presentation of the proposals. I direct your attention to the rules of order that are printed in your program. Our order of events is as follows: the Chairman will introduce each proxy proposal and the presenter of each proposal. Following the presentation of all the proposals, the Chairman will ask for a motion and a second on all the proposals at one time. There will not be a comment period during the presentation of the proposals and only persons who are called on by the CEO during the question and answer period should proceed to the microphone after their name is announced. If you've not already voted your shares and need a ballot, please raise your hand and an usher will provide one to you. If you've already submitted your proxy, you do not need to vote by ballot. Broadridge Financial Solutions, the independent Inspector of Election, receives and tallies all votes. Preliminary voting results will be announced after Steve's remarks. I'll now turn the meeting back to our Chairman for the presentation of the proposals. Okay. Thank you, Gloria. Our first order of business is the election of Lloyd Dean, Steve Easterbrook, Bob Eckert, Margo Georgiadis, Rick Hernandez, Gene Jackson, Rick Lenny, Walter Massey, John Mulligan, Sheila Penrose, John Rogers and Miles White as Directors. The second proposal is an advisory vote on 2015 executive compensation. The 3rd proposal is the approval of Ernst and Young as the company's independent auditor for 2016. The 4th item is an advisory vote on a shareholder proposal requesting that vote counting for shareholder proposals include abstentions. At this time, I call on Richard Hausman, who is here to present the proposal in 2 minutes or less. Mr. Hausman? Thank you, Mr. Chairman. I am Richard Hausman and I stand on behalf of Newgrounds Social Investment of Seattle to move proposal number 4 on simple majority voting, a democratic voting standard that counts votes clearly cast as either for or against, but does not include abstain votes in the formula, though they are still cast and tracked. Simple majority voting allows for a more clear channel of communication from shareholders to the Board and management. It is even handed because it is the formula required by the Securities and Exchange Commission for determining whether a proposal can be resubmitted. And it is fair because it mirrors how Board members are elected. You know the old saying, what's good for the goose is good for the gander. So simple majority voting is good enough for Board elections, why use something worse on shareholder items? The situation is this. The SEC requires a simple majority tabulation, but the company bases its count on a second formula, which leads to 2 different vote outcomes for every shareholder proposal. In contrast, management items have a single count and only one outcome. Common sense tells us that votes should have only one outcome, which makes the company's approach: 1, unfair because shareholder items are disadvantaged 2, unnecessary since shareholder items are non binding and 3, confusing because the company's insistence on a variant formula creates 2 different outcomes for each shareholder proposal. So in closing, this stilted policy benefits management and harms stockholders. It artificially lowers the outcome on shareholder items, clouds the accurate information accurate flow of information between shareowners and their company and places shareholders at a disadvantage compared to how directors are elected. McDonald's faces growing concerns over a range of its practices, from treatment of workers to impact on health and the environment. We're past 2 minutes. I'm just finishing up. Look around, 1,000 are protesting outside. Isn't it time for the company to embrace measures that increase transparency for shareholders? For these reasons, we recommend a vote for proposal number 4, which will fairly count shareholder proposals in line with how Board members are elected. Thank you, Mr. Housum. Thank you. So the 5th item is an advisory vote on the shareholder proposal requesting the ability of shareholders to act by written consent. At this time, I call on a long time friend, Mr. Martin Glatzer, who is here to present the proposal in 2 minutes or less. Mr. Glatzer? Thank you, Mr. Chairman. Thanks for the introduction. I'm Martin Glaser, a long time shareholder in the company and I'm also a long time shareholder in the Chicago Tribune. I intend to attend the annual meeting of the Chicago Tribune next Thursday in Los Angeles. I'm offended by not having the press present at the shareholders meeting. How could you offend members of the Fourth Estate? I've learned a long time ago, people you don't Mr. Gautam, please address the shareholder proposal. Yes. I'm also addressing, let the record indicate that I've presented the proposal as found on the proxy statement. I got a second and I'm going to speak on their behalf and I want you to know as the proponent of the proposal I have the last say. Excuse me? I'm taking the time, Mr. Chairman, for reasons on this proposal to lobby. I'm lobbying for having the staff with the Securities and Exchange Commission amend the proposal rules so that a proponent of that proposal get funds from the company to solicit yes votes. At the present time, the management uses shareholder money to solicit no votes. That's why the proponents are at a disadvantage. I have spoken to Scott Stringer, the Controller of the City of New York on this matter, to solicit his help to be the Chairman of my committee or a member of the committee to solicit the U. S. Securities and Exchange Commission to amend the proxy rules. I believe in time, we will see that the qualified proponents of shareholder proponents will receive funds from the company to solicit yes votes. And again, I have the final say. Thank you, Mr. Batjer. The 6th item is an advisory vote. Does anybody else want to speak about advisory vote? Mr. Vachter, your time is up. My time is up, Mr. Chairman. The 6th item is an advisory vote on a shareholder proposal related to the Holy Land Principles. At this time, I call on Robert Thomas, who is here to present the proposal in 2 minutes or less. Mr. Thomas? Good morning, Mr. Chairman, everyone here. Thank you very much. I'm Robert Thomas from Virginia. I represent the Washington DC based Holy Land Principles, Inc. For more details of what those principles are, I would urge you to go to the internet at holylandprinciples.org. The Holy Land Principles is a corporate code of conduct for American business doing business in the Holy Land. Holy Land Principles are pro Jewish, pro Palestinian and pro company. The principles do not call for quotas, reverse discrimination, divestment, disinvestment or boycotts. The principles do not take any position on solution to the Israeli Palestinian issue. The principles do not try to tell the Palestinians or the Israelis what to do. The Holy Land principles only call for fair employment by American companies in Palestine, Israel. Let me repeat, this resolution only calls for McDonnell to practice and urge their franchisees to implement fair employment, but nothing more and nothing less. Irrespective of what Americans think about these issues, one thing is certain, Americans expect American companies in the Holy Land and one would hope anywhere else to practice fair employment. This resolution calls on McDonald's to set the standard by signing and urging their franchisees to implement the Holy Land principles. These are based on the very effective McBride principles for Northern Ireland. For those of you my age, you may remember what a nasty conflict that was and what a help American companies in Northern Ireland did. Initially, American companies resisted these McBride principles, but now 116 companies have signed them. For a long time, McDonald's resisted taking a position on the McBride principles, claiming it had no control over franchisees in Northern Ireland, even though McDonald's clearly has control over certain things, brand name, McDonald's sign, etcetera. However, in December In 1994, McDonald's finally signed an agreement with the Controller to urge their franchisees in Northern Ireland to implement the standards embodied in these principles. I urge you to apply the same principles in the Holy Land. Thank you, Mr. Thomas. The 7th item is an advisory vote and a shareholder proposal requesting that the Board adopt a global policy regarding use of antibiotics by its meat suppliers. At this time, I call on Sister Mary Anne Orion, who is here to present the proposal in 2 minutes or less. Mr. Mary Ann? Good morning. My name is Sister Mary Ann Orion, a Benedict's sister. Resolution number 7 asks that McDonald's update the 2015 global vision for antimicrobial stewardship in food animals by adopting the following policy: prohibit the use of antibiotics important to human medicine globally in the meat supply chain, including chicken, beef and pork for purposes other than disease treatment or non routine control of veterinarian diagnosed illness. Identify timelines for global implementation of this vision. We believe McDonald's should adopt this policy because the non therapeutic use of antibiotics in livestock is under increasing regulatory scrutiny in the United States, European Union and other markets. This threat of increased regulation creates material risk that can and should be proactively addressed because McDonald's can lose market share because of not keeping up with consumer preferences. In a 2015 survey from Crain's Chicago Business, 34% of fast food restaurant customers said they would visit McDonald's more often if it serves meat raised without hormones or antibiotics. All animal products sold by Chipotle Mexican Grill are antibiotic free. Panera Bread announced that all of its chicken, turkey and pork is raised without antibiotics. Subway committed to require all chicken to be raised without antibiotics by the end of 2016, all turkey by 2019 and all beef and pork by 2025. Shareholders are seeking detailed comprehensive disclosure about how McDonald's plans to expand its policy on chicken throughout its meat supply chain, particularly given growing health concerns and industry trends. Thank you and we ask you to vote for Resolution 7. Thank you, sir, and thank you for staying within the 2 minute guidelines. The 8th item is an advisory vote on a shareholder proposal requesting an annual congruency analysis between corporate values and political contributions. And at this time, I call on Shriram Madhusudinan, who is here to present the proposal in 2 minutes or less. Thank you. My name is Sriram Madhusudhanan, Director of the Value the Meal campaign at Corporate Accountability International. I speak on behalf of Harrington Investments as well as a growing movement of parents, educators and health professionals to voice our concerns regarding McDonald's abuse of workers, our food system, and children's health. To that end, we urge McDonald's to assess the alignment of its values to its political activities. McDonald's claims to value its workers yet the corporation does the opposite. It bankrolled the National Restaurant Association, the largest anti worker lobby on Capitol Hill, and it spends billions on marketing and pay raises for top executives while admiring workers in poverty. McDonald's claims it cares about families, but will stop at nothing to target children. It exploits school budget shortfall to enlist teachers in the teachers' nights marketing events, which use teachers to sell junk food directly to trusting students. People are not fooled. Last fall, unions representing more than 3,000,000 teachers, including the Chicago Teachers Union and the National Education Association called on you to stop Make Teachers' Nights for exploiting schools, teachers and kids. This is just the beginning. Communities across the country are mobilizing the challenge McDonald's, whether it's because of the corporation's poverty wages, its presence in hospitals or marketing in schools. Actions speak louder than words. It's time for a real turnaround plan, one that ends McDonald's exploitation of its workers and children. McDonald's can start by ensuring that its stated values are in line with its political activities. Therefore, we urge shareholders to vote in support of this shareholder proposal. Thank you, Sriram. The 9th item is an advisory vote on a shareholder proposal. Please, sir. The 9th item is a shareholder proposal requesting an annual congruency analysis of company values and policy activities. At this time, I call on Justin Danhof, who is here to present the proposal in 2 minutes or less. Mr. Danhof? Thank you, Mr. Chairman. I'm Justin Danhof. I'm General Counsel with the National Center For Public Research and I move proposal 9 on behalf of my colleague Amy Ridenour, the proponent of this pro business resolution. For too long now, much of corporate America has sometimes been fully and sometimes been a little to the political left without pushback. Consider our proposal today to be that pushback. Our proposal is simple. It asks the company to explain its support for individuals and organizations that fight policies that would ultimately tax and regulate McDonald's out of existence. And when McDonald's joins anti free enterprise causes in the future, our proposal merely asked the company to tell our shareholders when and why. At last year's shareholder meeting, the company crowed about artificially increasing minimum wage for some of its workers. Well, look, the barbarians are back at the gate demanding more. They didn't see your concession as a victory for workers. They saw it as a sign of weakness, which they can exploit, and they're trying to right now. With less economic understanding than the socialist senator from Vermont, they demand wage increases that would shutter most McDonald's locations. You should be screaming this from the rooftops, not relying on us free enterprise groups to do it for you. But there's the rub, because when these same liberal activists spread lies about the American Legislative Exchange Council known as ALEC, a well regarded 40 year old organization that McDonald's has joined because it works to reduce our taxes and ease the regulatory burden on the operations, McDonald's is one of the first organizations in the country to cave in and withdraw its membership. There are certainly some shareholders here that are willing to stand up and be counted who think McDonald's is better off with higher corporate taxes, higher government regulations and higher wages. But I think most of us here who believe in the free enterprise system would disagree. What McDonald's has done from time to time has given clout to these left wing groups and they want to tear down the free enterprise system that has allowed the company to thrive and grow through generations. If McDonald's wants to shun free enterprise with them and continue down this path, it should just tell us shareholders when and why. Thank you. Thank you, Mr. Danfel. Is there a motion to move on all proposals? So moved. Your Board of Directors recommends a vote in favor of the election of all director nominees and in favor of the other 2 management proposals. The Board recommends a vote against all of the shareholder proposals. The reason for the Board's recommendations are outlined in the proxy statement. If you are voting at this meeting, please complete and sign your ballot and motion for an usher to collect it. And if you've already submitted your proxy, you do not need to vote by ballot. Now the polls are now closed. I will announce preliminary voting results after Steve's remarks. This concludes the formal business of the meeting, and the Annual Shareholders' Meeting is now adjourned. Now before I turn the podium over to Steve Easterbrook for remarks on McDonald's business, I want to take this opportunity to say it has been a real pleasure for me to have served as the Director for many years and a privilege to serve all of you, and particularly this Board as Chairman for the past 12. And on behalf of the Board and myself, I'd like to thank Steve for his leadership as he works tirelessly to return McDonald's to long term continued success. Steve is committed to doing the right thing for our business, for our customers and, of course, our shareholders. So ladies and gentlemen, let me introduce Steve Easterbrook. Thank you, Andy, and thank you for your years of unwavering commitment to McDonald's. Your leadership, your integrity and commitment to excellence are second to none. Now you've guided McDonald's through some good times and some challenging times, but you've been a great asset to the business and also, of course, to our shareholders. And for me personally, it's been a great honor to have worked alongside you, most notably recently. Now I know you're a no fuss type of guy, but we do want to recognize you today as you retire as Chairman of the Board. Now we know you have a passion for giving back. We also know that you're proud of your heritage, growing up on the south side of Chicago and attending Lehigh High School. So consistent with your passion and McDonald's commitment to education, we're endowing a scholarship fund in your honor. The Andrew J. McKenna Leadership Grants will recognize the achievements of deserving LEO students and help their families with the cost of a LEO education. And LEO has shaped Young Men for almost 90 years, including Mike Thompson, a fellow LEO graduate and one of our suppliers who's in the audience today. Leica's President and CEO of Fair Oaks Farm in Wisconsin, widely respected for its great tasting, quality meats. We're also lucky to have LEO High School President, Dan McGrath, with us. Dan is a LEO graduate, too. And after a brilliant sports signing career, he returned to Leo as President 6 years ago. Since then, Leo has graduated 100% of its senior students. I know Dan is grateful for your guidance at Leo, just as we've been grateful for your guidance at McDonald's. So again, on behalf of all of us, Andy, thank you very much. Now I want to thank all of our independent directors for your vision and leadership as we work to build a better McDonald's. I want to thank our shareholders, too, for your investment and your confidence in McDonald's and for being here today. I'd also like to recognize our senior management team. And in addition to Kevin and Gloria, the team includes Mike Andres, President of McDonald's USA Pete Benson, Chief Administrative Officer Ian Borden, President of the Foundational Markets Francesca Debiardi, Chief Supply Chain and Sustainability Officer David Fairhurst, Chief People Officer Robert Gibbs, Chief Communications Officer Doug Gore, President of the International Lead Markets Dave Hoffman, President of the High Growth Markets Chris Kaczynski, Executive Vice President of Strategy, Business Development and Innovation Silvia Laniado, Chief Marketing Officer Atif Rafiq, Chief Digital Officer and Jim Sappington, Executive Vice President of Operations and Technology Systems. Would the team please stand and be recognized? We're building a better McDonald's, a brand everyone can believe in. We're making the most of our competitive advantages, our iconic brand, our size and scale, our geographic diversification and our unique franchising model. We're proud to be one of the most recognizable brands in the world And with more than 36,000 restaurants in 120 markets around the world, we're the biggest player in our industry. Our 5,000 independent owner operators are entrepreneurs and small business owners who keep us close to the communities we serve. Our suppliers power the McDonald's experience, bringing customer favorites to the restaurants and innovating to help us serve great tasting food and beverages. And the more than 1,900,000 people employed by our company and franchisees enable us to deliver feel good moments for every customer. 2015 was about tapping into these strengths to operate McDonald's differently. We put the customer back at the center of everything we do. For years, we asked the customer to adapt to us. Now we're adapting to them. And there's no greater example than our launch of all day breakfast here in the U. S. And it's this mindset that has guided every decision we've made the past year and ignited our turnaround. In fact, last year, we grew system wide sales by 3% in constant currencies. We grew global comparable sales 1.5%. And operating income growth was flat for the year in constant currencies. We built business momentum as the year went on with positive performance across all four segments in the 3rd and 4th quarters. Last month, we announced our 3rd consecutive quarter of positive global comparable sales. And in the Q1 of this year, we served 23,000,000 more customers than we did during the same period last year. We know no brand or business has a divine right to succeed. To drive momentum, we have had a sharp focus on executing our turnaround framework. As I shared at this meeting last year, our goal is to create a McDonald's customers recognize as modern and progressive, and that's how we'll become a true global leader. And we're doing it. Customers are noting a difference. Let's take a look. Our revitalization is built on a foundation of running great restaurants. We said we'd get the basics right, and we're doing it. We've reemphasized quality, service and cleanliness in the restaurants. For example, we now have guest experience leaders in Canada to make the customer visit even more enjoyable. We've removed items from the menu, including complex wraps here in the U. S. We've simplified drive thru menu boards because in many places, the majority of customers experience McDonald's through the drive thru. And we've streamlined operational procedures to improve order accuracy. This includes a procedure called Ask, Ask, Tell, which we've implemented here in the U. S. Drive throughs to confirm at 3 separate points that we have the orders right. It's because of actions like this that people are feeling better about visiting McDonald's. In fact, customer satisfaction scores were up 6% in the U. S. In the Q1 of last year. Looking ahead, we'll continue to improve on the 5 key elements that drive customer satisfaction: speed, accuracy, friendly service, a clean environment and hot fresh food. This is an operational growth led turnaround. We said we'd focus on fewer, more substantive initiatives to put customers, crew and restaurants back at the center of everything we do, and we're doing it. We've restructured the business, eliminating layers, sharpening our focus and accelerating our decision making. We brought in fresh perspectives in areas such as people, strategy, marketing and communications, including many of the senior leaders I introduced today. We focus on the core plastics McDonald's is known for and on the nuts and bolts of food preparation. You saw a video showing how markets around the world are reminding customers about their favorite menu items, and our customers are loving it. Customer love for McDonald's begins with what we call our core menu, from the Big Mac to Chicken McNuggets, the Egg McMuffin and the world's greatest French fries. So we're cooking juicier burgers, toasting buns longer and returning the original Egg McMuffin recipe returning to the original Egg McMuffin recipe in the U. S. We also continue to innovate with products such as the lobster roll in Boston and chicken snacks in China and testing others like garlic fries on the West Coast of the U. S. And Signature Beef in the U. K. Looking ahead, we'll continue to evolve our menu the right way, balancing our core menu, new products and customization. We're also evolving the customer experience, making a dramatic statement that McDonald's truly is different from the moment a customer walks through the door. We're bringing a new level of ease, convenience and delight to customers, implementing technologies such as self order kiosks and mobile ordering and payment. And we're expanding additional service options, including table service and delivery. It's all about giving customers greater choice and flexibility. And that's why markets around the world continue to accelerate these efforts. Countries, including Australia, Canada, France and the U. K. Are all deploying different parts of the experience I just described that resonate most with our local customers. Enhancing the customer experience is one of the many ways we're building brand excitement. We said we'd reach customers in ways that are meaningful to them, and we're doing it. We've long been committed to helping the people who work for McDonald's achieve their dreams. Employees have told us they'd like access to affordable education. So we developed a set of programs called Archways to Opportunity because we believe it's the right thing to do. The programs provide employees at company and franchisee restaurants with an opportunity to grow and learn. Eligible employees get financial assistance towards college degrees, are earning high school diplomas and learning English for free. The initial success of Archways to Opportunity has exceeded expectations. More than 5,000 people have enrolled in the program since they were launched last year. And much of that success is thanks to franchisees like Jon Ebert. We're lucky to have him with us today. An owner operator for 26 years, John has always made education a priority. In his spare time, he created, teaches and funds an ACT prep course for West Virginia students. To date, nearly 1300 people have taken the course, giving them a better chance to receive critical scholarship dollars. Now John is actively involved in the Archways programs. He encourages his employees to participate, offers flexible schedules and supports them in their journey. This includes Ali from Clarksburg, West Virginia. She was valedictorian of her high school class and Archways is now helping her pay for college. John was honored to serve as the commencement speaker at her graduation. John, please stand and be recognized. Our food is another important area where we're addressing perceptions head on. We continue to enhance the quality of our food, serving new grilled and buttermilk chicken sandwiches and milk free of RBST hormone. And we've made commitments to serve chicken free of antibiotics important to human medicine and K3 eggs in the near future. Working hand in hand with the Alliance for a Healthier Generation, we're also making progress on our commitment to increase access to fruits, vegetables and low fat dairy in 20 of our major markets around the world. In fact, we've now served 2,000,000,000 sides of fruit and low fat dairy in U. S. Happy Meals. And as we talk about how we're listening to customers, we have to mention all day breakfast. Let's take a look at what's being said here in the By serving breakfast all day, we're giving customers new reasons to visit McDonald's. Now they can enjoy their favorite breakfast food and beverages in the morning, at lunch and throughout the day. Customers are also adding breakfast items to their regular orders. That's driven significant business results. All Day Breakfast took tremendous collaboration between all three legs of the McDonald's store: owner operators, company employees and suppliers. And today, we're lucky to have Peter Forsman from Forsman Farms here with us. Forsman Farms is a world class egg supplier in Minnesota. Peter runs the farm with his mom, dad and brother, Dave. And they stepped up to the challenge when we asked for their partnership in making sure customers could get their Egg McMuffins and more at 1 p. M, 3 p. M. Or 5 p. M. Also here today is Hugues Labroch from our supplier, Cargill, who works with Family Farms to bring fresh eggs to McDonald's restaurants. For us to run McDonald's differently, Forsman Farms and Cargill had to run their businesses differently, too. And our customers are winning as a result. Thank you, Peter and UGG. Please stand and be recognized. Continues to drive sales. We're already looking at ways to extend the platform in response to feedback we've heard from customers. It's a platform we can build upon to continue driving growth here in the U. S. And around the world. One benefit of our new Australia saw the success the US was having and quickly implemented its own version for Australian customers. It's off to a strong start in Australia and contributed to the market's 7th consecutive quarter of positive comparable sales. And lastly, we continue to enhance financial value. We said we'd raise the bar on financial expectations and performance, and we're doing it. We've committed to refranchising 4,000 restaurants between 2015 and 2018. That means putting more restaurants in the hands of local owner operators who know their communities and customers better than anyone else. We're also exercising a high level of financial discipline, and we're actively eliminating layers of the business that add cost but not value. That too will bring us closer to customers. At the same time, we continue to aggressively unlock growth potential. We plan to open 1,000 new restaurants globally in 2016. We recently opened the doors to the 1st McDonald's in Kazakhstan, our 120th market. We received an overwhelming amount of enthusiasm and support from the local community. By the end of the first day, we'd sold over 2,000 Big Macs. We see parts of Asia as particularly prime for growth. That's why in China, Korea and Hong Kong, we plan to open more than 1500 restaurants over the next 5 years. To help us do that, we recently announced that we're seeking strategic partners in those markets. We believe, as we always have, that ownership is a powerful driver of growth. As we further enhance our financial value, we expect to return $30,000,000,000 to shareholders for the 3 year period ending in 2016. That's nearly double the cash returned to shareholders in the previous 3 year period. The actions we're taking are working. Customers are visiting us more often. We've built a virtuous cycle of success. Momentum builds confidence, confidence builds belief and belief builds business. In the near term, we will continue to execute our turnaround plan. At the same time, we're laying the foundation for actions that will generate sustainable, profitable growth for the long term. So make no mistake, McDonald's is on the move. We're redefining what it means to give customers what they want, when they want it. We're fundamentally changing their perceptions. I'm encouraged by the progress we've made so far and energized by the opportunities ahead. Again, thank you for your investment and your confidence in McDonald's. And now I ask Andy to share the preliminary voting results. Thank you, Steve. Steve, thanks for your nice comments and for that wonderful gift for Leo High School, and thanks to all of you for your commentaries as well. We have received the preliminary voting results from the independent Inspector of Election. Final results will be posted on McDonald's website after all the votes have been tallied and certified. The preliminary results are as follows: Shareholders have been elected each of the director nominees with the support of at least 94.4% of the shares voted. Shareholders have approved the management proposal relating to an advisory vote on executive compensation with the support of 94.7% of the shares voted. Shareholders have approved Ernst and Young as the company's independent auditor for 2016 with the support of 98.7% of the shares voted. The advisory shareholder proposal requesting that vote counting for shareholder proposals not include abstentions has not been approved by shareholders, receiving the support of 12.2% of the shares voted. The advisory shareholder proposal requesting the ability of shareholders to act by written consent has not been approved by shareholders, receiving the support of 41.2% of the shares voted. The advisory proposal regarding the Holy Land Principles has not been approved by shareholders receiving the support of 3% of the shares voted. The advisory shareholder proposal requesting that the Board adopt a global policy regarding use of antibiotics by its meat suppliers has not been approved by shareholders, receiving the support of 22.4% of the shares voted. The advisory shareholder proposal requesting an annual congruency analysis between corporate values and political contributions has not been approved by shareholders receiving the support of 5.4 percent of the shares voted. The advisory shareholder proposal requesting an annual congruency analysis of the company values and policy activities has not been approved by shareholders receiving the support of 2.5% of the shares loaded. So I now will turn to Steve, and he will leave in the question and answer period. Steve? Okay. I know we were scheduled for a 1 hour meeting. I may just ask if we can extend that a little long because I'd like to give due duty to the Q and A session. So we'll have 15 to 20 minutes of that. So if I could ask Jennifer McDowell to come forward with a microphone. So I've got a number of completed cards here. While I do call your name, please go to 1 of the 2 microphones either side of the room. And I'd like to get as many questions as possible. Unfortunately, the meeting is closed, sir. So if you would just sit down and allow the Q and A to continue you've spoken very fully already. So if you could maybe sit down and we can allow the Q and A to be continued in a dignified manner. You could have submitted a question and I'll I'm fan taker by a pure contest. I'm politely asking you to sit down, sir, if you would. Thank you. So first, I'll ask Jennifer McDowell to step forward, who's got a question regarding school programs, which around 5 questions will submit on that subject. And perhaps if we can keep moving, second question, if Howard Silvers could step forward and be ready for question number 2, that would be great. Thank you. Yes. Good morning. My name is Jennifer McDowell. I'm a McDonald's shareholder, a special ed teacher and a mother of 3. And I am deeply disturbed by this corporation's predatory marketing tactics towards children, especially make teachers' nights. This is why I'm joining with a local teacher, Mark Noltner, who was shut out of this meeting to address this question related to proposal number 8, although it's already been voted on. Last year, Mark's daughter brought home that they needed to exploit the that they needed to exploit the relationship between a teacher and a student in order to gain a marketing foothold on such young consumers. This is clearly an example of McDonald's disguising marketing as a fundraiser. And I hope you will seriously considering stopping exploiting the budget crisis of our schools and the relationship between students and teachers for McDonald's financial gain. Thank you. Thank you for the question, Jennifer. I think you and I are going to be diametrically opposed on this one. And let me explain a little bit why. As we grow up as individuals, some of the most formative adults that we learn from are teachers. They play a very important role in our lives as we grow, as we get educated and we develop. And then 20, 30 years later, we then put that same trust in the judgment, the skills and expertise of teachers to help introduce our children to the world and educate them and to get them ready for the challenges ahead. So if a school or a PTA or a teacher seeks to collaborate with a local business to raise much needed funds, I think that's an entirely appropriate request and one that we have every right to respond to, and we'll continue to do so. Howard Silvers, take a step forward. Howard, thank you. Thank you, Mr. Easterbrook. I appreciate the opportunity to be here and I want to commend you on the excellent job that you've done with our company. It really reached my expectations beyond anything. I'm going to be 70 years old in October and you can see what French fries can do for you. But I realize that being at 70, I've been switch turning my direction to my bucket list. And I just realized that I don't have enough money or enough McDonald's stock to be able to do all the traveling that I'd like to do. And lately, my wife and I, we don't when we do go on vacation, it's not taking pictures of ocean views or sunsets and all, it's going to restaurants. She takes pictures of me, I take pictures of her with the food, maybe we can get a waiter to take a picture of us together. Mr. So, was that Back, lately, we went to our Chinese restaurant. There's a question emerging. And the waiter said, what's wrong with the food? You haven't been taking any pictures. So instead of spending a lot of money on traveling, I would like to be able to perhaps experience all your wonderful international food around the world and maybe we can showcase some of these foods here at McDonald's, so I don't have to spend that much money on traveling. Okay. Well, first of all, thank you for your positive comments at the start. It's I mean, this is something that we think is pretty exciting McDonald's is the ability to move winning plays from market to market quicker. And I think if Mike was to respond to this on behalf of the U. S. Here, we have certain items that we know are very popular at a nationwide level and we have certain items that are more popular at a more local level because the customer groups are different. And I think you have seen a much heightened level of food innovation, including ideas from around the world at a regional level. So perhaps if your budget could extend to traveling around the U. S, you'd see a broader range of food at local level, and hopefully that will satisfy you as well. But thank you for your business and we appreciate your comments. Thank you. If Paul Shapiro could step forward, please, got a comment regarding Animal Welfare. And then behind that, could Ronald Friedman be ready to ask the 4th question? That would be great. Thank you, Mr. Easterbrook. My name is Paul Shapiro with the Humane Society of the United States. And as Mr. McKenna knows, I have been asking the company for the past decade, both privately and publicly here at this shareholders meeting, if it would adopt the same policy in the United States that it has in the European Union for its eggs, mainly that it uses cage free eggs in the EU. And for those of you who aren't familiar in the egg industry, the typical practice is to keep birds in cages where they can't spread their wings, but in cage free systems, they have a better quality of life. And I'm very pleased to say that under Mr. Easterbrook, your leadership this past September, McDonald's did announce that both in the U. S. And in Canada, it would adopt a 100% cage free egg policy, a policy that will free literally millions of birds from cages, putting them in cage free systems. But even better is the fact that so many of your competitors followed in your footsteps, more than 100 companies followed in an avalanche of corporate policies going toward cage free eggs in the wake of the McDonald's announcement. Denny's, IHOP, Wendy's, even Walmart all announcing that they too are going 100% cage free. And so first, I want to say thank you to the company for its leadership on this issue and taking this animal welfare issue very seriously by adopting this case free policy. And second, I would like to say that we look very much look forward to working with the company to applying that policy globally in other markets because in the EU, the U. S, Canada, New Zealand, Australia, McDonald's now has these cage free policies and we hope that we can work with the company to do the same in places like Latin America, Africa and Asia. So thank you. Thank you very much indeed. First of all, Paul, good to see you again. So thank you very much. And we also want to thank you for just engaging in a very constructive manner. I mean, my experience across much of this across the U. K. And Europe previously and then obviously in my current role. We do listen to our stakeholders. We respond to our customers and listen to our stakeholders. I think if we can conduct ourselves in very dignified ways, we stand better chance of learning from each other and making good decisions. So your encouragement in K3 is well received. But hopefully, that is it sends a broader statement about how we take the responsibility of sourcing, sustainable sourcing. It's something that we embrace the business and we'll continue to make progress. So thank you. Ronald Friedman. I'm Ron Friedman. And with all the talk and all the protesters and the $15 an hour wage, If that is mandated, if the government does raise the minimum wage, do you see McDonald's substituting capital having kiosks where people order automatic pancake machines and things like that taking the place of workers where people will end up losing jobs because of the higher wages? It's a really fair question, and clearly, it's a topic of discussion right now. And here's my view about McDonald's. Ultimately, we're in the service business and we're competing with other restaurant businesses and other options for good to go and eat and drink out. So frankly, we will always have an important human element because that is what brings the service experience to life. If we were able to automate certain non value added processes in the restaurants, we'll do that because it's a smart thing to do. Then that gives us more opportunity to bring that manpower, front of house, we can offer better dining area experience and service experience. So I don't see it being a risk to elimination. It may change the nature of the jobs in the restaurants because, frankly, technology is something that our customers are embracing, whether it's through their phone or through cell phone at kiosks, that is societal trend. We want to adapt to that, but it's not actually meant as a labor replacement. We can just reapportion that labor into more service orientated roles. So we think the customer will benefit both ways. They'll have a smoother experience and actually a better person interpersonal experience as well. Thank you for the question. If next, we could have Janice Nowak come and join one of the microphones. And then behind that, maybe Mike Schoenberg, please. And Janice has got a question, and we had 4 on a similar subject. So Janice, if you could perhaps ask your question, that would be great. I guess I'm in shock. I didn't think I would be called to the microphone, didn't expect this. Well, thank you for submitting a question. I didn't ask a question. I provided a compliment. Oh, okay. Well, we welcome those as well. And this is my first meeting. I have been a teacher for many years. And so it's been a it's a privilege to be here and to see all of this. For years, I have been saying, please have all day breakfast. As I would arrive in Yorktown and it was 11 o'clock, they would change the signs and say, sorry, breakfast is over. So one day I called your offices and I said, there has to be a change. So today I wrote, thank you for giving me my wish and having this wonderful breakfast that I can receive any time of the day. Well, thank you for your comment, Janice. And also thank you for speaking up and expressing your opinions on this because the reality is we've really worked hard to reorientate the business around listening to customer demands. And when we get into problem solving mode and act on the customer's agenda, typically good things seem to happen to the business. So you and many others were have been asking for a while. I'm sorry it took us a while, but I'm glad you're happy now. Thank you. Mike Schoenberg, please. And then after Mike, do we have Jonathan Rubinstein, please. Hello, Mr. Easterbrook. Nice to be here. Mike Schoenberg, I'm a small shareholder, retired business manager at the University of Illinois College of Medicine. And I've seen over the last few years that the United States has kept inflation at a rate of about 2%, 1.9%, 2.1%, about 2%. And that's pretty good. The McDonald's has outshined that with dividend payments between roughly 3% 3.6% and that's great. So my question is a tough one. Could we look forward to 4% dividends by 2018, 4% dividends within 2 years. I'm certainly won't be committing to that target, but I certainly we recognize because we engage with our shareholders of all sizes and different shareholders have different ambitions as to what they invest. But we know that dividends are very, very important incentive to our shareholder base. And we have an unblemished record of increasing that dividend every single year since we've been paying out dividends. And I would like to think if the performance of the business continues to improve, we'll continue on an upward trajectory, but I won't necessarily offer up that target number right now. But thank you for your comments. You and many other shareholders really appreciate their dividend, and thank you for your investment. Thank you. And after Jonathan, perhaps could Mary Carmen Munoz please step forward? Jonathan? Thanks very much, Mr. Easterbrook. My name is Jonathan Rubinstein. I'm a father, a mental health professional and a rabbi of a community that is very concerned about the environmental harm and human suffering caused by the fast food industry. I have a question on behalf of a student at a local elementary school. He writes, my name is Isaac. I'm a 5th grade student at the Academy For Global Citizenship. Last year my class and I participated in a protest against McDonald's use of Ronald McDonald and their child targeted advertising. After participating in this action my family and I made the decision not to eat at McDonald's anymore. We want to put food into our body that does not cause obesity and other illnesses. Since the protest, I have noticed that McDonald's is making some changes. While this is a start, it does not address the fact McDonald's wants to use kids to make money off of food that is not sustainably produced or healthy for our bodies. Now your presentation said that the future has arrived and that you're putting the customer first. Truly, you will put the customer first and the future will have arrived. When you answer Isaac's question, when will you stop marketing an unhealthy lifestyle to children like me? Thank you. Well, you can certainly let Isaac know that we take our responsibilities as a business extremely seriously, both abiding by all appropriate marketing and advertising regulations, but actually, we go way over and above that. So you will see that in the majority of our communications around the world, it's nutrition messages, there's healthy active lifestyle messages and also the way that we have adapted the Happy Meal offering, for example, if you talk about younger children to offer dairy and fruit. And the results are that we are helping parents feed their children better because we are having increased investment in the quality of our food and a broader range in the Happy Meal offering. So I think you can do a lot better and really get on the right side of this issue. Well, I think you'll combat this terrible, terrible So what you'll see and I think Much, much more. I think the proof points are in the actions we're taking, and you will have seen a number of the actions we've taken over the last year. And that indicates the type of pace and the velocity with which we're evolving our business. So keep it up. Thank you very much for your encouragement. Mary, is Mary with us? Okay, I'll move on. Sam Martel has some menu ideas, I believe. And if I pronounce this wrong, is it Ilsa Sibyl Sonnenberg? If you could be ready after Sam Martel, please. Could we open up the microphone over the other side? I love it and I appreciate so much. And also since we're too fat, we work out in this place downstairs And I have heard rumors that you're going to move away and not be here at this beautiful place anymore. Is this true? I've heard those rumors as well. So I'll give you a very honest response. When the pace of change outside of McDonald's had been running quick and the pace of change within just across the business. And one thing we as a management team with encouragement for the board is to inject a more purposeful and energy to the business to actually get the business back on track, firstly around the turnaround plan and then around sustaining growth plan. And we committed to leaving those stone unturned. How could we best set up the business the long term benefit of both the business and the shareholder? And one of those things would be, are we operating at the right facilities? Are we attracting the right talent? Are the facilities commensurate with a modern workplace where teams are much more engaging and collaborating? So it was one of the things we did say and we shared with our staff here that we will leave no stone unturned, and we will also consider where the best location for the office is and the best facilities. If you want a world class team, you've got to provide a world class environment. I don't have options for your workout alternatives if that was to happen, But absolutely agree, it's a lovely facility here. It's houses really, really well for a good period of time. And when we have anything more to say about it, we'll share it with you and hopefully an alternative, if it was required, we're comfortable with. Appreciate it. Thank you. Do we have Sam? Yes, I'm here. Hi, Sam. I have 8 children and 20 grandchildren and they all love your commercials and they don't think that you're targeting children at all. Okay. But I do want to ask you one question. Where's the brats? I love the brats. You had them here in Chicago. You have them up in Wisconsin. And I don't want to drive to Wisconsin. I'd like to see them here in Chicago. Okay. Well, you've made an impassioned plea in front of the President of the U. S. And I'm sure he'll take that back to his menu team. But I was referring earlier to the earlier question. The regional tastes and flavors are marked across the extent of the U. S. From the Northeast all the way to the Southwest. And whether it's the Shamrock shake or the McRib or Bratz or lobster roll, I think you'll continue to see food innovation. And this quantity is not too far to go, so hopefully you can get out there. But thank you. We have time for one more question. And could Albert Polistrini step forward, please? Okay. I didn't ask you to step forward, madam, so I apologize your question hasn't come forward. But as of respect, would you allow Albert to ask his question? And then any questions that have been submitted, we haven't got around to today, we'll respond to in writing. Albert? Albert Palastrini, I've been a stockholder for since 1985. I love your splits, which I haven't seen lately. But I noticed when I go into McDonald's, I'm 76 years old and the vision isn't that good. The menu is small. You got calories right next to it. You can't tell the price from the calories. And then it flashes on and off. It keeps changing menus. So by the time I focus on the menu and get halfway down, it changes and disappears. And I have to wait another 15, 20 seconds, so it comes back and the person at the register says, may I help you, may I help you? And I go in there and say, give me a coffee. It's just it's pressure. So if they can stop that and make the menus, I don't care about the calories. It's just that it's too much to read and too fast. Okay. Otherwise, I love McDonald's. Again, thank you for your investment in your business. Digital menu boards are actually proving to be very successful as we roll those out around the world. And it actually enables us to be a lot more creative in the content on there. And also, we can start to adapt it to different dayparts and to different temperature. Even as it goes sunshiny, you can start to merchandise different items on there. But we never want to get to a stage where it makes it more difficult for customers. So I hear your feedback on that. And one of the other options, as we expand on the different ways that we offer customers to order, the self order kiosk is a nice static, it's like a massive iPad for you. You could stand there and just slowly work through the screen at your own time and the screen will not move on until you press Next. So perhaps that will be an option which will take you away from that more stressful front counter moment, and it'll be a different service option. But nonetheless, we can continue to learn and get better on the digital menu board. So your point is well made. But that is unfortunately all we have time for today. And if we didn't address your topic, we'll respond to you by e mail. So thank you again for being here, everyone who has the courtesy to be here.