Welcome to McDonald's Annual Shareholders Meeting. We now call this meeting to order. We also appreciate your patience in arriving to this meeting 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 of our meeting today and information about our procedures, and it's important that we abide by those. With me on stage, our President and Chief Executive Officer, Steve Easterbrook, General Counsel and Corporate Secretary, Gloria Santona, and Chief Financial Officer, Kevin Ozan. Steve will discuss McDonald's performance and plans in a few moments, following the presentation of the proxy proposals.
I'm delighted to tell you that your board, as you know, is comprised of a diverse, independent-minded, and experienced group of business leaders, and they remain committed to you and to enhance shareholder value. I'm now pleased to introduce our board of directors. As I introduce them, may I ask you to please hold your response until everyone has been presented.
In addition to Steve Easterbrook and me, your directors are Susan Arnold, Operating Executive, Global Consumer and Retail Group of The Carlyle Group; Bob Eckert, Operating Partner of Friedman, Fleischer & Lowe; Margo Georgiadis, President, Americas at Google; Rick Hernandez, President and CEO of Inter-Con Security Systems and Non-Executive Chairman of Nordstrom; Jeanne Jackson, President of Products and Merchandising at Nike; Rick Lenny, Non-Executive Chairman of Information Resources; Walter Massey, President of the School of the Art Institute of Chicago; Sheila Penrose, Non-Executive Chairman of Jones Lang LaSalle; John Rogers, Founder, Chairman, and CEO of Ariel Investments; Roger Stone, Chairman and CEO of KapStone Paper and Packaging; and Miles White, Chairman and CEO of Abbott. I'd like to ask the directors to stand for a moment and be recognized. We really do appreciate your service and commitment.
Let me now turn to Gloria Santona, our Corporate Secretary, to describe our procedures. Gloria?
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. Our order of events is as follows. The chairman will introduce each proxy proposal, and after all the proposals have been presented, we'll ask if anyone has questions or comments on the proposals. That we can proceed with the meeting in an orderly manner, we ask that you limit your remarks at this time to one proposal. I also direct your attention to the rules of order that are printed in your program. Following the presentation of all the proposals, the chairman will ask for a motion and a second on all the proposals at one time.
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. 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 Susan Arnold, Bob Eckert, Margo Georgiadis, Rick Hernandez, Jeanne Jackson, Rick Lenny, Walter Massey, Sheila Penrose, John Rogers, Roger Stone, Miles White, and me as directors. The second proposal is an advisory vote on 2014 executive compensation. The third proposal is the approval of Ernst & Young as the company's independent auditor for 2015. The fourth item is an advisory vote on a shareholder proposal requesting the board to adopt a policy to prohibit accelerated vesting of performance-based restrictive stock units in the event of a change in control. At this time, I call on Ken Hitchcock, who is here to present this proposal in two minutes or less. Mr. Hitchcock?
Thank you, Mr. Chairman. On behalf of The Amalgamated Bank's LongView Funds, which is the sponsor of the proposal, I appreciate the opportunity to be here. We are, for the record, own 140,000 or so shares of McDonald's and look forward to a good long-term relationship with the company. We are making this proposal to eliminate accelerated vesting because, in our view, it is inconsistent with the core principles of pay for performance, that if you can get equity that you haven't earned in the event of a change in control. We understand the board's concern that executives be motivated to stay with the company during a transition and have adequate compensation for that. The limits that we are proposing are limited to the performance types of shares equity and leave in place many of the other types of compensation, including salary, bonus, stock options.
Let's not forget the gross-ups in which the shareholders pay the taxes on the severance packages, the golden parachutes for departing executives. We do contemplate in the proposal that there can be pro-rata vesting of whatever equity has been earned as of any termination date and think that this is a balanced approach. We're happy to meet and discuss with management some of these issues. We regret that we were not able to reach an agreement on that. We urge consideration of what we view as a relatively modest proposal
To try to rein in some of executive compensation and to restore the notion of pay for performance. Thank you, Mr. Chairman.
Thank you, Mr. Hitchcock. The fifth item is an advisory vote on a shareholder proposal requesting the ability of shareholders to act by written consent. At this time, I call on Lucia von Reussner, who is here to present the proposal in two minutes or less. Thank you, Miss von Reussner.
Thank you. My name's Lucia von Reussner. On behalf of John Chevedden, I hereby move shareholder proposal number five. Thank you.
Thank you, Miss von Reussner. The sixth item is an advisory vote on a shareholder proposal requesting a proxy access bylaw. At this time, I call on Cambria Allen, who is here to present the proposal in two minutes or less.
Thank you, Mr. Chairman. Mr. Chairman, members of the board, and fellow shareholders, my name is Cambria Allen, and I am corporate governance director for the UAW Retiree Medical Benefits Trust. I hereby move proposal six on behalf of the trust, a long-term shareholder in McDonald's. McDonald's needs strong leadership to endure as a great American icon 10, 50, 100 years from now. We believe the best way to do this is to foster a culture of accountability to shareholders, of which proxy access is an integral part. Proposal six calls for a proxy access bylaw to enable share owners that have collectively held at least 3% of the company continuously for three years to nominate directors on management's proxy card. The proposed bylaw is designed to give substantial long-term shareholders a meaningful voice in director elections.
Absent meaningful proxy access, the director election process simply becomes a ratification of management's nominees. We file proposal six because of McDonald's lagging performance and concerns that McDonald's board needs to be more accountable for these performance lapses. Proxy access is one way to make that happen and in our view is a fundamental shareholder right. Today, McDonald's is at a crossroads, ripe with opportunity. We already saw one positive change when the company increased the minimum wage for employees of its corporate-owned stores, and we applaud McDonald's for recognizing what many of us already know, that its workforce is its number one asset. There is more that can be done.
A 2014 report by the CFA Institute found that proxy access, if adopted market-wide, has the potential to raise U.S. market capitalization by as much as $140 billion. Certainly, performance we can use in McDonald's. This year, a growing number of companies in various industries and of various sizes have agreed to voluntarily adopt proxy access, including Wendy's, Bank of America, Big Lots, General Electric, and Yum! Brands. On behalf of the trust, I urge the McDonald's board to do the same. The trust looks forward to continuing our ongoing engagement with McDonald's into the future on this key reform. In the meantime, please vote for proposal six. Thank you.
Thank you, Miss Allen. The seventh item is an advisory vote on the shareholder proposal requesting an annual congruency analysis of company values and political contributions. At this time, I call on Jesse Sharkey, who is here to present the proposal in two minutes or less.
Thank you. Mr. Chairman, members of this meeting, my name is Jesse Sharkey. I'm the Vice President of the Chicago Teachers Union. We represent 30,000 members of the Chicago Public Schools working in your backyard. I'm here today to communicate the growing concerns that we have and the people across the globe have regarding the devastating impact that McDonald's is having on workers, our food system, and the health of our children. I'm also here to ask that McDonald's stop pretending to support values for the public good while simultaneously undermining those policies with its political contributions. McDonald's is exposing share owners and business to significant reputational risk by continuing to say one thing and do another. We've seen McDonald's double-dealing in a number of ways.
A few months ago, McDonald's raised the wages of 10% of its workers by a mere $1 an hour and made overtures about advocating for well-being of its employees. Yet simultaneously, McDonald's undermines the efforts to raise the minimum wage across the country with large support through the National Restaurant Association. Despite the claims of former CEO Don Thompson, educators in Chicago and across the country know that McDonald's uses schools to target children through its McTeacher's Nights, where teachers become brand ambassadors and inadvertently market junk food to trusting students. While McDonald's gets the kind of marketing money cannot buy, children and families pay the cost of diet-related disease. Actions speak louder than words. It's high time that McDonald's issues a real turnaround plan, one that eliminates the exploitive practices this corporation engages in, from poverty wages to exploiting teachers and targeting children in schools.
McDonald's must ensure that its stated values are aligned with its political activities. Until then, educators, parents, and young people will continue to see McDonald's as a corporation unwilling to adapt to changing times, and its turnaround is one that offers nothing more than hot air. Therefore, we urge that the shareholders vote to support resolution number seven. Thank you.
Thank you, Mr. Sharkey. The eighth item is an advisory vote on a shareholder proposal requesting that the board have the company be more proactive in educating the American public on the health and environmental benefits of genetically modified organisms. At this time, I call on Justin Danhof, who is here to present the proposal in two minutes or less.
Thank you, Mr. Chairman. I am Justin Danhof. I represent the National Center for Public Policy Research. Today my colleague at the National Center, Amy Ridenour, and I hereby move proposal number eight. Our proposal simply asks the company to do more in defending its products and to promote the safety and benefit of GMOs. Companies whose products contain GMOs, such as McDonald's, are harmed by the public's severe ignorance on this issue. As we stand, there are more than 2,000 global scientific studies on GMOs. The evidence is clear. GMOs are perfectly safe. The debate is over.
Despite this clear scientific consensus, anti-GMO activists, such as the last shareholder proponent, continue to sow fear and doubt. Their actions are ignorant and frankly inhumane. Polling data shows that nearly four in 10 Americans are misinformed about GMO safety. More than nine in 10 are not aware of the unnecessary cost and unscientific rationale of GMO labeling. That ignorance harms the company and the developing world, where malnutrition is exacerbated by resistance to GMO technology. Scientific American has reported that the delayed application of the GMO vitamin A-enhanced Golden Rice, thanks to controversy stirred by anti-GMO activists, has cost over 1.4 million life years in India alone since 2002. This is real human suffering and death. It is children who too often suffer the most.
If the company does not stand up for its products, not only will uneducated folks, such as the last shareholder proponent, continue to attack the company, also hunger, malnutrition, and even death can rightly be blamed at McDonald's feet. Abdicating your responsibility as a major international brand, the iconic golden arches with trillions of meals served is shameful. I urge my fellow shareholders to support sound science, the promise of GMOs, and vote for Proposal eight. Thank you.
Thank you, Mr. Danhof. The ninth item is an advisory vote on a shareholder proposal requesting the board publish an annual report providing metrics and key performance indicators on palm oil. At this time, I call on Lucia von Reussner, who is here to present the proposal in two minutes or less.
Thank you. Fellow shareholders and members of the board, my name is Lucia von Reussner. I am here on behalf of Green Century Capital Management to move shareholder proposal number nine, which calls on the company to ensure that its suppliers are not destroying the rainforest or exploiting local communities to make the palm oil used in McDonald's products. Palm oil has become a highly controversial ingredient because it is often produced by burning down valuable tropical rainforests, driving climate change, species extinction, and conflicts with local communities. Due to these controversies, a growing number of companies have adopted sourcing policies to ensure that their suppliers are not contributing to these controversial issues. Unfortunately, McDonald's continues to lag consumer and industry trends and in making sure that its suppliers are not engaged in these controversial activities.
McDonald's is among the top 10 palm oil-consuming companies in the world, but is the only one in that group that still permits its suppliers to engage in rainforest destruction and exploitation of local communities, posing a reputational risk to the company's already flagging brand and reputation among consumers and maintaining a market for these controversial suppliers. While the company recently announced an intent to curb deforestation occurring across its global supply chains, the company has not provided specific timelines or plans for when it plans to implement these commitments for palm oil. The only timeline the company references is for 2030, a good 10 years later than the rest of the industry is working towards. Ladies and gentlemen, customers are unlikely to accept that McDonald's is allowing its suppliers another 15 years of destroying the rainforest to make McDonald's Happy Meals.
Green Century has worked closely with a number of brands to develop stronger sourcing policies. However, McDonald's has unfortunately not worked meaningfully with shareholders to address these concerns. For these reasons, I hope you will support shareholder proposal number nine, which urges McDonald's to strengthen its sourcing policies and demonstrate that its suppliers are not destroying the rainforest to make McDonald's products. Thank you.
Thank you, Ms. von Reussner. Are there any questions or comments only related to these specific proposals?
I have a question too.
Yes, I have a question too. My name is Casey Hines, and I'm here today as both a veteran and a mother. Last year at this meeting, I asked for you to stop sending Ronald McDonald into schools under the guise of education. Your predecessor, Don Thompson, lied and told us, "We don't put Ronald out in schools." This year, I came prepared with photos like these. Lying to the public is the kind of disrespect that makes us see McDonald's as the Philip Morris of fast food. It's the kind of disrespect that results in a loss of brand trust, and it's why moms and millennials are leaving the corporation behind. Your reputation as a bad corporate actor is reflected in slipping sales, Your turnaround plan addresses none of these substantial issues.
You want to be seen as a modern, progressive burger company, Progressive corporations don't use schools as ads or tell kids that fast food is loving. CEO Easterbrook, when will you end your exploitive practice of marketing to children and retire Ronald McDonald, the Joe Camel of fast food?
Let me Thank you for your comments. We want to have these comments directed only to the shareholder proposals.
Yes, my comment is directed towards number 7.
Okay. Thank you so much.
I'd like an answer to my question, please.
Well, we will provide. Mr. Easterbrook will be out at the podium for questions and answers after this presentation.
He is not going to address our questions?
He will address it. Yes, he will address the question.
Thanks. I have a question on Proposal seven. I am Sriram Madhusoodanan with Corporate Accountability International. On behalf of thousands of parents, doctors, educators, and McDonald's investors, it is high time the corporation bring its actions into alignment with its professed values. CEO Easterbrook, you acknowledge the need to build brand trust in your turnaround plan, but instead of substantive change, shareholders and the public only see shallow marketing and PR. You have stated that you want McDonald's to be progressive, yet you continue the antiquated practices that put you in dire financial straits to begin with. Is not it finally time to stop targeting children and miring workers in poverty, considering how clear it is that these practices are hurting your bottom line?
Well, thank you. Mr. Easterbrook will deal with that when he's at the podium. Thank you.
I'd like an answer now.
We're dealing now with shareholder proposals, specifically.
This is related to shareholder proposal number seven.
Well, you're stretching it a little bit. Steve, would you like to respond?
To either of those or to both of those?
To that last gentleman.
Yeah.
To the earlier one, if you could, please.
Yeah, happy to. Let's step back and think about the underlying values of McDonald's. From the very first year of our existence, one of our underlying ethos and values has been that we put back into the communities in which we do business. That has stayed real strong for 60 years and certainly something I'm committed to going forward. When we think about some of the most respected people in those communities, teachers are amongst those. We all see it, those of us who've got children now, or those of us who've had children go through education, we see the role that teachers play in educating our kids and also getting them ready for life beyond education.
If a teacher was to approach a local owner-operator, for example, and ask for their support in helping address certain projects or certain areas in which they think maybe a local owner-operator can help bring to life something that's meaningful, whether it's something like anti-bullying or bike safety, or understanding what it's like in the workplace and what a first job is like, then I think it's entirely appropriate an owner-operator, on a local basis, in their local community, will support teachers in helping educate kids. I think that's what a responsible business does, and that's what McDonald's will continue to do.
My name is Jose Oliva. I have a question related to proposal seven. I co-direct the Food Chain Workers Alliance. We represent workers from farms to processing plants to restaurants. Our combined membership is close to 300,000 here in the U.S., and McDonald's and some of the suppliers are actually our members. I'm here today to ask you to stop talking out of both sides of your mouth in this response that you just had right now. Mr. Easterbrook is actually a great example of that, right? You say you're raising the minimum wage for some frontline employees at company-owned stores, that looks like a PR stunt, when you're actively fighting against increasing the minimum wage elsewhere by supporting the National Restaurant Association, which is a huge front group to fight against the well-being of communities and the increase of minimum wage.
While you claim to be interested in making our communities better, your support for the National Restaurant Association, the country's largest and most powerful anti-worker lobby, speaks volumes to the contrary. This past April 15th, the NRA-
Sir, let me just interrupt this for a moment. You're past one minute.
Oh.
Thank you.
Hello. My name is Charlie Fyke, and this is in regards to proposal eight that speaks about being proactive in educating the American public. I'm so glad you spoke about teachers. I am a teacher. I'm also an organizer with Campaign for Commercial-Free Childhood. At last year's meeting, Don Thompson claimed we don't put Ronald out in schools, when this is simply not true. Far from it. Under the guise of promoting everything from reading to healthy lifestyles, you regularly send Ronald into schools to push your junk food brand. As an educator, I know the importance of keeping marketing out of schools, especially when the brand promoted is fueling today's health epidemic. More than that, it is wrong to exploit developmentally vulnerable children with sophisticated marketing that seeks to create lifelong customers. That's why CCFC, along with a growing international movement, has demanded McDonald's stop exploiting schools.
CEO Easterbrook, will you commit to respecting schools as commercial-free zones and stop targeting our children?
Thank you for your comments.
I would like an answer.
Mr. Easterbrook will deal with that at the podium shortly after I leave.
Wonderful. I look forward to that.
Thank you.
Hi.
Yes.
My name is Holly Silvers. I've been a shareholder for over 25 years. Can we have some good news about proposal number seven? First of all, I don't think we need to pay $15 an hour. I think what we haven't ever stressed at McDonald's are the famous people that have worked at McDonald's, the likes of Sharon Stone, Shania Twain, Phio, some CEO that owned Amazon, Jeff Bezos, Jay Leno, I'm sure if they would be making $15 an hour, they'd still be working at McDonald's. We've got to realize, I even have a nephew who's an EMT specialist at UCLA. He worked at McDonald's as a teenager, now he's doing his fellowship at Harvard University. I think McDonald's is a stepping stone for people to have their first job, I think they've done a great job.
If this persistent keeps up, we're going to have robots and less employees, and they're going to be shooting themselves in the foot. Thank you.
In all fairness, I must say, thank you for your comments. Your one minute has expired. Is there a motion to move on all the proposals?
We have a motion.
What? I'm sorry.
Don't forget us.
Hi. I have a question related to proposal seven. My name's Roberto Clack, the lead organizer with the Restaurant Opportunities Chicago. We're the largest restaurant workers organization in the country. This week, I was a part of a contingent that addressed our concerns to National Restaurant Association President Dawn Sweeney at the NRA's annual trade show. She talked about the restaurant industry being a pathway to achieving the American dream. At ROC, we know for the vast majority of restaurant workers, the wages and conditions in the industry are anything but part of that dream. In fact, the poverty level wages and lack of benefits are more of a nightmare. Too long, the NRA lobbies against common sense policies such as raising the minimum wage or ending separate lower minimum wage for tipped workers.
We know that McDonald's is one of the two top contributors to the NRA's poverty agenda. CEO Easterbrook, when will you choose to walk away from the NRA and start working with groups like ROC to ensure your employees and all restaurant workers are paid a living wage and treated with dignity and respect?
Thank you.
Will you walk away from the NRA?
Thank you for your question. Yeah.
Can I get an answer?
Mr. Easterbrook will be up here in just a moment now. He'll answer all questions.
I'm speaking to proxy number seven. My name is Leah Segedie, and I'm the mother of three small children and a professional blogger. CEO Easterbrook, let me first congratulate you on becoming CEO. You see, I had the unfortunate experience of being lied to last year by Don Thompson, who said they are not marketing in schools in spite of the direct evidence I've seen at my son's school. When you said you were making McDonald's a progressive burger company, I got really excited. What kind of modern progressive burger company sends a clown to school or gives coupons out with report cards like at my son's school? McDonald's is painfully out of touch with what mothers like me are demanding, an end to predatory marketing practices that target our kids. It's no surprise that McDonald's is losing support from moms when you so clearly disrespect us.
CEO Easterbrook, are you finally ready to show some real leadership and stop exploiting children through your kid-targeted advertising?
Thank you.
Will you finally retire Ronald McDonald?
Thank you for your comments. Okay.
I would like an answer.
Thank you. Is there a motion on all of the proposals?
Moved.
Second?
Second.
Okay. Your board of directors recommends a vote in favor of the election of all director nominees and in favor of the other two management proposals. The board recommends a vote against all of the shareholder proposals. The reason for the board's recommendations are outlined in our proxy statement. If you're voting at the meeting, please complete and sign your ballot and motion for an usher to collect it. If you've already submitted your proxy, you do not need to vote by ballot. If you have a question for the general Q&A session, some of which we just heard, with Steve Easterbrook that you have not submitted, please hand that to an usher as well. The polls are now closed. I will now turn the meeting over to Steve Easterbrook for remarks on McDonald's business.
I also want to thank and take this opportunity on behalf of the board and myself to thank Steve for his leadership, and all of you for that matter, as he works tirelessly to return McDonald's to renewed and continued success. Steve's committed to doing the right thing for our business, our people, our customers, and of course, our shareholders. Ladies and gentlemen, Steve Easterbrook.
Thank you, Andy. It's been great working with you so closely these past few months. I also want to thank all of our independent directors for your vision, your leadership, as we work to reenergize and grow the McDonald's business. I also want to thank our shareholders for your investment and your confidence in McDonald's and for being here today. Now, I'd like to begin by recognizing our senior management team. Please hold your response until everyone is introduced. In addition to Kevin and Gloria, the team includes Mike Andres, President of McDonald's USA. Jose Armario, Executive Vice President of Global Supply Chain, Development, Franchising, and Sustainability. Dean Barrett, Senior Vice President, Global Marketing. Pete Bensen, Chief Administrative Officer. Ian Borden, currently Chief Financial Officer of McDonald's Asia Pacific, Middle East, and Africa, and President of the Foundational Markets, effective July 1st.
Bridget Coffing, Senior Vice President and Chief Communications Officer. Rich Floersch, Executive Vice President and Chief Human Resources Officer. Dave Garland, Senior Vice President of Corporate Strategy. Doug Goare, who's currently President of McDonald's Europe and will be President of International Lead Markets effective July 1st. J.C. Gonzalez-Mendez, Senior Vice President of Global Inclusion, Community Engagement, and Philanthropy. Erik Hess, Senior Vice President of Consumer Insights, Menu, and Brand Strategy. Dave Hoffman, President of McDonald's Asia Pacific, Middle East, and Africa, and President of the High Growth Markets, effective July 1st. Edgardo Navarro, President of McDonald's Latin America. Atif Rafiq, Senior Vice President and Chief Digital Officer. Jim Sappington, Executive Vice President of Operations and Technology Systems. Now, I'd like to ask those members of management who are here today to stand and be recognized, please. Thank you.
Now, I'm honored to lead this great brand as we celebrate 60 years and to work with our tremendous system to move McDonald's forward. Our approximately 5,000 owner-operators represent one of the world's largest networks of independent businesswomen and men. They are the heart and soul of our business. Our suppliers deliver safe and high-quality food and materials for our more than 36,000 restaurants around the world. Our agency partners help us reach customers in meaningful ways. Approximately 1.9 million employees, including employees of both company-owned and franchise-owned restaurants, who work every day to deliver the simple, easy enjoyment that customers expect. 2014 was a challenging year for McDonald's. Our performance fell short of expectations. While we grew system-wide sales by 1% in constant currencies, global comparable sales decreased 1% and operating income declined 8% in constant currencies.
Even so, we returned $6.4 billion to shareholders through dividends and share repurchases. We're committed to turning around the business and moving assertively to make McDonald's a modern, progressive burger company, delivering a contemporary customer experience. This begins with inspired people who run great restaurants with a recommitment to hot, fresh food, fast and friendly service, a contemporary restaurant environment at the value of McDonald's. We're putting a stronger and more relentless focus on those things that mean the most to our customers. First, a continuous improvement of our food, building on our commitment to quality and freshness while maintaining the taste customers love, serving the best burger possible and growing sales of the menu items our customers enjoy most: Big Mac, Quarter Pounder, Egg McMuffin, Chicken McNuggets, and our world-famous fries.
Second, enhancing the customer experience through reimaging, better service, and the deployment of world-leading digital enhancements, including self-order kiosks, mobile order and pay, web order, delivery, table service, and a host of other new technologies that deliver the greatest convenience and engage customers in new and fun ways. Third, building brand trust. As part of the loving campaign launched in the U.S. this year, a commercial with McDonald's signs showing messages of appreciation, remembrance, and congratulations for their communities generated significant conversation. Let's take a look.
The meeting will resume after this commercial break.
We're committed to being more progressive around our social purpose and what matters most to consumers, from supporting Ronald McDonald House Charities, our charity of choice, to aspiring to end deforestation in our supply chain and continuously improving the quality of our menu. In the U.S., we're eliminating antibiotics important to human medicine in our chicken supply by 2017. We are one of the founding members of the Global Roundtable for Sustainable Beef and plan to purchase a portion of our beef from verified sustainable sources next year with the help of our suppliers and partners like the World Wildlife Fund. In fact, I'll be visiting our pilot program in Canada this summer. At a high level, my priorities for McDonald's are threefold: Driving operational growth, creating brand excitement, and unlocking financial value.
To help drive our operational growth-led turnaround, we announced earlier this month a restructuring of the business. We are reorganizing into four segments: the U.S., International Lead Markets, High Growth Markets, and Foundational Markets. This is a significant change for us. It removes cultural and structural blockers to growth, strips out layers of bureaucracy, and allows more nimble decision-making and action. It enables direct dialogue between markets and a faster transfer of thinking and experience. In short, it will create the optimal conditions for success and unlock growth by bringing markets closer to customers. We also announced that we're evolving our ownership strategy and accelerating our franchising, moving from 81% franchise restaurants to about 90% franchise globally.
We will refranchise about 3,500 restaurants over the four-year period ending 2018, putting more restaurants into the hands of our best owner-operators and getting closer to the customers in the communities within which we serve. We expect our organization restructure, new ownership strategy, and a stronger financial discipline to deliver $300 million in net annual savings. Most of those savings will be realized by the end of 2017. Across McDonald's, we're putting the right structures and plans in place to regain our momentum and drive stronger growth. We're moving with greater urgency and seeing levels of progress across many of our markets. The U.K. continues its positive performance, growing comparable sales, operating income, and franchisee cash flow.
The U.K. is succeeding for an emphasis on food quality and progressive employment practices, insightful market analysis that produces true customer-led plans, and a continuous commitment to improving restaurant operations and modernizing the brand. Australia is gaining momentum with a focus on strengthening everyday value, improving marketing and execution around key promotions like Monopoly, re-energizing McCafé, and reinvigorating its premium offerings with the new entrees such as the rump steak burger. Around the world, from Australia to France and throughout Europe, we are driving greater convenience and personalization in the restaurants. In the U.S., we are taking action to move the business forward. We have a new structure in place with a greater regional focus, fewer layers, and stronger accountability. Working together with owner-operators, we're recommitting to a stronger focus on core and new menu news, emphasizing quality ingredients like sirloin burgers and artisan chicken.
Stronger insights underpinning the development of a compelling everyday value proposition this summer to drive baseline sales and guest counts. We continue to test innovations such as all-day breakfast, delivery in New York City with our partner, Postmates, and streamlined drive-thru menu boards to improve speed and accuracy. We also made an industry-leading announcement this spring that builds on our commitment to providing enhanced opportunities to the employees who bring our brand to life. We're giving employees in our U.S. company-owned restaurants a wage increase and paid time off. Through Archways to Opportunity, we're also giving everyone working in a McDonald's restaurant the ability to earn a high school diploma for free, receive assistance for college credits and tuition, and access expanded language classes free of charge. For decades, people have begun their careers at McDonald's.
They've learned transferable skills, found a flexible job, a place to grow, learn, and lead. Today, we're honored to have two such people in attendance. With us is Juan Garcia, who earned his high school diploma through Archways to Opportunity and is the first employee to do so. Juan is general manager of a restaurant in Chatsworth, California, and next he plans to work towards a college degree. Also with us is Jeffrey Gearhart II, who goes by LJ. LJ was recently recognized as Student of the Year by the American Council on Education, which is a national association of 1,700 colleges, universities, and education entities. This award is presented annually to just one student who's demonstrated outstanding achievements in their community. LJ manages two McDonald's restaurants in Indiana whilst going to school full-time at Ivy Tech Community College.
Juan and LJ, thank you for being with us today and showing all of us the power of opportunity. To be a modern, progressive burger company, we're returning excitement to our proposition and brand and focusing on unlocking greater financial value. When it comes to brand excitement, we will raise our game and surprise and delight our customers around the world. At our best, we're a fun and enjoyable brand, that is what we'll continue to be. We will create strategies that leverage our scale and convening power, we'll look for new ways to connect with customers through our sports and entertainment partnerships with the Olympics and World Cup, amongst others, as well as working with brands such as Apple and a whole host of external content creators.
We'll do even more to deliver our unique surround sound of positivity, those actions that disrupt and delight, from our many local activities to our recent global I'm Lovin' It 24 event, which you saw in the opening video. That was 24 hours of McDonald's-inspired creativity in cities around the world, with 70,000 participants and more than 2 billion impressions across traditional and social media. We will continue to evaluate all ideas to drive shareholder value. In the near term, we expect to return $8 billion-$9 billion to shareholders this year and reach the top end of our three-year $18 billion-$20 billion return target by the end of 2016. I'm excited by the moves we're making to reassert McDonald's as a leadership brand. There's much work ahead, I know our owner-operators, suppliers, and employees are well-equipped to deliver.
The steps we're taking will help unlock greater energy and action, accelerate our growth, and fuel our turnaround. Since becoming CEO earlier this year, I've spoken about making bold moves to turn around our business, that is what we're doing. It's how leadership brands evolve and continue to thrive, how they stay in step with the customers they serve. It's what we'll keep doing at McDonald's to get closer to our customers, deliver a better experience today and tomorrow, realize our aspiration to become a modern, progressive burger company. I am confident we'll emerge from this time of transition more responsive to customer expectations and market conditions, better able to deliver enduring profitable growth for our shareholders, our owner-operators, suppliers, and employees. Thank you all again for your investment and your confidence in McDonald's.
Now I'd like to bring our board chairman, Andy McKenna, back to the podium. Thank you.
Thank you, Steve. We have received the preliminary voting results from the independent inspector of the 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 elected each of the director nominees with the support of at least 96% of the shares voted. Shareholders have approved the management proposal relating to an advisory vote on executive compensation with the support of 93% of the shares voted. Shareholders have approved Ernst & Young as the company's independent auditors for 2015 with the support of 98% of the shares voted. The advisory shareholder proposal requesting the board adopt a policy to prohibit accelerated vesting of performance-based RSUs in the event of a change in control has not been approved by shareholders, receiving the support of 35% 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 42% of the shares voted. The advisory shareholder proposal requesting a proxy access by-law has been approved by shareholders, receiving the support of 61% of the shares voted. The advisory shareholder proposal requesting an annual congruency analysis of company values and political contributions has not been approved by shareholders, receiving the support of 8% of the shares voted. The advisory shareholder proposal requesting that the board have the company be more proactive on the health and environmental benefits of genetically modified organisms has not been approved by shareholders, receiving the support of 4% of the shares voted.
The advisory shareholder proposal requesting that the board publish an annual report providing metrics and key performance indicators on palm oil has not been approved by shareholders, receiving the support of 6% of the shares voted. Thank you again for your investment and support of McDonald's. The annual meeting is now adjourned. At this time, I would ask Steve to come up here and lead a general question and answer session. Steve?
Thank you very much, Andy. I think there were two questions we said we would comment on in the Q&A. Clearly a number of questions have been submitted by you all, a number of them on the same similar topics. I will then try and get through a number of questions and invite people up to ask their question on the open mic. Katie, your question really around advertising to children and retiring of Ronald. In every market in which we do business, we're a responsible advertiser. I just want to make that absolutely clear. There are regulations in force, which clearly we abide by, but frankly, we go further than that. What we often do and aim to aspire to do is to use our ability to influence and our expertise to offer more than just simply the bare minimal regulations.
For example, when it comes to children, the moves we have made across our Happy Meals have been substantial, both in the way we've introduced new items and a range in choices, but also the way we've encouraged and helped parents encourage their kids to eat more fruit and low-fat dairy. Let me just give you some statistics on that. In the last three years, once we've incorporated sliced apples into Happy Meals, 1.3 billion children have benefited from that, or 1.3 billion bags of apple slices being distributed in just the U.S. alone. When we introduced Cuties just for five months across the winter here in the U.S., 37 million Cuties were enjoyed by children.
I think that's the kind of business. When I talk about a progressive business, it's about using our influence and our responsibility and our accountability, not just to have fun with the business, which is what we're all about, but also to be a positive, be a change agent for good. With regards to Ronald's here to stay. And I've got to tell you, since he's had his redesign, his new outfit, he's feeling trendier and even more confident. Ronald stands for fun. Let's just realize what this is all about. It's about fun. It's about the magic shows. It's about putting smiles on people's faces. If we can therefore use and have Ronald also play a constructive role in helping convey important messages around literacy and reading, around anti-bullying.
I think that that is a very positive role that Ronald plays. He's here to stay. Also, Roberto, regarding National Restaurant Association and minimum wage, and there's a number of topics raised there. First of all, I'm incredibly proud of the announcement we made around minimum wage for company-owned employees. We voluntarily took a leadership position on this. We voluntarily committed to paying $1 above the local legal minimum to all the employees in the company-owned restaurants. And why the company-owned restaurants? Because that's all that we have the responsibility to make those decisions for. Our independent owner-operators make their own decisions. It wasn't just around pay. It was around paid personal time off, which is a leadership move across our sector. No one else offers paid personal time off.
And when people have hectic and busy lives, the flexibility that offers them in the workplace is fantastic and really, really much appreciated by our staff. And the education opportunities from Archways to Opportunity, such that Juan and LJ have benefited from, we're now able to offer that right across all of our restaurants around more than 700,000 employees across the U.S. When the paychecks come in, the first paychecks come in on the first of July. I tell you, there's going to be 70,000 people who are going to be incredibly grateful and will benefit from the moves we've made. I'm very proud of the statement we made, and we have said that is the first step. We are a progressive employer. I just want to make sure that move is not misunderstood. That is something we're proud of, and we stand firm and hard behind.
A business such as ours, we have all sorts of businesses and affiliations. We learn from people. We have affiliations with business who can help advise us, who we can help learn from, and we can help offer opinions into. Whether it's the National Restaurant Association or many other organizations, you'd expect us to be in an influential role and play a part. We should be heard, and we should be understood. I think that's part of what a leadership business should do, so we'll continue to do so there. With regards to questions, there's Sisters Carol Cook and Barbara Gall, I believe, have a question on the topic of food and nutritious food. Sisters.
Good morning, Mr. Easterbrook.
Good morning.
Members of the board and fellow shareholders. I'm Sister Barbara Gall.
I am Sister Carol Cook.
Representing the Sisters of Charity of the Blessed Virgin Mary, an institutional investor in McDonald's. We also represent McDonald's shareholders who are members of the Interfaith Center on Corporate Responsibility. ICCR members have a long and distinguished history of socially responsible investment in collaboration with companies to promote a just and sustainable world. As shareholders, we have been engaged in dialogue with McDonald's leadership for a number of years on a range of topics. In recent discussions, we focused on the company's nutritional impact on the families and communities it serves. These dialogues grew out of our concern about the global epidemics of obesity and nutrition-related illness, particularly as they affect children.
Sisters, I don't like to interrupt. We have around a minute per question. Would you please ease towards your question? I'll happily respond.
All right. Let me speak up, Carol.
All right. I'll talk quickly. We've urged our company to explicitly acknowledge obesity as a risk to the company in its annual 10-K report, to articulate an overall goal for increasing the proportion of the menu that meets a strong definition of healthy, which would unify and make meaningful the important but isolated goals articulated thus far.
Would you be able to lead us to a question, please, Sisters? I do want to get to a number of questions.
Yes.
We're running a little tight on time.
All right. We are pleased that in dialogue with us, the company is committed to serious consideration of our requests and ongoing engagement with us to discuss this. Our question, I suppose, is that we have your assurance that you will move from consideration of all these topics to concrete action, and we look forward to our next conversation with you.
Well, first of all, thank you both, Sisters, for the question and for your ongoing dialogue with us. We appreciate that. You certainly have my commitment. We will continue to make concrete moves in the areas of food and nutrition. It's clearly important for us. It's important to society, and you'd expect a leadership business to play a constructive role in that.
Dialogue. Thank you.
Thank you very much indeed. Thank you. Next question is Tom Buckhortis, who has a question on the availability of some menu items. Thank you, Tom.
Thank you.
Well, maybe for people listening in, it would help if they could hear it as well. Sorry about that.
Thank you. My name's Tom Buckhortis. Question I have is, whenever I'm traveling, and sometimes I'm traveling late at night, McDonald's is open 24 hours a day, which is great. I've noticed that they only offer limited menu items. Sometimes I want something healthy like a grilled chicken sandwich or a grilled chicken wrap, and I'm only told that the fryers are open up to midnight, and then they close, and I can only get a burger or French fries. If you're going to be open 24/7, your menu should be available 24/7, and everything. That probably includes breakfast. Some people want a lighter menu, breakfast late at night.
Okay. Thank you for your question, Tom. Thank you for being a regular customer as well. Couple things on this. With regards to availability of breakfast, as you may have read, we are really for the first time in a long while, actually testing the availability of breakfast all day. It's running in around 80 or so markets in San Diego at the moment. Again, we'll learn as to whether we can operationally deliver that at the same time and maintain the speed and the quality. We're exploring that.
With regards to the availability of the menu 24 hours, one of the challenges we have as a business is the menu has got increasingly broad, and I think one of the things we are looking at is how we can just trim back the menu so we can offer the majority of the items that customers love and make sure they're hot and fresh and available all day long and 24 hours. With regards to the availability on overnight, I'm aware that some restaurants do start to scale back the menu overnight, partly because it gets a little bit quieter on that period of the day, and therefore it enables us to have fewer products that maintain the quality. However, if you do have specific requests, you should make those known to restaurant. They'll try and honor those for you.
Thank you for the question and for the challenge on that. Thank you. Next question up, Mary Wagner has a question around a business decision that was made a while back.
I'd like to ask why Chipotle was sold.
It's a good question. It's not the first time that we've been asked that. In the early 2000s, we, as a business, McDonald's, begun to diversify a little bit and begun to acquire either full or partial interest in three or four other branded restaurant businesses, pizza business, burrito business, and also a chicken business and a sandwich business. All those decisions were made with a good intent. However, what it did do was begin to distract the majority of the company from focusing on what really matters, which was Brand McDonald's. When we hit a little sticky patch at the start of the 2000s, it was felt the best part to accelerate the turnaround was put everyone's effort and energy behind Brand McDonald's, and we diversified them, and we spun off all the other brands we had an interest in.
Frankly, the results from 2003 onwards for the next seven, eight, nine, 10 years probably validated that decision. No matter how any of these other brands have gone on, the sort of business they've become and grown into, good luck to them, but I think it was a good decision for Brand McDonald's and the corporation at the time. Thank you for the question. We have another question from another sister, Sister Susan Mika.
Yes. I'm Sister Susan Mika. I came today from San Antonio to be with you. Our sisters, the Benedictine Sisters of Boerne, Texas, which is right outside of San Antonio, we filed a resolution, which asked McDonald's to discontinue use of antibiotics used in humans in the supply chain for chicken, beef, and pork. We withdrew the resolution when you came out with your new policy or your updated policy in March of this year that talks about doing this in the chicken supply chain. We want to just know how you're going to continue to monitor and put all of this into practice. Of course, we are concerned about the pork and the beef supply chains. We would encourage you to publicly acknowledge, when is that going to happen.
I know that, in the discussions that we had with the company, that the policy really had not been updated since, I think, 2003. This was a big step, I believe, forward in the company's policies to get that updated. We'll be following all of that. As you know, we're longtime shareholders. We don't discourage easily. We'll be engaging with the company on this, and we would hope for some answers, if not today, then in the near future.
Yeah
I think this really is a very important question to so many of us.
I think I have the essence of your question. Thank you.
Yes.
Thank you for making the trip to join us today. In March, we released a global vision on antibiotic use, and that was across all proteins. What we have been able to do most recently is with poultry in particular, make a firm commitment. I think we've indicated our direction of travel on this. We will learn. We're a very, very big business. When we make moves such as this, there's a significant supply chain transitions that are required if you're working with our suppliers and working with experts and learning on the best use. It's not just simply about antibiotics because a number of other issues that get related to that, like animal welfare, which is also important to us as well. I think our move on poultry was a very purposeful move.
It was really well received by consumers. I think it was a good statement of intent. Thank you for the ongoing dialogue and for your investment as well. I have another question from Dr. Howard Liebman. I believe the topic is around education.
Mr. Easterbrook, thank you. More of a statement. I want to just acknowledge your team leadership for taking action, bold action on offering a high school diploma program across not just corporate-owned stores, for franchise stores as well, and how synonymous this is with the federal government's push at the current moment in upskilling and having corporations upskill their employees to either mid-management jobs or providing them with the opportunity to matriculate into post-secondary programs and re-engage back into the educational system, as evident here by Juan Garcia, who graduated recently and now is enrolled in College for America. I want to thank you and your entire management team for serving as a role model for the entire sector on how to provide educational opportunities for your entire workforce. Thank you.
Thank you. Thank you for your comment and for the encouragement. We talk a lot around entry-level jobs and first jobs, unfortunately, some people can see that as derogatory. I think that's fantastic. Everyone has a first job. If your first job's at McDonald's and you learn about some of the basic skills in the workplace and gather experiences, hopefully that will set you on the first rung of the ladder, either for a career within McDonald's or a career beyond. Frankly, I don't mind which that is. We want to create an environment where people see opportunity within. If they do move on, and they move on in a better place for it, then I think that's great. One of the realities, unfortunately, here in the U.S. is there are 40 million adults who haven't got a high school diploma.
I think if we can help, through our workforce, try and give people an opportunity to get a diploma where perhaps the education system, it didn't work out for them for whatever reason, and they're going through a mainstream education, if they can do that whilst working in the workplace, they can educate and earn at the same time, I think that's a very constructive role we play. Thank you for your comment. I appreciate that. We have another question from Julia Gabbert, I believe it's around financial performance. I ought say, we're probably going slightly over time, I'll probably take one more after this, just to let you all know.
Great. Hi, my name is Julia Gabbert. I'm with Corporate Accountability International, my question is around financial performance. More and more experts, including CFO Magazine, are questioning the financial sense in continuing exploitative practices from kid targeting marketing and from paying workers poverty wages. The public is increasingly recognizing this while McDonald's is burying its head in the sand. The signs are increasingly clear. The Bill & Melinda Gates Foundation divested its holdings from McDonald's and Coca-Cola, they were one of the largest institutional holders of McDonald's stock. Now you guys are just considered as bad as Big Tobacco. Hospitals in the U.S. and globally are kicking out your junk food brand and recognizing that you have no place in these places of healing. Most recently, officials in the U.K. are calling on public hospitals to kick out junk food brands like McDonald's.
Even competitors in the industry are distancing themselves from the exploitative practices.
We're getting close to the one minute, please.
Yep, I'm almost there
If you do have a question, I would welcome the question.
The Better Business Bureau was just the latest to take you to task on the content of your Happy Meal. My question for CEO Easterbrook and you is when will you finally protect your shareholders' investments by discontinuing the abusive practices like kid-targeted marketing and paying poverty wages when your association with them is so clearly hurting your bottom line?
Thank you for the question. I utterly refute a number of the comments you made before you got to the question. To respond to the question, you will find that the very vast majority of our shareholders are very encouraged about our plans to grow the business and grow it responsibly. Our employees are enthused about the opportunity to earn more and learn more whilst they're in the workplace. We will continue to do both of those, whether it's with your encouragement or without. Thank you. The final question, because we have run a little over, so thank you for your patience, is from Jerry Fernandez.
Good morning. I'm Jerry Fernandez, and I'm president of the Multicultural Foodservice & Hospitality Alliance, and I'm here to publicly thank McDonald's for their leadership. McDonald's is the number one player on diversity and inclusion in the food and hospitality industry. Without McDonald's, I wouldn't be here. I'm one of those examples of somebody who started out in a restaurant and went from the dish room to the boardroom. Our industry provides jobs and opportunities. McDonald's leadership in the food service industry, especially on things like supplier diversity, help Black, Hispanic, and other communities grow. I want to say another thing, that McDonald's is working with us to reach high school students with a message of stay in school, work hard, and you can be successful.
Finally, I want to say that I believe now is the time for culturally intelligent leadership, like what I see being provided here at McDonald's, to solve some of the issues that we see going on across this country. Because the restaurant industry is the good guy, not the bad guy. Thank you very much.
Jerry, thank you very much indeed again for your encouragement. I don't think there was a question there, but maybe I could just make a couple of observations on the back of yours, please, if you don't mind. I believe we were probably one of the very first businesses to appoint a Chief Diversity Officer, who happens to be with us here today, Pat. I think that was a real signal of intent way before it was vogue to do so, but it was something that was important to us. I think you'd struggle to find a more diverse business anywhere in the world than McDonald's, whether it's our workforce, whether it's our supplier base, whether it's our customer base, and all the geographic areas in which we do business and communities we do business. It's something we take, and we're very proud of that.
Just to give you a flavor here in the U.S., just to bring to life around the opportunity that McDonald's provides. We have over 3,000 owner-operators here in the U.S. More than half of them started as hourly paid crew members. Now they're running significant businesses as independent businessmen and women. That opportunity is difficult to get, and they managed to achieve that through McDonald's. Of that owner-operator base, 45% are women or people of color. I think that really speaks volumes to the diversity of our workforce and the opportunity for all. Thank you for your comment, and happy to support your enthusiasm with that. For everyone, thank you. We do want to answer all your questions, though we are out of time today.
If we didn't get to your question, we will follow up with you via email, and hopefully we'll see you in a restaurant soon and perhaps many of you back here next year. Safe travels. Thank you very much indeed.