AGM 2015

May 21, 2015

Welcome to McDonald's Annual Shareholders Meeting. So we now call this meeting to order. We also appreciate your patience in arriving to this meeting this morning. So in addition to everyone here, we are joined by those of you listening on our webcast. And for those in the room, we 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 are President and Chief Executive Officer, Steve Easterbrook General Counsel and Corporate Secretary, Gloria Santona and Chief Financial Officer, Kevin Ozan. Steve will discuss McDowell'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. So I'm now pleased to introduce our Board of Directors. And as I introduce them, 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 and Executive Global Consumer and Retail Group of The Carlyle Group Bob Eckert, Operating Partner of Friedman, Fleischer and Loew Margal Reggios, President, Americas at Google Rick Hernandez, President and CEO of InterContin Security Systems and Non Executive Chairman of Nordstrom's Gene 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 Capstone Paper and Packaging and Myles White, Chairman and CEO of Avid. So I'd like to ask the directors to stand for a moment and be recognized. We really do appreciate your service and commitment. And 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. So 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. So our first order of business is the election of Susan Arnold, Bob Eckert, Margaret Georgiadis, Rick Hernandez, Gene 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 3rd proposal is the approval of Ernst and Young as the company's independent auditor for 2015. The 4th item is an advisory vote on a shareholder proposal requesting the Board to adopt a policy to prohibit accelerated vesting of performance based restricted stock units in the event of a change in control. At this time, I call on Con Hitchcock, who is here to present this proposal in 2 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 have owned 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 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. But 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. And 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 shares 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. But 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. Hitz. And the 5th 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 Reissner, who is sure to present the proposal in 2 minutes or less. Thank you, Ms. Von Reissner. Thank you. My name is Lucia Von Reisser. On behalf of John Tvedden, I hereby move shareholder proposal number 5. Thank you. Thank you, Mr. Maurer. The 6th item is an advisory vote on a shareholder proposal requesting a proxy access by law. At this time, I call on Cambria Allen, who is here to present the proposal in 2 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. A year by move proposal 6 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 6 calls for a proxy access by law to enable shareholders that have collectively held at least 3% of the company continuously for 3 years to nominate directors on management's proxy card. The proposed bylaws are 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 filed proposal 6 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 our view is a fundamental shareholder right. Today McDonald's is at a crossroads, right with opportunity. We already saw one positive change when the company increased the minimum wage for employees of its corporate owned stores. We applaud McDonald's for recognizing what many of us already know that its workforce is its number one asset. The wage increase is an important step in strengthening the company, but 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 $140,000,000,000 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 adopt 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 6. Thank you. Thank you, Ms. Allen. The 7th item is an advisory vote on shareholder proposal requesting an annual congruency analysis of company values and political contributions. At this time, I call on Jesse Sharkey, who is free to present the proposal in 2 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 offer tending to support values for the public good while simultaneously undermining those policies with its political contributions. McDonald's is exposing shareowners 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 minimum wage across the country with large support through the National Restaurants 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 teachers' 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 Taitanya McDonald's issued 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 this turnaround is one that offers nothing more than hot air. Therefore, we urge that the shareholders vote to support Resolution 7. Thank you. Thank you, Mr. Sharkey. The 8 item is an advisory vote on a shareholder proposal requesting that the Board have the company be more proactive 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 2 minutes or less. Thank you, Mr. Chairman. I'm Justin Danhof. I represent the National Center For Public Policy Research and today my colleague at the National Center Amy Ridenour and I hereby move proposal number 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 and 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 4 in 10 Americans are misinformed about GMO safety and more than 9 in 10 are not aware of the 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 1,400,000 life years in India alone since 2002. This is real human suffering and death and it's children who too often suffer the most. If the company doesn't stand up for its products, not only will uneducated folks such as the last shareholder proponent continue to attack the company, but also hunger, malnutrition and even death can rightly be blamed in 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 8. Thank you. Thank you, Mr. Danhof. The 9th item is an advisory vote on the shareholder proposal requesting the Board publish an annual report providing metrics and key performance indicators on palm oil. At this time, I call in Lucia Von Reissner who is here to present the proposal in 2 minutes or less. Thank you. Fellow shareholders and members of the Board, my name is Lucia Von Reusner. I am here on behalf of Green Century Capital Management to move shareholder proposal number 9, 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. During 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. And the only timeline the company references is for 2,030, 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, while however, McDonald's has unfortunately not worked meaningfully with shareholders to address these concerns. So for these reasons, I hope you will support shareholder proposal number 9, 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. Han Reissner. Are there any questions or comments only related to these specific proposals? 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 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 is reflected in flipping sales and your turnaround plan addresses none of these substantial issues. You want to be seen as a modern progressive burger company, but 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? So let me thank you for your comments. And 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. And I'd like an answer to my question please. Well, we'll provide Mr. Stuebrik will be at podium for questions and answers after this presentation. So he's not going to address our question. Yes, he will address the question. Thanks. I have a question on Proposal 7. I'm Shriram Madhu Soudhanan with Corporate Accountability International. On behalf of thousands of parents, doctors, educators and McDonald's investors, it's 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 in the public only see shallow marketing and PR. You've 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. Isn't it finally time to stop targeting children hiring workers in poverty considering how clear it is that these practices are hurting your bottom line? Thank you. Mr. Richard Brook 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 7. Well, you're stretching a little bit. Steve, would you like to respond? To either of those or to both of those? To look to those that last gentleman. Yes. I mean And to the earlier one if you could please. Yes. Happy to. Let's step back and think about the underlying values of McDonald's. And from the very first year of our existence, one of our underlying evils and values has been that we put back into the communities in which we do business. And that has stayed very strong for 60 years and certainly something I'm committed to going forward. And when we think about some of the most respected people in those communities, teachers are amongst those. We all said 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 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. But I think it's entirely appropriate an owner operator on a local basis and a local community will support teachers in helping educate kids. 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 related to proposal 7. 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 United States 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, but 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. So 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 15, the NRA Let me just interrupt this for a moment. You're past 1 minute. Thank you. Hello. My name is Charlie Fike and this is in regards to Proposal 8 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. Esuberk will deal with that in his podium shortly after I leave. Wonderful. I look forward to that. Thank you. Hi. My name is Holly Silvers. I've been a shareholder for over 25 years. And can we have some good news about proposal number 7. First of all, I don't think we need to pay $15 an hour. I don't think I think what we haven't ever stressed at McDonald's of the famous people that worked at McDonald's, the likes of Sharon Stone, Shania Twain, CEO, some CEO that owns Amazon, Jeff Bezos, Jay Leno. And I'm sure if they would be making $15 an hour, they'd still be working at McDonald's. And we get to realize, I even have a nephew who's an ENT specialist at UCLA. He worked at McDonald's a teenager and now he's doing his fellowship at Harvard University. I think McDonald's is a stepping stone for people to have their first job. And I think they've done a great job. And if this persistent speeds up, we're going to have robots and less employees and they're going to be shooting themselves in the foot. And in all fairness, I must say, thank you for your comments. Your one minute has expired. Now is there a motion to move on all the proposals? I'm sorry. Hi. I have a question related to Proposal 7. My name is 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, Don Sweeney at the NRA's annual trade show. She talked about the restaurant industry being a pathway to achieving the American dream. But at Rock, we know the vast for the vast majority of restaurant workers, the wages 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 TIP workers. We know that McDonald's is one of the 2 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 Rock to ensure your employees and all restaurant workers are paid a living wage and treated with dignity and respect before you walk away from the NRA? Thank you for your question. Can I get an answer? Mr. Rishi will be up here in just a moment. He'll answer all questions. I'm speaking to proxy number 7. My name is Leo Segede and I'm the mother of 3 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. So when you said you were making McDonald's a progressive burger company, I got really excited. But what kind of modern progressive burger company sends a clown to school or give 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 for 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? We finally retire Ronald McDonald. Thank you for your comments. Okay. I would like an answer. Thank you. So is there a motion on all of the proposals? So moved. 2nd? Okay. 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 its shareholder proposals. The reason for the Board's recommendations are outlined in our proxy statement. So 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. And if you have a question for the general Q and 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. And I will now turn the meeting over to Steve Easterbrook for remarks on McDowell'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 commitment to doing the right thing for our business, our people, our customers and of course our shareholders. So ladies and gentlemen, Steve Easterbrook. Thank you, Andy. It's been great working with you so closely these past few months. And 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. And 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. And 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 Almario, Executive Vice President of Global Supply Chain, Development, Franchising and Sustainability Dean Barrett, Senior Vice President, Global Marketing Pete Benson, 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 1 Brigitte Kauffing, Senior Vice President and Chief Communications Officer Rich Florsch, Executive Vice President and Chief Human Resources Officer Dave Garland, Senior Vice President of Corporate Strategy Doug Gore, who is currently President of McDonald's Europe and will be President of International Lead Markets effective July 1. J. C. Gonzalez Mendez, Senior Vice President of Global Inclusion, Community Engagement and Philanthropy Eric 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 1 Edgardo Navarro, President of McDonald's Latin America Atif Rafiq, Senior Vice President and Chief Digital Officer and Jim Staffington, Executive Vice President of Operations and Technology Systems. 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 1 of the world's largest networks of independent business women 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 1,000 restaurants around the world. Our agency partners help us reach customers in meaningful ways and approximately 1,900,000 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 $6,400,000,000 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. And 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. 1st, a continuous improvement of our food, building on our commitment to quality and freshness, whilst 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. 2nd, 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, fun ways. And 3rd, building brand trust. As part of the loving campaign launched in the U. S. This year, a commercial with McDonald's sign 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. 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 in our chicken supply by 2017. We are one of the founding members of the Global Roundtable on 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. And 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 4 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 in accelerating our franchising, moving from 81% franchised restaurants to about 90% franchised globally. We will refranchise about 3,500 restaurants over the full year period ending 2018, putting more restaurants into the hands of our best owner operators and getting closer to the customers and the communities within which we serve. We expect our organization restructure, new ownership strategy and a stronger financial discipline to deliver $300,000,000 in net annual savings. And 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 UK continues its positive performance, growing comparable sales, operating income and franchisee cash flow. The UK 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, reenergizing McCafe and reinvigorating its premium offerings with a new entrees such as the Rump Steak Burger. Around the world, Australia, France and throughout Europe, we are driving greater convenience and personalization in the restaurants. And 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 are underpinning the development of a compelling everyday value proposition this summer to drive baseline sales and guest counts. We continue to test innovation 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 restaurant a wage increase and paid time off. Through Archway's 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. And 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. And today we're honored to have 2 such people in attendance. With us is Juan Garcia, who earned his high school diploma through Archways to Opportunity and is the 1st employee to do so. Juan is General Manager of a restaurant in Chatsworth, California. And next he plans to work towards a college degree. And also with us is Jeffrey Gearhart II who goes by L. J. L. J. Was recently recognized as Student of the Year by the American Council on Education, which is a national association of 1700 Colleges, Universities and Education Entities. This award is presented annually to just one student who demonstrated outstanding achievements in their community. LJ manages 2 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 and that is what we'll continue to be. We will create strategies that leverage our scale and convening power and we'll look for new ways to connect with customers through our sports and entertainment partnerships, the Olympics and World Cup amongst others, as well as working with brands such as Apple and a whole host of external content creators. And 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 2,000,000,000 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 $8,000,000,000 to $9,000,000,000 to shareholders this year and reach the top end of our 3 year $18,000,000,000 to $20,000,000,000 return target by the end of 2016. I'm excited by the moves we're making to reassert McDonald as a leadership brand. There's much work ahead and 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. And since becoming CEO earlier this year, I've spoken about making bold moves to turn around our business and that is what we're doing. It's how leadership brands evolve and continue to thrive and 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, more customers, deliver a better experience today and tomorrow and 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 and 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. And now I'd like to bring our Board Chairman, Andy McKenna, back to the podium. Thank you. So thank you, Steve. So we have received the preliminary voting results from the independent Final results will be posted on McDonald's website after all of 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 and executive compensation with the support of 93% of the shares voted. Shareholders have approved Ernst and Young as the company's independent auditors for 2015 with the support of 98% of the shares voted. And the advisory shareholder requesting the Board adopt a policy to prohibit accelerated vesting of performance based RSUs in the event of a change in control had 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 percent of the shares loaded. The advisory shareholder proposal requesting an annual congruency analysis 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 loaded. So 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 question session. Steve? Thank you very much, Andy. I think there were 2 questions we said we would comment on in the Q and A. And then clearly a number of questions have been submitted by you all. A number of them on the same similar topics. So 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. So 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. And 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 minimum regulations. So for example, when it comes to children, I mean the moves we have made across our Happy Meals have been substantial, both in the way we've introduced new items and arranged some choices, but also the way we've encouraged and helped parents encourage their kids to eat more fruit and low fat dairy. So let me just give you some statistics on that. In the last 3 years, once we've incorporated sliced apples into Happy Meals, we've 1,300,000,000 children have benefited from that or 1,300,000,000 bags of apple slices being distributed in just the U. S. Alone. When we introduced QT just for 5 months across the winter here in the U. S, 37,000,000 QT were enjoyed by children. So I think that's the kind of business. When I talk about progressive business, it's about using our influence and being 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, 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. So and he's busier than ever. So Ronald stands for fun. I mean, 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, then I think that that is a very positive role that Ronald play. So he's here to stay. Also, Roberto, regarding 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 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 educational opportunities from Archway to Opportunity such that Juan and L. J. 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. So when the paychecks come in, the first paychecks come in on the 1st July, I'll 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. But I just want to make sure that that move is not misunderstood. That is something we're proud of. We stand firm and hard behind. With regards to I mean we do a business such as ours, we have all sorts of businesses and affiliations. We learn from people. We have a affiliations. We learn from people. We have affiliations with business who can help advise us, who we can help learn from and that we can help offer opinions into. So 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. And we should be heard and we should be understood. And 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 Gore. I believe I have a question on the topic of food and nutritious food. Sisters. Good morning, Mr. Easterbrook, members of the Board and fellow shareholders. I'm Sister Barbara Gall, And 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 Interface Center on Corporate Responsibility. ICCR members have a long and distinguished history of socially responsible investments 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? Sis, I don't like to interrupt. We have around a minute per question. Would you please ease towards your question? I'll happily respond. I'll talk quickly. We've urged our company to explicitly acknowledge obesity as a risk to the company as annual 10 ks reports articulate an overall goal for increasing the proportion of the menu that meets a strong definition of healthy, which would unify a meaningful, the important but isolated goals articulated thus far. Would you be able to lead us to a question please sisters because I do want to get to a number of questions. Yes. And 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 request and ongoing engagement with us to discuss this. So we are 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. Thank you. Well, first of all, thank you both sisters for the question and for your ongoing dialogue with us. And we appreciate that. You certainly have my commitment that we will continue to make concrete moves in the areas of food and nutrition. And 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. Thank you very much indeed. Thank you. Next question is Tom Ricourtis who has a question on the availability of some menu items. Thank you, Tom. Well, maybe for people listening in, it would help could hear it as well. Sorry about that. Thank you. My name is Tom Buckman. 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. But I've noticed that they only offer a limited menu items. Sometimes I want something healthy like a grilled chicken sandwich or grilled chicken wrap. And I'm only told that the fryers are open for up to midnight and then they close and I can only get a burger or French fries. If you're going to be open 20 fourseven, your menu should be available 20 fourseven and everything. And 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. A couple of 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. Now it's running in around 80 or so markets in San Diego at the moment. And again, we'll learn as to whether we can operationally deliver that at the same time to maintain the speed and the quality. So we're exploring that. With regards to the availability of the menu at 24 hours, I mean, one of the challenges we have in the business is the menu has got increasingly broad. And 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 again it gets a little bit quieter on those 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 rational. They'll try and honor those for you. But 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? And 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 3 or 4 other branded restaurant businesses, pizza business, burrito business, and also 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 what really matters, which was brand McDonald's. And when we hit a little sticky patch at the start of 2000, it was felt the best part to accelerate the turnaround was for 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. And frankly, the results from 2,003 onwards for the next 7, 8, 9, 10 years probably validated that decision. So 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 Brann McDonald's and the Corporation at that time. But thank you for the question. We have another question from another sister, Sister Susan Micah. Yes. Sister Susan Micah came today from San Antonio to be with you. Our sisters, the Benedictine sisters from 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. And 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. So we want to just know how you're going to continue to monitor and put all of this into practice. And of course, we are concerned about the pork and the beef supply chains. And so 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 2,003. So this was a big step I believe forward in the company's policies to get that updated. And so we'll be following all of that. As you know, we're long time shareholders. We don't discourage easily. So we'll be engaging with the company on this. And we would hope for some answers, if not today, then in the near future because I think this really is a very important question. I think I have the essence of your question. Thank you for making the trip to join us today. So, in March, we released a global vision on antibiotic use. And that was across all proteins. And what we have been able to do most recently is with poultry in particular make a firm commitment. But I think we've indicated our direction of travel on this. We will learn. I mean we're a very, very big business. So when we make moves such as this as a significant supply chain transitions that are required working with our suppliers and working with experts and learning on the best use. And it's not just simply about antibiotics because there's a number of other issues get related to that like animal welfare which is also important to us as well. So I think our move on poultry was a very purposeful move. It was really well received by consumers. And I think it was a good statement of intent. But thank you for the ongoing dialogue and for your investment as well. I have another question from Doctor. Howard Liebmann. And I believe the topic is around education. Mr. Easterbrook, thank you. More of a statement. I want to just acknowledge the entire your team leadership for taking action bold action on offering a high school diploma program across not just corporate owned stores, but 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 reengage back into the educational system, as evident here by Juan Garcia who graduated recently and now is enrolled in College For America. So 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 opportunity for your entire workforce. So thank you. Thank you. Well, thank you. Thank you for your comment and for the encouragement. I mean it's yes, we talk a lot around entry level jobs and first jobs. And unfortunately, some people can see that as a derogatory. So I think that's fantastic. Everyone has a first job. If your first job is 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. And frankly, I don't mind which that is. We want to create an environment where people see opportunity within, that they do move on and they move 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 40,000,000 adults who haven't got a high school diploma. And I think if we can help through our workforce try to 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, 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. So thank you for your comment. I appreciate that. We have another question from Julia Gabbard in regard I believe it's around financial performance. And I would say we're probably going slightly over time. So I'll probably take one more after this just to let me know. Hi. My name is Julia Gaber. I'm with Corporate Accountability International. And my question is around financial performance. More and more experts including CFO Magazine are questioning the financial sense and continuing exploitative practices from kid targeting marketed and from to paying workers poverty wages. And the public is increasingly recognizing this while McDonald's is bearing its head in the sand. And the signs are increasingly clear. The Bill and Melinda Gates Foundation divested its holdings from McDonald's and Coca Cola and they were one of the largest institutional holders of McDonald's stock. And now they are just you guys are just considered as bad as big tobacco. And hospitals in the U. S. And globally are taking 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 self from the exploitative practices. We're getting close to the 1 minute. Yes, I'm almost there. The better business here was just the latest to ask you to take you to task on the content of your Happy Meal. So my question for CEO, Benson 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. But 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. And our employees are infused about And 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 Food Service and 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 and 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. And 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 the first probably one of the very first businesses to appoint a Chief Diversity Officer who happens to be with us here today, Pan. So I think that was a real signal of intent way before it was vogue to do so that it was something that was important to us. I think you would 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. But 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 business men 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. And I think that really speaks volumes to the diversity of our workforce and the opportunity for all. So thank you for your comment and happy to support your enthusiasm with that. But for everyone, thank you. We do want to answer all your questions, but 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. So safe travels. Thank you very much indeed.