McDonald's Corporation (MCD)

AGM 2013

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May 23, 2013

Welcome to McDonald's Annual Shareholders Meeting. So in addition to everyone in this room, we are joined by others in the Grand Oaks Ballroom and those of you on our webcast. I'm also pleased to announce that we have students from Ariel Academy and St. Eperolita School here with us today. So welcome to all of you. Now if you're here in person, you have a copy of the agenda for our meeting today and information about our procedures. With me on stage are President and Chief Executive Officer, Don Thompson General Counsel and Corporate Secretary, Gloria Santona Chief Operating Officer, Tim Fenton and Chief Financial Officer, Pete Benson. Don Thompson will detail McDonald's performance and plans in a few moments, following the business portion of the meeting. The Board in its oversight role believes that Don and his leadership team are doing the right things to move McDonald's forward in today's environment. And you could be assured that your Board continues its commitment to good corporate governance and management oversight. Our Board is comprised of a diverse, independent minded and experienced group of business leaders, all of whom remain committed to representing you and enhancing shareholder value. So I'm now pleased to introduce the Board of Directors to you. As I introduce our individual members, please hold your response until everyone has been presented. In addition to John Thompson and me, your directors are Susan Arnold, former President of Global Business Units of the Procter and Gamble Company Bob Eckert, former Chairman and CEO of Mattel Inc. Rick Hernandez, President and CEO of InterContin Security Systems and Non Executive Chairman of Nordstrom, Inc. Gene Jackson, President of Direct to Consumer for Nike, Inc. Rick Lenny, operating partner of Freeman, Fleischer and Loew LLC, a private equity firm Walter Massey, President of the School of the Art Institute of Chicago and a nominee for election at this meeting Kerry McMillan, CEO of 2 Partners Consulting Sheila Penrose, Non Executive Chairman of the Board of Jones Lang LaSalle Inc. John Rogers, Founder, Chairman and CEO of Ariel Investments LLC and a nominee for election at this meeting Roger Stone, Chairman and CEO of Capstone Paper and Packaging Corporation and a nominee for election at this meeting and Myles White, Chairman and CEO of Abbott and a nominee for election at this meeting. I'd like the directors now to please stand and be recognized. We really do appreciate your service and commitment. Now we're also pleased to have with us today past directors, Capp Adams, Don Lubin and our recently retired Vice Chairman and CEO, Jim Skinner. I now call the business portion of today's meeting to order, and I will turn to Gloria Santona, our Corporate Secretary, to begin this session. Gloria? Thank you, Andy. I can advise that a quorum of the company's shares outstanding is present to conduct a meeting. The polls are open and will close at the end of the business portion of the meeting. Our order of events is as follows: The Chairman will introduce each proxy proposal and after all of the proposals have been presented, we'll ask if anyone has questions or comments on the proposals. If you have questions or comments on other McDonald's business matters, please save them for the general discussion period later in the meeting. So that as many shareholders as possible have an opportunity to speak, we ask that you limit any comments or questions to no more than 1 minute. 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. Thank you, Gloria. So our first order of business is the election of Walter Massey, John Rogers, Roger Stone and Miles White as Directors. The 2nd proposal is an advisory vote on executive compensation. The 3rd proposal is the approval of Ernst and Young as the company's independent auditors for 2013. And the 4th item is an advisory vote on the shareholder proposal. At this time, I call on Maureen O'Brien, who is here to present the proposal in 2 minutes or less. Maureen? Bernie Martine is not here, so we will go forward and she'll have an opportunity before we take the vote. The 5th item is an advisory vote on a shareholder proposal. At this time, I call on Martin Glasser, who I know is here to present the proposal in 2 minutes or less. Mr. Glasser? Thank you, Mr. Chairman. For the record, my name is Martin Glasser of Chicago, a long time shareholder in the company. Point of order, We have a few proposals on the agenda presented by the management. We would like to discuss some of the proposals that the management has proposed election of directors and auditors etcetera. We're going to have the opportunity to discuss those proposals. I think Mr. McClasser you heard us propose a certain proposal. I'm pleased to go forward with that. Yes. I know. I'm going to propose it. But I want to know I asked for a point of order, are we going to be able to discuss the management proposals, election of directors? Do you hear her say something? Fine. Could you is something you want to say about that? Yes. I have two comments on the election of directors. Go forward. The first point is, it appears to me, since I've been the President of the Cincinnati Union Stockyard Company since 1965, In my bylaws, we have the provision for Director of Emeritus. It would appear to me that here at the McDonald's, we do not have in our bylaws the position of Director of Emeritus. You recently you introduced a few of our former directors and it appears that if we had the proposal we had amendment in our bylaws providing for Director of Emeritus, we would still have the services of the 2 former 3 former Directors who have retired. The second so I have a request that the Board of Directors consider having the bylaws amended to provide for Director of Americas. Thank you, Mr. Glasser. The second point of order is annual election of directors. I was a long time shareholder of Midway Games and I submitted a proposal to elect annual election of directors. The company was run by Mr. Sumner Redstone. Sumner Redstone agreed to the proposal. He had all the directors resign at one time and had everybody all the directors at the same time elected on an annual basis. I say if it was good enough for some of the Redstone who runs CBS and Viacom, it should be good enough here at McDonald's. Mr. Glasser, please. Our directors are elected on an annual basis. But we're 2 of several of them are being elected at this time and all the others aren't elected at this time. As our terms expire, as you may know, last year we went away from a staggered Board. And so it will be all up to the annual election henceforth. And you have a very limited amount of time now on your proposal. Okay. Thank you for your comments. Now about my proposal, which is found on the proxy statement, let the record indicate that I read the proposal and the reasons. And I have one comment on the proposal. And I refer using the time to refer to the recent shareholder proposal at JPMorgan Chase. 1 of the proponents didn't use the argument that they didn't have the funds available, the same amount of money that the company used to solicit no votes. If the proponents had the same amount of money to solicit yes votes, the results would be higher. And I believe here at McDonald's that the proponents of shareholder proposals got the same funds available to solicit proxies as the same amount that the management uses to solicit no votes, the results would be much higher. Thank you very much. Thank you, Mr. Lasser. Okay. The 6th item is an advisory vote on a shareholder proposal. At this time, I call on Deshuda Desikan, who is here to present the proposal in 2 minutes or less. Deshuda? My name is Vasuda Deskin. I'm representing the Apti Employees Pension Plan and the co filer of the UAW Retiree Medical Benefits Trust. I hereby move stockholder proposal 6 asking the company to issue a report detailing its human rights risk assessment process. Specifically, this process goes beyond asking a company to adopt a human rights policy and ask for information about how McDonald's assesses human rights risk. Our company points to its demonstrated commitment to human rights through various company policies as essential argument against implementing this proposal. The company's standards of business conduct are valuable first step, but it's very different from what this proposal asked, which is how a human rights policy can be applied throughout the company. A commitment to human rights in the form of principles is great, but it leads to the question of how a company identifies human rights risk and incorporates that knowledge to improve its systems and practices. Companies must assess the risk to shareholder value posed by human rights practices in their operations and supply chain in order to effectively translate human rights principles into appropriate practices and manage that risk. We note that McDonald's has faced controversies over its human rights practices in its business operations in many countries. For example, McDonald's came under fire in 2000 when press reports indicated that underage workers were manufacturing toys used in the Happy Meals. And more recently, company workers have participated in strikes and walkouts for better wages and working conditions across the country. The company has acknowledged that boycotts or protests, labor strikes and supply chain interruptions could adversely affect the company's ability to execute on strategic plan. All of this increases the company's exposure to human rights risk. We'd like to note that proxy advisor ISS recommends that its clients vote for this proposal. Finally, human rights risk assessment reporting would enable McDonough to identify and mitigate risk and would enable shareholders to understand the potential effects on shareholder value. We urge all stockholders to vote for this proposal. Thank you. Thank you, Vasudev. Now, the plant and loader business is an advisory vote on the shareholder proposal. So at this time, I call on Tanya Fields, who is here to present the proposal in 2 minutes or less. Tanya? Good morning. Good morning. Thank you. My name is Tanya Fields. I'm a single mother of 4 and the Executive Director of an organization called The Black Project. I'm here today to communicate the growing international concerns that have led to today's resolution regarding how McDonald's continues to contribute to the global academic of diet related disease. McDonald's avoidance of meaningful change contributes continues to put the health of millions of children like mine worldwide at risk, while also risking the investments of shareholders. In the neighborhood of the Bronx where I live, food options are limited. My community is a food swamp, filled with corner stores and fast food and lacking fruits and vegetables. McDonald's happens to be the biggest alligator in that swamp. I have 3 McDonald's within walking distance of my home. But it's not simply the saturation of fast food that is the problem. It is the deluge of fast food marketing to my 4 children and people in my community who have children. McDonald's has long inundated children with marketing, seeking to hook kids on the brand in their early age and make them customers for life. Perhaps nowhere is McDonald's predatory marketing more pervasive than in communities of color, where Ronald McDonald's in my children's school or the gymnast Gabby Douglas is on television or the demeaning website 365black.com. This targeted marketing is everywhere and it is a recipe, Mr. Thompson, for disproportionate disease rates that my community and community of colors can no longer stomach. I'm doing all that I can through my organization and my activism to feed my children healthy food. And I'm tired of McDonald's targeting my children in my community at every possible turn with marketing designed to undermine my choice. So I'm here to tell you that I'm not loving it. As the growing movement of moms around the world call on the corporation to stop interfering in our children's health as health professionals continue to urge you to stop driving a global epidemic of diet related disease, as communities increasingly seek policies of solutions to limit fast food influence, I urge McDonald's for genuine action to address these increasing concerns about McDonald's unhealthy products and marketing practices. Sorry, 4 slices of apples and plastic packaging won't cut it. In closing, McDonald's can mitigate its risk to shareholders and and to long term sustainability of the corporation by accepting the resolution and assessing whether the scope and scale of the corporation's response keep pace with the growing movement demanding McDonald's stop marketing to children. Thank you. Thank you, Tanya. Alex, morning O'Connor arrived on the first proposal. Okay. If not, are there any questions or comments on any of these proposals? If not, is there a motion to move on all of the proposals? I have a question. Since the proponent of the first proposal wasn't here, what action is the company going to take on that matter? Well, we'll see. We're calling we're going to call for both. Are we going to introduce that proposal even though the proponent isn't here? It has been introduced. Seconded? We just called for a motion. I'll call for a second on it. So we'll see what after all, the shareholders who voted on it took the time to vote on it and so they should have an answer. Thank you. Thank you, sir. You're very helpful. So your Board of Directors recommends a vote in favor of the election of all Director nominees, in favor of the appointment of Ernst and Young as auditor and in favor of Maniquis' advisory proposal related to executive compensation. The Board recommends a vote against each of its shareholder proposals. Now the reasons for these recommendations on shareholder proposal are outlined in the proxy statement. So if you are voting at the meeting, please complete and sign your ballot and motion to an usher to collect it. Again, if you've already submitted your proxy, you do not need to vote by ballot. And the business portion of this meeting is included. The polls are now closed. And I will now turn the meeting over to Don Thompson for remarks on the McDonald's business and to lead the general question and answer session. I also want to take this opportunity to thank Don for his strong leadership and his passion for the brand. Don is a tireless champion for McDonald's who epitomizes integrity and always doing the right thing for our business and our customers. So ladies and gentlemen, Don Thompson. Good morning. First off, Andy, thank you very much for that kind introduction. And to Jim, it's truly a pleasure, buddy, to have you here with us and it's an honor. You were and have been such a tremendous leader of this brand for 8 years and a partner to so many of us over 41 years. So we appreciate everything that you've done. No one has stood more proudly or fearlessly for this brand and the things that we've done and contributed to society as a whole and we look so forward to building on that legacy. So thanks so much for being I also want to take this time to thank all of you for being here with us and for your investment in McDonald's. It's truly a privilege to be part of Brand McDonald's and to lead this great organization as we continue to work to become our customers' favorite place and way to eat and drink. And for so many of us, this is truly a passion. This is what we do. This is our life. You've already met our Board of Directors, and I'd like to take this time also to personally thank Andy and all of our independent directors for their outstanding guidance and your insight. It's truly appreciated. Also want to recognize our senior management team, starting on stage with Gloria Santana and Tim Fenton and Pete Benson. In addition, Jose Amario, our Executive Vice President of Global Supply Chain, Restaurant Development and Franchising Bridget Coffey, Senior Vice President and Chief Communications Officer Rich Florsch, our Chief Human Resources Officer Doug Gore, President of McDonald's Europe J. C. Gonzalez Mendez, Senior Vice President of Corporate Social Responsibility, Sustainability and Philanthropy Dave Hoffman, President of McDonald's Asia Pacific, Middle East and Africa Ken Koziol, Executive Vice President and Chief Restaurant Officer Adam Krieger, our Senior Vice President of Corporate Strategy Jim Sappington, our Chief Information Officer and Jeff Stratton, President of McDonald's USA. I'd like to ask those members of senior management who are here today to please stand and be recognized. At McDonald's, we're proud to serve 69,000,000 guests in more than 100 countries around the world every day. Our focus is singular. It's on satisfying our customers' needs around the world. We focus on operational excellence in our restaurants deliver on the quality, the service, cleanliness and the value our customers expect at McDonald's. At the same time, we're focused on remaining relevant as consumers' expectations continue to evolve. We're developing great tasting new products and working to create a modern and a contemporary restaurant experience. We're able to achieve this balance through our 3 legged stool of owner operators, our supplier partners and company employees. Now our world class owner operators, one of the world's largest networks of independent business people own and operate 81% of our restaurants around the world. And while McDonald's is a global brand, we're also a local brand. Most of our restaurants are owned and operated by businessmen and women who live in the communities that they serve. In the United States, 89% of our restaurants are franchised and nearly half of our U. S. Franchisees, about 1200 of them started as hourly employees in our restaurants. Today with us here, we have owner operators representing 10 countries from around the world. I'd like to ask all of you to please stand and be recognized. In addition to our owner operators, our outstanding network of suppliers around the world enable us to guarantee the delivery of safe, high quality products to our more than 34,500 restaurants each day. And our communications and marketing agency partners help us responsibly and appropriately share our brand story and unique brand attributes with consumers globally. The 3rd leg of our stool is the 1,800,000 employees who support and work in McDonald's restaurants, helping us create connections with our customers and in their communities every day. They are tireless and passionate believers and ambassadors for brand McDonald's. Nearly 60 years ago, our founder Ray Kroc made a statement about how we operate our business that is as relevant today as it was back then. He said, take calculated risk, act boldly and thoughtfully, be an agile company. We continue to apply that same philosophy to our business and our operations today. And while the informal eating out category was flat to declining throughout 2012, we continue to grow market share. We increased global comparable sales by 3.1% and improved system wide sales by 5%, both in constant currencies. Every area of the world contributed to our performance, with comparable sales up across each segment. We also grew operating income 4% and delivered 5% growth in diluted earnings per share, both in constant currencies. Additionally, we returned $5,500,000,000 to shareholders through share repurchases and dividends. Our results are truly a testament to our resilient business model, our talented and aligned system and our broad and deep experience in many different operating environments. And like you'll see in this commercial from Canada, our customers have come to know us and to count on us all around the world. The potential to continue growing our brand and drive enduring and profitable growth is significant, both in the short and the long term. We will capture this potential by executing our plan to win and our 3 global growth priorities. Those priorities are optimizing our menu with delicious and relevant food and beverages that balance our classic core favorites with new taste. Also modernizing the customer experience by upgrading every aspect of our restaurants from the look of our lobbies and our exteriors to improving the way we engage with our customers and by broadening accessibility to brand McDonald's and being available when and where our customers want us at a price they can afford. Let's start with optimizing our menu. We continue to balance the strength of our global core products with our efforts to remain locally relevant across all categories, dayparts and price points. True to our values, our markets are continuously learning from each other. Proven menu solutions are scaled from market to market, especially in our 4 key growth categories of chicken, beef, breakfast and beverages. Hopefully, you all received the Be Our Guest card for our new premium McWraps when you checked in. This delicious new product, which originated in Poland, has already expanded to 33 countries around the world. Our beverage platform is another example of our learn, share and scale philosophy. Mid Cafe Specialty Beverages started in Australia. The U. S. Then adopted this concept and built on it with real fruit smoothies and Breakfast also remains a significant growth opportunity. That's why the U. S. Introduced the Egg White Delight McMuffin earlier this month and why you can now order any breakfast sandwich with egg whites. While new menu news is very important, we remain highly committed to our core classics. Products like the Big Mac, our world famous fries, hamburgers, cheeseburgers and Chicken McNuggets are an important part of our menu that continue to account for about 25% of our total sales. Our second priority, modernizing the customer experience, is all about ensuring that we keep pace with our customers' expectations in our restaurants. We've already reimaged more than 60% of our interiors around the world and we expect to hit the 50% milestone for our exteriors by 2015. Modernization goes beyond reimaging to include the many other ways that our customers engage and interact with our brand, ways like mobile ordering and delivery, self order kiosks, just to name a few. Our 3rd priority broadening accessibility is about being available to our customers when and where they want McDonald's, wherever they may be. That's why we're open longer and more restaurants and why we continue to strategically add new restaurants when and where appropriate. Last year, we opened more than 1400 new restaurants around the world. This year, we plan to open between 151600 restaurants in both established and emerging markets. We also continue to add multiple order points and cashless payment options to name just a few of the solutions that are helping make McDonald's even more convenient around the world. Another major aspect though of accessibility is affordability. In today's environment, affordability is top of mind for consumers everywhere. That's why offering great taste for great value across our menu board is an important part of our accessibility strategy. In France, for example, the casse croute sandwich and drink combination has enabled us to compete more aggressively with local bakeries. In Australia, our loose change menu offers 7 choices at various price points, everything from an indulgently sweet creamy soft serve cone to a juicy beefy McDouble hamburger. In the U. S, we remain committed to our dollar menu and keeping it relevant with new news like the Grilled Onion Cheddar Hamburger or the Spicy McChicken sandwich. Let's take a look. The environment in which we're living and operating has changed. And we as McDonald's have continued to change along with it. The McDonald's of today and of tomorrow is an aggressive and an appealing leadership brand. And while we continue to look to the future, we remain firmly rooted in our core values and in our commitment to making a meaningful difference in the communities that we serve. From the investments we make in developing today's workforce and tomorrow's leaders by providing training and career opportunities to our community outreach efforts and continued support for Ronald McDonald House Charities and our work across the broad spectrum of sustainability from energy to animal health and welfare, we take pride in what we're doing in the areas of food, sourcing, people, community and our planet. And we are determined to keep doing more. We have an incredible iconic brand that we can leverage to accelerate our growth and enrich the world. And we're committed to doing this in a more focused and ambitious way as we serve good food through good people and by being a good neighbor. Optimizing our menu, modernizing the customer experience, broadening accessibility and continuing to do good, these are the McDonald's top priorities. I'm energized by our opportunity to be a bright spot in our customers' days and confident in our ability to grow our business as we become even more relevant and trusted all around the world. Before we open it up for your questions, I want to acknowledge our honorary Chairman and 1st Grill Man, Fred Turner, who passed away earlier this year. We've been so fortunate that Fred chose to dedicate his talent and foresight to our brand And we pay the greatest tribute to Fred as we deliver quality, service, cleanliness and value to our 69,000,000 customers each and every day. The meeting will resume after this commercial break. We have Fred's daughters, Terry and Paula and 2 of Fred's grandsons, Jack and Steve Grasso, here with us today. Please stand and let us recognize you for all you've done. I'd like to thank all of you again for your investment and your confidence in McDonald's. We'll now open the meeting for questions both here in the room and from the Grand Oaks Ballroom. Please remember to limit your questions to 1 minute. This will ensure that we can accommodate as many questions as possible. With that, we'll take questions. I see on the left, Ms. Hanna? Yes. We have a question regarding Nutrition at McDonald's and it's from Hannah Robertson. Hi, Hannah. My name is Hannah and I am 9 years old. My mom has taught me that there are things in life that just aren't fair, like when your pet dies or you have to miss a special event because you have a cold. Something that I don't think is fair is when big companies try to trick kids into eating food that isn't good for them by using toys and cartoon characters. If parents haven't taught their kids about healthy eating, then the kids probably believe that junk food is good for them because it might taste good. Then they will just keep bugging their pants to give them that food. It isn't fair that there are so many kids my age and younger that are getting really sick with diseases like diabetes and obesity. That is really sad. It was how I make cooking videos with my mom that show kids that eating healthy can be fun and yummy. We teach them that eating rainbow fruits and veggies makes kids healthier, smarter, and happier because that is the truth. Mr. Thompson, don't you want kids to be healthy so they can live a long and happy life? Anna, thank you very much for your questions. And by the way, it was good to meet you upfront. Couple of things, Hannah. First off, we don't sell junk food, Hannah. My kids also eat McDonald's. When they were about your size to my son who's with us today was a little bit bigger, was a football player. And also they cook with me at home. I love to cook. We cook a lot of fruits and veggies at home. We sell a lot of fruits and veggies at McDonald's and are trying to sell even more. With the apples that we introduced into the Happy Meals, we sell different fruits and different varieties. I was telling you a little bit earlier about things we like to introduce even more if there's an affinity for them like kiwi on a stick and pineapples and we serve side salads And we serve those for $1 on our dollar menu and they're very affordable. And so there's a lot of things that we've done our chicken nugget happy meals, fat free milk, both we also just changed the chocolate fat free milk. We're making a lot of changes at McDonald's and we'll continue to. I think it's really great that you want to continue eating more fruits and more vegetables. I honestly hope even more kids do. I know that as my kids came up, sometimes I had to nudge them a little bit more to eat some more fruits and vegetables, but they did eat quite a bit of fruits and vegetables and that's what we served in our household as well. So thanks so much for the question, Hannah. Next question? I have a question here about McDonald's in the hospitals. And this is Mr. Shahram. I'm sorry. I'm going to let him tell you his name. And he's here by proxy. Good morning. I'm Shriram Madhushuvananth from Corporate Accountability International. Through our Value the Meal campaign more than 3,000 health professionals have urged this corporation to stop marketing to kids and to address its role in driving diet related disease. McDonald's has long placed stores in hospitals to create a false sense of helpfulness, using hospitals as part of McDonald's marketing strategy. But hospitals aren't buying it anymore. Most recently, Truman Medical Center kicked McDonald's out specifically citing health reasons. Healthcare providers will no longer participate in sending such mixed messages. CEO Thompson, how will McDonald's address growing brand liability as hospital after hospital protect their patient's health and distance themselves from McDonald's? Shriram, thank you very much for the question. Just to make sure that we're all on the same page, we have about 25 restaurants and hospitals out of the 14,000 in the United States. The and in many of those hospitals, we've actually there's many hospitals that have asked us to come back in or actually never to leave hospitals. So there's a lot of places that we're in and we're doing great business and have great relationships in those hospitals. In addition, there's about 100 Ronald rooms, as we call them, in many of the hospitals around the U. S. And hospitals around the world. And in those hospitals, we're also trying to take care of holistic family needs. So not just the selling of food, but also through rental rooms and through things we can do to take care of a whole child when they're sick or ill and their families can be there with them for treatment. So we will look at hospital opportunities as they come up and if hospitals would like to engage with McDonald's and we do have many of those that we're entertaining at this point in time. We won't always go if the business model doesn't seem right or if the relationship doesn't seem right, but we'll continue to look at that. In addition, we continue to migrate our menu. We've added a lot more fruits, a lot more vegetables. We talked about many of those things, talked about things like smoothies and salads and beverages. And believe me, we like to see even more. What's rather interesting is in many of the places even when we have all of those, as customers come in to choose, they may one day to have a burger, one day to have a chicken sandwich, one day to have it grilled, one day to have a salad. And we think customers should have their choice, but we'll continue to work with hospitals when and where appropriate and when the relationships and the business model merit it. Thank you. Next question. Yes. Our next question is regarding restaurant expansion and customer service and it's from Kendall Pettis from Ariel Capital Academy. Hi, Kendall. Hi. My name is Kendall. I go to Aerial Community Academy and I am in 6th grade. Here's my question. You planning on opening more McDonald's around the world? And how do you think it will impact the budget allowed for customer service? I'm going to ask Pete Benson, if he would speak to that one. Yes. Kendall thanks for the question. We're going to open between 150600 restaurants this year around the world. A large percentage of those developed markets. And you can be assured as we open these new markets or new restaurants that we do a lot of training and recruiting of the staff so that when the restaurants open, we're delivering that exceptional McDonald's experience that everyone is expecting. Thanks. Thank you. Thanks, Andrew. Yes. I have a question here on Nutrition and Children's Health. And this is Mr. Andrew Bremmer's and he is a proxy holder. Hello again, Doc. How are you? Good. Thank you for having me back. So my name is Doctor. Andrew Bremer and I'm a Board Certified Pediatric Endocrinologist, Pediatrician and Internist. I'm also an Associate Professor at Vanderbilt University School of Medicine, but I want to make it clear that these are my own personal comments. I stand before you today, as I did last year, as a physician and now my father, to reiterate the concerns about the impact McDonald's marketing is having on children's health. My medical and public health colleagues the world over have repeatedly acknowledged the science linking McDonald's style fast food and the fast food industry practices due to decline in children's health. McDonald's has yet to make substantive changes, continuing to expose shareholders to considerable risks. Mr. Thomas, last year he said, do me the honor. I'm not associating us with anything doing I'm not associating us with doing something that is damaging to children. Well, with all due respect to the entire corporation, the corporation is doing just that. Given the highly visible and global backlash from health professionals, government officials and now parents, is it time for McDonald's to finally stop marketing to children? Thank you. Thank you for the question, doctor. As we talked about last year and as we you and I and others have talked about on the side, we provide quality, high quality food. We always have. It's real beef. It's real chicken. It's real tomatoes, real lettuce, real fruit, real smoothies, real dairy, real eggs. And we do it in a way that is also affordable. We are in many communities and we take their responsibility quite seriously. And not only that, but I'll make the same comment I made last year. We have 1,800,000 employees. Many of them are parents. Many of them have their children come to McDonald's. If any of us believe we would do damage to our own children, we wouldn't work for McDonald's. And so I say once again, just do us the honor of parenting the same way you do and believing the fact that we know when we take our children to McDonald's, I feel very safe very confident that it's high quality food. So we appreciate your concerns. We'll continue to look at it, improve and sell even more fruits and vegetables. We moved that tremendously in the last 4 or 5 years and we'll continue to do that. Thanks much. Next question? Yes. The next question is on Children's Health and it comes from proxy holder Kia Robertson. Hi, Kia. Hi. You're Hannah's mom, right? I am Hannah. Okay. All right. Thanks for meeting with us earlier. No problem. My name is Kia Robertson. I've been doing a lot of thinking about what I should say, because not a lot of parents get this opportunity. This generation is in trouble and we all need to come together to help them. Childhood obesity rates are skyrocketing and one of the biggest factors is diet. I believe that parents are ultimately responsible for the food that we feed our children and it is up to us to educate them and give them the skills to make healthy food choices for themselves. That said, I also believe that corporations like McDonald's have a responsibility to stop undermining parents by directly marketing to our children in ways that you know are deceptive. Some parents think if you don't let your kids watch TV, they won't see your commercials. What they may not realize is that you are getting around that by marketing your brand in our school system. As a corporation, you might not have to think about the effects of your marketing, but as parents and grandparents, there must be a part of you that knows it's just not right. You are a leader in your industry, So you are also very well aware that the fast food industry is changing. And in order to keep up, maybe it's time for some genuine change at McDonald's. CEO Thompson, don't you think a good place to start would be to leave our children alone and let us parent decide what's best for them? Thank you. Thank you for the question. The again, I'll state it. As a parent, I'm glad that McDonald's allows me to make the choices I need to make as a parent. And I know you do the same thing. The globally, we follow guidelines on how we responsibly communicate with children. We were part of the Children's Food and Beverage Initiative years ago and still remain as part of that initiative as we market our business broadly. And we're very careful. If you've ever watched television and I'd ask all of you, watch television on Saturday. Watch Saturday morning. I've done this throughout the year, especially after last year's meeting. I decided I want to watch TV on Saturday morning. And I've seen how our commercials come out. And we're not marketing food to kids. As a matter of fact, we're not even marketing Ronald the way we used to. The interesting thing is Ronald has been an ambassador for Ronald McDonald House Charity. What we could do and what we've tried to do is sell even more apples and even more fat free milk. And for those who want to work with us to try to help us to continue to do that and do it even more, I'd love to see kids eat more fruits and more vegetables and we're trying to do that. Relative to schools, we're not marketing in schools. So now if you see what's interesting is if you see some of the franchisees that are here, they may be doing a lot of things in their community, supporting schools and Little Leagues and things like that. And you'll see them doing that, but you won't see them in schools marketing McDonald's food to children. We don't do that. The average person, average McDonald's customer eats McDonald's 3 to 4 times a month. That's out of 90 mil occasions. If even we were at the point that some of you have surmised today, that would not be the cause of some of the issues that you all are talking about. I do agree we have some issues. And we can be part of the solution and we are doing that and doing, I think, our plus some. But we are not the cause of obesity. We are not unjustly marketing to kids. Ronald is not a bad guy. He's about fun. He's a clown. And so I'd ask you all to let your kids have some fun too. Next question please. I have a question here on animal welfare and this is Mr. Paul Shapiro and he's a proxy. Good morning, Paul. Good morning, Mr. Thompson. How are you? I'm fantastic. How are you doing, sir? Very good. All right. Members of the senior management, Board of Directors, fellow shareholders, good morning. My name is Paul Shapiro with the Humane Society of the United States. I have been to this shareholder meeting every year for the past 8 years And often I have similar to some of the other questioners today encourage the company to do better. In my case to do better when it comes to the treatment of the animals used in the supply chains for McDonald's. However, last year after working together McDonald's and the Humane Society of the U. S. Jointly issued a press release in which McDonald's, Admiral Green, called unsustainable the standard pork industry practice of confining pigs in cages barely larger than their bodies. These animals are unable even to turn around for essentially their entire lives. And further, again admirably, McDonald's announced that it was not just calling this practice unsustainable, but that it would require its pork suppliers to phase out this inhumane practice called gestation crate consignment of pigs. The company's announcement was welcomed by many, including us at the Humane Society by an avalanche of positive publicity and I'm very proud to report that McDonald's leadership on this particular issue caused a cascade of similar policies in your industry. Nearly every one of your competitors followed your lead Burger King, Wendy's, Denny's, Carl's Jr, Arby's and more. In fact, since McDonald's made this announcement in 2012, more than 50 other major pork buyers in the fast food industry, in the grocery chain business, in the foodservice business, all adopted the similar policy that McDonald's adopted last year, making it clearer than ever to the pork industry that this cruel and inhumane practice has no future in its industry. Well, I absolutely love the fact that you're giving us some accolades. I want to make sure I hold to that 1 minute piece we talked about. I got you. Thanks for having my back and let me finish. Thank you. First, I want to say thanks to McDonald's for its leadership in changing not just one supplier, but changing an entire industry with its announcement and leadership. I think the company for that issue deserves a round of applause. My question Mr. Thompson is for you. And I just want to ask why is it do you think that these type of animal welfare initiatives are so important to McDonald's? Well, Paul, first of all, thanks for the comments. And this will the first comment, I'm going to turn this over to Tim Fenton, because he can kind of give you an update on where we are. As I've said, we want to make sure that we're being responsible corporate citizen. We don't take it's We feel like these are things that we can look at doing. The other thing is it's much easier to work with somebody when they're not calling you out your name, when they want to sit at a table and talk to you rather than talk about you. And you all modified a couple of your approaches as well and we actually sat down and talked. And so I appreciate that. And with that, I will turn it over to Tim Fenton. He'll give you a little update as to where we are. Well, first of all, Paul, thank you for the acknowledgment. Why is it important? Well, we are an industry leader. We take that responsibility very seriously. We are committed and have been committed to improving the health and welfare of animals in our supply chain. It's a journey. It's not a destination. We have been proactively involved with animal welfare since the mid-1990s. So we continue to work on it. We continue to strive to be better. And we take it very seriously because we are the leader. And to your points earlier, people look up to us and follow our lead. Thank you. Next question please. Yes. The next question is regarding Children's Health and it comes from Michelle Dyer, proxy holder. Hello, Michelle. Good morning. My name is Michelle Dyer and as a recent graduate, I am deeply concerned about the epidemic of diet related disease and the role of McDonald's in driving it. As a millennial, one of an entire generation that McDonald's is fast losing brand appeal among, I have too often seen and often in the target of exploitative marketing designed to get kids hooked on unhealthy food at a young age to make them customers for life. Especially outrageous is McDonald's targeting children of color. Children of color are already more likely to live in environments where healthy food is less available, That they are more likely to develop diet related disease than their white counterparts should be no surprise considering how McDonald's overwhelmingly targets them with predatory marketing. Not only does McDonald's use athletes of color such as Gabrielle Douglas, Venus Williams and LeBron James, It also invokes culturally inappropriate stereotypes and borrows liberally from hip hop culture to aggressively target children of color. Targeted commercials, toy giveaways and culturally based partnerships are all employees to sell more fast food. CEO Thompson, I must ask, when is McDonald's going to end its aggressive marketing to communities of color? Michelle, thank you for your comment. This was kind of close to home. I wonder why that is. We do not have not will not try to target people of color with some kind of subversive, I don't know how you you put a lot of stuff together, hip hop and sports and a lot of things. We wouldn't do that. I've been here 23 years. And I know we wouldn't do that. And we don't do that. And we won't do that under my leadership. I grew up in the neighborhood. And believe me, when I was growing up, we couldn't afford the McDonald's. My grandmother would take me by McDonald's and she'd say, I'll take you home to make you a McDonald's. I didn't eat the McDonald's, but I do know what else I ate. And I will tell you that the epidemic of obesity, particularly relative to my neighborhoods and the ones I grew up in, is not about McDonald's. There needs to be more fresh foods, guaranteed. And if we can help with side salads, parfaits and smoothies and things, we'll do that. But I still cook ham hocks with my greens at home. I grew up doing that and I still do that. It's not about McDonald's alone. We can be part of the solution. And I think that for McDonald's and for leaders like us, we have to do that and we'll continue to do that. But if you accuse us of doing things we don't do and haven't sat with LeBron and with the Williams sisters, they don't view us as the brand that you view us as. And so we'll continue to try to work with them and continue to try to do things actually to even advance even further, some of the changes that we can have and influence relative to eating habits. But by the same token, we're very proud of a person every now and then having to order French fries or having burgers or having grilled chicken or having our salads. We have a broad array of menu items and we'll continue to offer that and broaden that range as much as we can so that it still fits operationally. So we do take the responsibility seriously. We'll continue to look at improving, but we're not the brand that you described. And I hope that you will grow to see and understand that as you get to know McDonald's, at least the way that I've known it over the last 23 years. Thank you. Hi. We have a question here on marketing and health. And this is Ms. Hannah Friedberg and she is a proxy holder. Thank you. Hello, Hannah. Hello. I am Hannah Friedberg from Corporate Accountability International. Tens of thousands of people have joined our Value the Meal campaign challenging you to put public health over short term corporate profits, a demand echoed by moms around the world who've urged you to end McDonald's aggressive marketing of junk food to kids. For decades, McDonald's has profited richly at a staggering cost to our children's health. Its strategy has been to undermine the efforts of parents whom the corporation calls gatekeepers and who are working each day to feed their kids healthy foods. Well, these so called gatekeepers are not loving McDonald's marketing. And this Mother's Day launched their call to you, CEO Thompson, to stop McDonald's predatory marketing to kids. As a gift to parents everywhere, will you and McDonald's finally stop undermining parents' efforts to protect their children's health and stop marketing to kids, a brand that is burdening a generation with chronic diet related disease? Thank you for your interest in McDonald's. I mentioned this and I think that the same point goes. The way you describe us is not who we are. We are not predatory. We've not done the things that you just mentioned. We'll continue to run our business responsibly, appropriately, effectively and we'll continue to reach out to try to always continuously improve. So thanks much for the question. We do have a couple of questions I think from Grand Oaks. So I don't know who had those. Angie would you want to make sure we make the folks at Grand Oaks feel a little bit of love here. We don't want them to be left out. Yes. The question will be in regards to egg whites. And this is Carol Nagel and she is a shareholder. Mr. Thompson, your egg white McMuffin is yummy. Will you introduce more healthy choices to your menu and when? Mr. Finn, you want to talk a little bit about what's happening with egg whites and menu? Yes. First of all, thank you for the question. Personally, I love the egg white delight. What started out is something too kind of appeal from a caloric and nutritional advantage on some of our products. It turns out that it's selling so much not because of that because of the taste. It's doing quite well. And is we can tell you, you can also get egg white light on any one of our carriers for breakfast, be it biscuits or different muffins and so on. We are extending. We just launched our chicken McWraps that are doing quite well for us that have a fresh array of different vegetables. You can get it in grilled. And we will continue to look at what items I think resonate with our consumers with our testing, not only in the U. S, but globally. And we get some of our best ideas on these products from the markets that we have in 118 countries. Thank you. Next question? I also have a question from the Randalls Ballroom regarding our stock and it's from a student at St. Ezzaretta School. Pete? I'm sorry Pete get ready. I'm ready. The question is, do you feel our stock is currently undervalued and why? It's a great question. A lot of things go into the valuation of a stock and it's as much art as it is science. So I think today investors are looking at the opportunity for our sound dividend and our safe dividend and the growth potential that we have all around the world. So I think today the stock is at a fair price and there's an opportunity for it to continue to go higher as we continue to perform as a global business. Thanks much. I know we have time for a couple of more questions. So the gentleman over here has been standing there for a while. Sorry about that. This question is on customer service and it's from shareholder Philip Johnson. Hello, Philip. Hi, how are you doing? Good. Wondering if you're going to improve the status of the port of sales areas where they have kiosks in the stores where customers can go up and do their own orders instead of having the customer wait for the cashier to take the orders. That way it eliminates the cashier from being up behind the counter assist making the orders a lot better, plus also eliminate long lines where people can just go up, pay the cashier and get their orders and wait for that while they're waiting. And also as far as McDonald's itself, I think that McDonald's food service is a lot better versus some restaurants where you go get loaded biscuits or you get double patties of chicken and stuff like that. So I feel like the customer service as far as the food is good, but the customer service for the employees to the customers should be a little bit more focused on. Thank you, Philip. Thanks very much. Tim, you want to talk a little bit about service options? Yes. First of all, Philip, thank you. A good student of our industry. What you're talking about is what we call a dual point service, which we're moving to in the U. S. And throughout many countries in the U. S. Fast and friendly service has always been a stable pillar for us at McDonald's. We continue to move forward and open new restaurants and migrate to what you described our dual point where you order and then move to the side and somebody presents the order, we find it more personal. We find that consumers find it faster. And we find it's more accurate. So we will continue to do that. We continue to strive and enhance our service not only in the U. S. But globally on some of these great initiatives that we've we're implementing. Thanks. Thanks so much. We'll take 2 more questions because I see 2 guys. I have a question on the good that Hi, Mr. Thompson. How are you? Good. Okay. I don't necessarily have a question, but I have a statement. Yes, sir. I know my school benefits off the McDonald's because you guys donate the pancake batter, the sausage patties and the orange drinks to our schools for the pancake breakfast, which my school makes money off of. And also, I know other schools benefit off McCare Night, which you guys give a percentage of your profits to the schools. And I know also that the Ronald McDonald House has benefited many families across the world to so they can have shelter near the hospital where their child has been treated. And I'm only listing some of the good McDonald's studies. So I just want to say thank you McDonald's. Thank you, Roger. Thank you very much, Robert. It's good to hear some good news about us. I think we do a lot of great things. So Robert, thank you. One more question. This question is on growth and this is Mr. Maxwell Todd and he is a shareholder. Hello, Maxwell. How are you? Hi. I'm good. Well, for the past 10 years, most companies have been strongly going after the Chinese market. Where does McDonald's see the next China like opportunity to grow? Great question. Tim? Sure. Having lived in Asia for 6 years, first of all, China is a great market for us. It's our fastest growing country that we have. By this time next year, we'll have approximately about 2,000 restaurants. It's the 2nd fastest country to get to 2,000. The first the fastest was the U. S. But where's the next China? Well, we look at the BRIC countries. We get Brazil, Russia, India, China, Southeast Asia is a growth market force. Eastern Europe is a big growth market force. Saudi Arabia is a big growth market for us in the Middle East. We have plans to open in Vietnam in the Q4 of this year or Q1 of next year. So there's a lot to do for us. We've got many countries And I classify this countries that have 100 restaurants or more that are opening on a pace of 20% on their base of units. So majority of our growth will be coming from international. Don had mentioned earlier that 1500 to 1600 new restaurants will open this year. Majority of those will be overseas in our growth markets and in our established markets. There's still a lot of growth in our established markets as well. Thanks for the question. Thanks very much. I said 2, but we only have one person standing. So Martin, you get the last call here. Thank you, Mr. Chairman. On the shareholder proposals, we want to thank take the time to thank all the shareholders who took the time to participate on the voting, but especially the ones who voted yes on our proposals. One of the benefits a lot of proponents that make proposals don't thank the people, the shareholders who vote for the proposals. One of the benefits of having an annual shareholders meeting is to give the management an opportunity to give their views and you certainly have given us our views and I certainly appreciate coming to the meeting and hearing all the shareholders who came before me and asked questions because at many meetings I'm the only one who gets up and talks. So I really like to see other shareholders do the talking rather than myself. Thank you. Martin, thank you very much. I really want to thank all of the folks who asked questions and especially for your concerns, thoughts about our business. We take it all very seriously. With that, I'd like to bring our Chairman, Andy McKenna, back to the podium. Thank you, Don. We have received the preliminary voting results from the independent Inspector of Election and final results will be posted on the 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 97% of the votes chairs voted. And shareholders have approved the management proposal related to an advisory vote on executive compensation with the support of 95% of the shares voted. Shareholders have approved Ernst and Young as the company's independent auditor with the support of 98% of the shares voted. Now the advisory shareholder portal requesting an annual report on executive compensation has not been approved by shareholders, yet received the support of 7.3% of the shares voted. The advisory shareholder requesting an executive stock retention policy has not been approved by shareholders. It received the support of 31.3 percent of the shares voted. The advisory shareholder proposal requesting a human rights report has not been approved by shareholders, it received the support of 28.3% of the shares voted. And the advisory shareholder proposal requesting a nutrition report has not been approved by shareholders, yet received the support of 6.3% of the shares loaded. So we thank you all for attending the meeting for your participation. We all certainly appreciate your investment and your support in McDonald's. And the meeting is now adjourned.