Christopher Kempczinski
MCDONALDSAbout Christopher Kempczinski
Christopher J. Kempczinski is Chairman, President and CEO of McDonald’s Corporation. He joined McDonald’s in 2015, served as President, McDonald’s USA (2017–2019), became CEO in 2019, and was appointed Chairman in 2024; he also serves on McDonald’s Board and chairs its Executive Committee. Age 56; other public directorship: The Procter & Gamble Company . Under his leadership, the Company’s 2024 operating income grew 1%, global comparable sales were slightly negative but +8.9% on a two‑year basis, Systemwide sales rose 1%, and three‑year average annual EPS growth was 7%; 2022 PRSUs paid out at 170.2% in early 2025, underscoring multi‑year performance alignment .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| McDonald’s Corporation | Chairman, President & CEO | 2024–Present | Leads “Accelerating the Arches”; Board selected combined Chair/CEO structure with strong Lead Independent Director oversight . |
| McDonald’s Corporation | President & CEO | 2019–2023 | Architect of Accelerating the Arches growth strategy; drove multi‑year EPS/ROIC performance reflected in PRSU payouts . |
| McDonald’s Corporation | President, McDonald’s USA | 2017–2019 | Led ~14,000 U.S. restaurants; advanced strategy and operations . |
| McDonald’s Corporation | EVP – Strategy, Business Development & Innovation | 2015–2016 | Drove global strategy, business development, innovation . |
| The Kraft-Heinz Company | EVP, Growth Initiatives; President, Kraft International | 2014–2015 | Led international growth initiatives . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| The Procter & Gamble Company | Director | — | Current outside public board service . |
Fixed Compensation
| Component | 2023 | 2024 | Notes |
|---|---|---|---|
| Base Salary (annualized) | $1,425,000 | $1,550,000 | Increases effective March 1 each year . |
| Salary paid (SCT) | $1,417,500 | $1,529,167 | Summary Compensation Table amounts . |
| STIP Target (% of salary) | 200% | 200% | CEO target unchanged . |
| STIP Target ($) | $2,850,000 | $3,100,000 | Per Grants of Plan‑Based Awards table . |
| STIP Payout ($) | $4,027,620 | $854,670 | Reflects below‑target 2024 corporate results . |
| STIP Payout (% of Target) | — | 27.6% | Corporate factor for NEOs . |
| All Other Compensation | $709,657 | $811,228 | Includes $341,006 Company contributions to plans in 2024 . |
Performance Compensation
Annual Incentive (STIP) – 2024 Design and Outcomes (Corporate)
| Metric | Weight | Target | Actual | Payout mechanics / result |
|---|---|---|---|---|
| Operating Income Growth | 40% | 5.9% | 0.1% | Below target; overall corporate STIP factor driven to 27.6% . |
| Systemwide Sales Growth | 30% | 6.1% | 1.6% | Below target; capped framework up to 200% overall . |
| New Restaurant Openings | 15% | 489 | 466 | Below target; development is a key strategic pillar . |
| Strategic Scorecard | 15% | 0–20 pts | 11.3 pts (75%) | Qualitative scorecard on values, engagement, franchising . |
| CEO STIP Target / Payout | — | $3,100,000 | $854,670 (27.6%) | Corporate factor applied to CEO . |
Notes:
- STIP metrics and weightings: OI Growth (40%), Systemwide Sales (30%), New Restaurant Openings (15%), Strategic Scorecard (15%); payouts capped at 200% .
Long‑Term Incentives (LTI) – 2024 Grants and Structure
| Award | Grant date | Quantity | Exercise/Price | Grant date fair value | Key terms |
|---|---|---|---|---|---|
| PRSUs | 2/12/2024 | 24,585 target; 49,170 max | — | $7,500,146 | 3‑yr performance; EPS growth 75%, ROIC 25%; relative TSR modifier ±25 pts; cap 200% (100% if absolute TSR negative); vests 2/12/2027 . |
| Stock Options | 2/12/2024 | 125,377 | $289.44 | $7,500,052 | 10‑yr term; 25% vest annually over 4 years . |
Multi‑year performance: PRSUs granted in 2022 paid at 170.2% in early 2025 on 2022–2024 EPS/ROIC and TSR modifier performance, demonstrating long‑term alignment .
Equity Ownership & Alignment
- Beneficial ownership (as of Mar 1, 2025): 779,700 common shares; 4,877 stock equivalent units; directors and officers as a group own <1% of shares outstanding .
- Outstanding/unvested equity (12/31/2024): 88,420 unvested stock units (market value $25,632,074) ; multiple option tranches outstanding with expirations 2027–2034 (e.g., 125,377 unexercisable options from 2024 grant at $289.44; 68,256 unexercisable at $253.39 (2022 grant); 89,697 unexercisable at $266.20 (2023 grant)) .
- Ownership policy: CEO must hold stock worth 6x salary; executives have five years to comply; all NEOs currently in compliance .
- Hedging/pledging: Prohibited for executives and directors .
- Clawbacks: SEC/NYSE‑compliant clawback plus additional recoupment/forfeiture provisions and restrictive covenants .
Insider selling pressure view:
- Near‑term unlocks include annual option vesting (25% each anniversary of 2/12/2024 grant through 2028) and any remaining time‑vested awards; 2024 PRSUs vest 2/12/2027, creating a potential supply event at payout .
Employment Terms
| Topic | Key terms |
|---|---|
| Employment/roles | Joined McDonald’s 2015; CEO since 2019; Chairman since 2024 . |
| Severance plan | U.S. Officer Severance Plan: CEO cash severance = 1.5x (salary + target STIP); 18 months medical/dental/vision continuation; prorated STIP, unused sabbatical, outplacement; section 409A delays as applicable . |
| Illustrative severance (12/31/2024 scenario) | Cash $6,975,000; Benefits $30,757; Other $253,162; Total $7,258,919 . |
| Change‑in‑control | No CIC agreements; double‑trigger equity; no single‑trigger payouts; no 280G tax gross‑ups . |
| CIC equity acceleration (illustrative) | Options intrinsic value $8,910,960; RSUs (target) $21,016,735; Total $29,927,695 (based on 12/31/2024 price) . |
Board Governance (dual‑role implications)
- Structure: In 2024 the Board combined Chairman and CEO roles under Kempczinski; appointed Miles White as Lead Independent Director with robust, codified responsibilities (agenda setting, executive sessions, CEO evaluation, shareholder engagement) .
- Independence: 10 of 11 directors are independent; CEO not independent due to management role .
- Committees: CEO serves only on the Executive Committee (Chair since 2019); all other standing committees are fully independent .
- Executive sessions: Regular independent director sessions without management .
- Director compensation: Employee directors (including the CEO) do not receive director fees .
Director Compensation (context)
- Non‑management director program: $120,000 annual cash retainer; $205,000 in annual common‑stock equivalent units; additional chair retainers (A&F Chair $30k; Comp/Gov/CR Chairs $25k); charitable match up to $10k; 2024 LID received additional $50k .
Compensation Committee, Peer Group, and Say‑on‑Pay
- Compensation Committee: Lloyd Dean (Chair); members include Capuano, Daniel, Mulligan, Taubert, White .
- Independent consultant: Semler Brossy; Committee affirmed independence in Oct 2024 .
- Peer group and changes: 2024 peer set included Coca‑Cola, PepsiCo, P&G, Visa, Mastercard, Starbucks, Target, Walmart, Yum! etc.; in July 2024, added Disney and removed Johnson & Johnson and Walgreens Boots Alliance for 2025 decisions .
- Market positioning: Uses market median as a reference point; does not target specific percentile .
- Say‑on‑Pay: Shareholders “continued to show strong support” at the 2024 meeting; 2025 proxy again recommends “FOR” executive compensation .
Performance & Track Record
- Strategic initiatives: Accelerating the Arches execution, digital and development focus, and introduction of a Restaurant Experience Team to drive guest counts and experience .
- 2024 outcomes: Operating income +1%; Systemwide sales +1%; two‑year global comp sales +8.9%; three‑year average annual EPS growth 7% .
- Incentive alignment: 2024 STIP paid at 27.6% reflecting below‑target year; 2022 PRSUs paid at 170.2% in early 2025, reflecting strong multi‑year performance .
Compensation Structure Analysis
- Cash vs equity mix: Majority of CEO target direct compensation performance‑based and long‑dated (PRSUs + options) .
- Metric rigor and evolution: STIP includes OI, Systemwide Sales, New Restaurant Openings, and a qualitative Strategic Scorecard; 2024 scorecard awarded 75% (11.3 pts) .
- Risk controls: Caps on payouts, clawbacks, stock ownership/retention, no option repricing/backdating, no hedging/pledging .
- Peer group adjustments in 2024 (effective 2025) improve competitive relevance (adding Disney, removing J&J and WBA) .
Risk Indicators & Red Flags
- Hedging/Pledging: Explicitly prohibited (positive) .
- CIC practices: Double‑trigger equity; no CIC agreements; no 280G gross‑ups (positive) .
- Option practices: Market‑priced options; no repricing/backdating (positive) .
- Clawbacks: SEC/NYSE‑aligned policy plus contractual recoupment (positive) .
- Say‑on‑Pay: Ongoing strong support (positive) .
Investment Implications
- Pay‑for‑performance alignment appears robust: 2024 STIP paid well below target (27.6%) while 3‑year PRSUs paid at 170.2%, aligning realized pay with performance cycles .
- Retention risk looks mitigated: Significant unvested equity (e.g., 88,420 units; multiple unvested option tranches) and 6x salary ownership requirement support retention and alignment; hedging/pledging barred .
- Governance checks on dual role: Lead Independent Director with strong remit, fully independent committees, and anti‑risk pay design reduce governance concerns from combined Chair/CEO structure .
- Near‑term trading signals: Annual option vesting cadence and PRSU vest in 2027 may create periodic supply; 2024 below‑target STIP underscores sensitivity to operating income/Systemwide sales trends—watch these metrics for potential incentive‑driven behavior and estimate revisions .
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