Rich Floersch & Don Crosby April 4, 2008 University of Illinois – Institute Of Labor And Industrial Relations

2 Agenda Business Overview/History Revitalization Program/Plan to Win HR Plan to Win Strategic Frameworks Bringing Frameworks to Life Q&A

3 The History of McDonald’s Late 1950s -1960s Ray Kroc buys McDonald’s business Franchising Opportunities Abound & HU Introduced IPO 1965 – 13 Stock Splits Since s Standardized Business Model U.S. Focus Common Operating Platform and Menu Leverage Franchisee Ideas

4 The History of McDonald’s & 2003 Sweeping Organizational Changes 1990s Business Environment Changed McDonald’s Stalled Took Our Eyes Off Our Fries Opened Too Many Restaurants Distracted By Other Brands 1980s & 1990s Explosive Growth International Expansion/ 118 markets Darling of Wall Street Creation of Ronald McDonald House Cover of BusinessWeek “Hamburger Hell” Staff Reductions Stock Price Drops to $11 (high $49) CEO Change Call to Action Plan to Win

5 Revitalization of McDonald’s Better, not bigger More relevant to consumers Singular focus on customers’ experience and core business – our restaurants Global business plan to improve alignment and focus … McDonald’s Plan to Win 5 Ps (People, Product, Place, Promotion and Price) People and customer experience is central to new strategy

6 McDonald’s Today McDonald’s Revitalization 58 months consecutive comp sales increases Stock price reaches all-time high of $63 CEO tragedies 2007 Marketwatch CEO of the Year Food and beverage focus

7 People Challenges: 2003 Relationship-driven =High-performance culture Rewards programs confusing with little pay for performance Lack of transparency in performance/development discussions Little or no formalized leadership development focus or succession planning protocols McJob label driven by loss in employment value proposition and not “Telling Our Story”

8 Our Roadmap

9 Restaurants Restaurant people strategy Strengthened selection system Unique people programs Metrics tie people practices to store success Focus on HU training Employment value proposition U.S. People Migration Strategy Respectful workplace training

10 Total Rewards Compensation Pay for performance Tied to business results - Plan to Win measures Benefits High value to employees Lead industry Development Hamburger University Succession planning Accelerated development programs

11 Total Compensation New approach to Compensation Packaged so employees understand the value of their total compensation Total Compensation = Pay + Incentives + Retirement Savings + Health and Insurance Benefits + More Provide benefits, resources and tools to help employees and families lead healthier lives Creating programs that differentiate us in the industry Branding total compensation programs

12 Talent Management Culture One of CEOs top three priorities Accelerated development programs Directors (Americas, Europe, Asia Pacific) VPs and higher (Global) Succession Planning Template Formalized reviews Premium on conversation, not forms Fortune/Hewitt Recognition: Top Company for Leaders #14 Globally #11 North America #6 China

13 Accelerated Development Programs Job Transitions  On-boarding & Assimilation Support  Ops Fast Track Information and Templates  Job transition support Career Tools  Complete your internal Profile  Prepare for an interview  Leadership Position Profiles Development Planning  360 Feedback  IDP Support  IDP Templates  Development resources aligned w/ competencies Development Resources  Internal development curriculum  University programs  Self-study books, articles  Exec. coaching Talent Management Culture

14 McDonald’s Means Opportunity 67,000 managers worldwide started as crew 1,200 U.S. Owner/Operators started as crew 40% of our Top 50 executives started in the restaurants Life skills training First Job for Carl Lewis, Jay Leno, Sharon Stone and more!

15 Employment Image Voice of McDonald’s Global restaurant employee singing contest 3,600 entries from 53 countries Public online voting Finalists perform at ’08 Worldwide convention Grand Prize of $25,000! Beijing Olympic Champion Crew More than 100 crew The best of the best 30 countries represented Once-in-a-lifetime experience Crew work in our restaurants and experience the Olympic games

16 Employment Value Proposition: Telling Our Story 29 countries received great place to work recognition 2006/2007 winners include RussiaFrance SingaporeBelgium IndiaLatin America Puerto RicoCanada U.K.Hong Kong Effectively telling our opportunity story Extensive media coverage —Leadership development —Opportunity —Minority investing —Training

17 Bringing the Frameworks to Life Shaun Ruming VP HR APMEA Australian Based in Singapore 33 Markets Cecile Staner VP HR Europe Belgian Based in London 41 Markets Cesar Martinez VP HR LA Mexican Based in Oak Brook 22 Markets Len Jillard VP HR Canada Canadian Based in Toronto 3 Regions

18 Bringing the Frameworks to Life Communication Strategies HR Leadership Team Major Market Meeting Global HR Meeting Webcasts/Best Practice Sharing Global HR Website Market visits

19 Bringing the Frameworks to Life Performance management Global PDS system Distribution guideline (20/70/10) Talent management Talent Plan Frameworks Global Leadership Staffing Process Leadership Development Programs

20 Bringing the Frameworks to Life Global People Metrics 90-day Crew Turnover Management Stability Reputation Index HU Certified Managers Global Commitment Survey Consistent across 118 markets At least 1x per year Restaurant and staff

21 Bringing the Frameworks to Life Employment Experience Australia - MeTime U.K. - Our Lounge Latin America - McLand U.S. - Hiring to Win France - Recruitment Centers

22 Bringing the Frameworks to Life Rewards Global Annual Incentive Program design Competitive positioning policy Singular executive compensation program (top 200) Strong recognition programs —President’s Award —Restaurant Manager Award —Circle of Excellence

23 Bringing the Frameworks to Life McDonald’s Formula Strategic frameworks developed with AOW input led by centers of expertise ie. talent, rewards, metrics and performance management Decentralized, empowered environment - scale big ideas Common unifying values Partnership with franchisees Passion for the brand

24 Questions and Answers