Annual Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K405 Form 10-K 74± 340K
2: EX-10.(C) Supplemental Profit Sharing and Savings Plan 13 78K
3: EX-10.(G) Executive Retention Plan as Amended and Restated 23 96K
4: EX-10.(K) Tier I Change of Control Employment Agreement 36 151K
5: EX-10.(L) Written Description of Oral Agreement 1 6K
6: EX-12 Statement Re: Computation of Ratios 2± 11K
7: EX-21 Subsidiaries of the Registrant 1 7K
8: EX-23 Consent of Independant Auditors 1 8K
9: EX-99 Press Release Dated March 22, 2002 3 14K
EX-10.(C) — Supplemental Profit Sharing and Savings Plan
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McDonald's Corporation 41
Exhibit 10(c). McDonald's Corporation
Supplemental Profit Sharing and Savings Plan
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Section 1 Introduction
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1.1 The Plan; the Plan Merger; History.
(a) The McDonald's Corporation Supplemental Profit Sharing and Savings
Plan (the "Plan") as set forth herein is the result of the merger of
the McDonald's Profit Sharing Plan Equalization Plan as amended and
restated effective January 1, 1996 ("McEqual"), the McDonald's 1989
Executive Equalization Plan as amended and restated effective January
1, 1996 ("McCAP I") and the McDonald's Supplemental Employee Benefit
Equalization Plan as amended and restated effective January 1, 1996
("McCAP II") into the McDonald's Corporation Deferred Income Plan (the
"DIP") pursuant to a Merger Document executed by McDonald's
Corporation ("McDonald's" or the "Company") as of September 1, 2001
(the "Merger Document"), attached hereto as Exhibit A. The effective
date of that merger is January 1, 2002; provided, that this Plan shall
be considered to be in effect as of September 1, 2001 for purposes of
permitting Participants (as defined below) to make Deferral Elections
with respect to compensation that would otherwise be paid to them on
or after January 1, 2002 and to make investment elections, Payment
Elections, Installment Elections and beneficiary designations to take
effect under this Plan on or after January 1, 2002.
(b) The DIP, formerly known as the McDonald's Corporation Deferred
Incentive Plan, was established November 1, 1993. The DIP was amended
and restated effective September 1, 1994 and was subsequently amended
by the first amendment thereof effective as of February 1, 1996 and
the second amendment thereof effective as of August 15, 1996. The DIP
was subsequently amended and restated effective several times,
including amendments and restatements effective as of January 1, 1997,
July 15, 1997, August 1, 1998, December 1, 1998, September 1, 1999 and
September 1, 2000.
(c) McEqual was established, effective January 1, 1989, by the merger,
amendment and restatement of the McDonald's Supplemental Employee
Benefit Equalization Plan, established effective January 1, 1983,
approved by the shareholders on May 19, 1983, and amended and restated
effective January 1, 1987, and the McDESOP Equalization Plan,
established effective January 1, 1986, approved by the shareholders on
May 23, 1986, and amended and restated effective January 1, 1987.
McEqual was further amended and restated effective January 1, 1989,
January 1, 1990 and January 1, 1996.
(d) McCAP I was established effective January 1, 1989, and amended and
restated from time to time thereafter, with the most recent amendment
and restatement being effective January 1, 1996.
(e) McCAP II (formerly, the McDonald's 1986 Tax Reform Equalization Plan)
was amended and restated, effective January 1, 1989, January 1, 1990
and amended and restated, effective January 1, 1996, and provided
certain benefits previously provided by McDonald's 1986 Tax Reform
Equalization Plan with respect to years before January 1, 1989 and
certain additional benefits.
1.2 Purposes and Features of Plan.
(a) The purposes of the Plan are (i) to provide to certain
highly-compensated employees the opportunity to elect to defer
compensation under the "Deferred Income Feature" of the Plan, and (ii)
to provide, under the "McCAP Feature" of the Plan, certain
participants in the McDonald's Corporation Profit Sharing and Savings
Plan (the "Profit Sharing Plan") with benefits that they would have
received under the Profit Sharing Plan, absent the Limits (as defined
in Section 1.2(b) below). These two purposes are implemented under the
Plan's two features. The Deferred Income Feature represents a
continuation of the DIP. The "Participants" in the Deferred Income
Feature shall be a select group of management or highly compensated
employees, as more fully provided in Section 2 below. The McCAP
Feature represents a continuation of McEqual, McCAP I and McCAP II.
The "Participants" in the McCAP Feature shall be certain employees
whose employer and/or employee contributions under the Profit Sharing
Plan have been or are expected to be limited by the Limits, as more
fully provided in Section 3 below.
(b) The Profit Sharing Plan has, as of September 1, 2001, three main
features, the Profit Sharing Feature, the 401(k) Feature (which
includes participant deferrals and the employer match), and the ESOP,
and is intended to meet the requirements of a qualified plan under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). Code Section 415 places limits on the maximum amount of
contributions and benefits that may be paid under a qualified plan
(the "415 Limits") and Code Section 401(a)(17) limits the amount of
compensation that may be taken into account for a Plan Year under a
qualified plan (the
42 McDonald's Corporation
"Compensation Limit"). In addition, Code Section 402(g) generally
limits the maximum amount of employee elective deferrals under a
qualified plan ("Elective Contribution Limit"); and elective deferrals
to a nonqual-ified plan are not taken into account in determining
compensation and benefits under the qualified plans ("Elective
Deferral Exclusion") (these limits and exclusion are collectively
referred to herein as the "Other Limits" and, together with the 415
Limits and the Compensation Limit, as the "Limits").
1.3 Administration. The Plan shall be administered by a committee of three
officers of the Company (the "Committee"), the members of which shall be
appointed from time to time by the Compensation Committee of the Board of
Directors of the Company (the "Compensation Committee"). The Committee
shall have the powers set forth in the Plan and the power to interpret its
provisions. Any decisions of the Committee shall be final and binding on
all persons with regard to the Plan.
1.4 Initial Participants, Beneficiaries and Accounts. The Merger Document sets
forth provisions for individuals who are, as of September 1, 2001,
participants in or beneficiaries under McEqual, McCAP I, McCAP II and/or
the DIP to become Participants in, or beneficiaries under, the Plan, and
specifies the manner in which their Accounts initially shall be deemed
invested and the Payment Elections and beneficiary designations that
initially shall apply to their Accounts. The provisions of the Merger
Document shall apply notwithstanding any other provision of this Plan.
1.5 Defined Terms. Capitalized terms used in this Plan that are not defined
herein have the same meaning as the same term in the McDonald's Profit
Sharing Plan. An index of terms defined in the Plan is attached as Exhibit
B to the Plan.
Section 2 Deferred Income Feature: Participation and Deferral Elections
================================================================================
2.1 Eligibility and Participation. Subject to the conditions and limitations of
the Plan, the following individuals shall be eligible to participate in the
Deferred Income Feature of the Plan ("Deferred Income Eligible Employees"):
(a) all officers, regional managers, department directors and other
employees who are in the Senior Direction Compensation Band of the Company;
(b) international country heads who are on United States payroll of the
Company and who are identified as eligible by the Committee; and (c)
employees of Brands meeting the requirements set forth on Exhibit C to the
Plan. Any Deferred Income Eligible Employee who makes a Deferred Income
Deferral Election as described in Section 2.2 below and in accordance with
the requirements of Sections 2.3 and 4 below shall become a Participant,
and shall remain a Participant until the entire balance of the
Participant's Account is distributed.
2.2 Deferral Elections. Subject to Sections 2.3 and 4 below:
(a) Any Deferred Income Eligible Employee may make an election (a
"Deferred Income Deferral Election") to defer receipt of all or any
portion (in 1% increments) of his or her compensation under the
McDonald's Target Incentive Plan, any successor annual bonus plan of
McDonald's, or any annual bonus plan of a Brand, in which the Deferred
Income Eligible Employee participates (collectively, the "Annual Bonus
Plan") that is to be paid in a subsequent calendar year. Any Deferred
Income Eligible Employee also may make a Deferred Income Deferral
Election to defer a percentage (in 1% increments) of his or her base
salary for the following calendar year in accordance with the
following schedule:
[Enlarge/Download Table]
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Compensation Band
(or Category of Deferred Income Eligible Employee) Maximum Deferral Percentage
==============================================================================================
Highest paid five officers of McDonald's
(ranked by the total of base pay and the target incentive
under the Annual Bonus Plan for the current year) 90%
Executive Management Band (includes Executive Vice Presidents) 80%
Senior Leadership and Leadership Bands (includes all other
officers and regional managers) 70%
Senior Direction Band (includes Department Directors) 60%
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provided, however, that the Committee may, in its discretion, grant
individual requests for higher deferral percentages of base salary;
and provided, further, that the Committee may, in its discretion,
authorize Deferred Income Eligible Employees to modify their deferral
percentages of base salary as may be necessary to reflect
organizational, title or compensation band changes. Such modification
may only be made with respect to base salary earned and paid after the
effective date of the modification. The first elections
McDonald's Corporation 43
under this Section 2.2(a) shall be permitted with respect to payments
under the Annual Bonus Plan and base salary that are payable on or
after January 1, 2002.
(b) If applicable, any Deferred Income Eligible Employee may also make a
Deferred Income Deferral Election to defer all or a portion (in 1%
increments) of his or her Three-Year Incentive award under the
McDonald's Corporation 1992 Omnibus Stock Ownership Incentive Plan or
the McDonald's Corporation 2001 Omnibus Stock Ownership Incentive
Plan, in either case payable in 2002 or later.
(c) No other forms of compensation, including, but not limited to exit
bonuses, severance bonuses or bonuses paid under the Executive
Retention Plan during a transition or retention period, may be
deferred under the Deferred Income Feature of the Plan.
2.3 Rules for Deferred Income Deferral Elections. Deferred Income Deferral
Elections shall be made in accordance with Section 4 below. An individual
shall be eligible to make a Deferred Income Deferral Election only if he or
she is a Deferred Income Eligible Employee on the Due Date. Notwithstanding
the foregoing, an individual who becomes a Deferred Income Eligible
Employee after the Due Date, by reason of being hired or promoted into an
eligible position under Section 2.1 above after the Due Date, will be
eligible to make a Deferred Income Deferral Election, to defer base salary
only, within 60 days after the date he or she becomes a Deferred Income
Eligible Employee. Such a Deferred Income Deferral Election shall become
effective, and the individual making it shall become a Participant, as soon
as administratively feasible after the Deferred Income Deferral Election is
made.
Section 3 McCAP Feature of Plan: Participation and Deferral Elections
================================================================================
3.1 Eligibility for Benefits.
(a) 415 Limits. If an employee of the Company or of any Adopting Subsidiary who
is a participant in the Profit Sharing Plan has the amount of employer
contributions (including Participant Elected Contributions) and forfeitures
that would have been allocated to his accounts under the Profit Sharing
Plan for 2002 or a later calendar year reduced pursuant to the 415 Limits,
the amount of each such reduction shall be credited to the employee's
Account as provided in Section 5.1.
(b) Compensation Limit. If an employee of the Company or of any Adopting
Subsidiary who is a participant in the Profit Sharing Plan has the amount
of employer contributions (including Participant Elected Contributions) and
forfeitures that would have been allocated to his accounts under the Profit
Sharing Plan for 2002 or a later calendar year limited as a result of the
Compensation Limit, the amount of each such reduction shall be credited to
the employee's Account as provided in Section 5.1 below.
(c) Other Limits.
(i) Each employee of the Company or of any Adopting Subsidiary who is a
participant in the Profit Sharing Plan as of the first day of 2002 or
of a later calendar year (the "Specified Year") whose Specified
Compensation exceeds the dollar amount in effect under Code Section
414(q)(1)(B)(i) and the Treasury Regulations thereunder during August
of the year immediately preceding the Specified Year (the "Prior
Year") shall be entitled to the credits provided for in Section
3.1(c)(ii) below, so long as he or she remains an employee of the
Company or such Adopting Subsidiary as of the first day of the
Specified Year. For these purposes, the term "Specified Compensation"
for a Participant for a Specified Year shall mean the sum of (A) the
amount of the Participant's annual base salary at the rate in effect
for one of the payroll periods during August of the Prior Year, as
specified by the Committee, and (B) the amount of the bonus, if any,
payable to the Participant under the Annual Bonus Plan during the
Prior Year (in each case, without regard to any elective deferrals
thereof under the Plan, the Profit Sharing Plan or otherwise).
(ii) There shall be credited to the Account of each Participant who is
eligible for credits under Section 3.1(c)(i) above for a Specified
Year an amount equal to (A) the amount, if any, the Participant would
have received under the Profit Sharing Plan for that year (including,
if the Participant so elects pursuant to Section 3.1(d) below, the
amount of any elections of Participant Elected Contributions made by
the Participant and any associated Matching Contributions) in the
absence of the Other Limits, reduced by (B) the sum of the amounts
allocated to the Participant's accounts under the Profit Sharing Plan
and to the Participant's Account under Sections 3.1(a) and 3.1(b)
above. Notwithstanding the foregoing, a Participant who does not have
an election in effect under Section 3.1(d) below of the Plan for a
calendar year shall not be credited with any Participant Elected
Contributions or Employer Matching Contributions hereunder for that
calendar year.
44 McDonald's Corporation
(d) Deferral Elections. The following provisions apply to each Participant
who is eligible for credits under Section 3.1(c)(i) above for a
Specified Year:
(i) Each such Participant may elect, by filing a written election (a
"McCAP Deferral Election" and, together with the Deferred Income
Deferral Elections, the "Deferral Elections") with the Committee
before the beginning of the Specified Year, in accordance with
Section 4 below, to have the Participant Elected Contributions
and Employer Matching Contributions described in Section
3.1(c)(ii) above, if any, credited to his Account.
(ii) If such a Participant has a McCAP Deferral Election in
effect for a calendar year, the McCAP Deferral Election and the
Participant's elected deferrals under the 401(k) Feature of the
Profit Sharing Plan may not be changed during the year. If such a
Participant does not have a McCAP Deferral Election in effect for
the calendar year, any amounts of Participant Elected
Contributions in excess of the Elective Contribution Limit that
are elected by the Participant under the 401(k) Feature of the
Profit Sharing Plan either shall not be contributed or shall be
returned to him or her as provided thereunder and no benefit
shall be credited to him or her hereunder with respect to his or
her Participant Elected Contributions and Employer Matching
Contributions under the Profit Sharing Plan.
3.2 Equalization. Base salary and compensation payable under the
Annual Bonus Plan that are deferred under the Deferred Income
Feature of the Plan shall be considered compensation for the
McCAP Feature of the Plan, including, without limitation, for
purposes of elections to contribute a percentage of compensation
as Section 401(k) contributions. Three-Year Incentive awards that
are deferred under the Deferred Income Feature of the Plan shall
not be considered compensation for the McCAP Feature of the Plan.
Section 4 Rules for Deferral Elections
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4.1 Timing for Deferral Elections. All Deferral Elections must be returned
to the Committee no later than the date specified by the Committee (the
"Due Date"). In no event will the Due Date be later than the end of the
year that precedes the year that the amount deferred would otherwise be
made available to the Participant making the Deferral Election.
4.2 Tax Withholding and Other Special Rules. Notwithstanding any other
provision of the Plan, if the Committee determines that it is necessary or
appropriate for administrative, legal or other appropriate reasons, the
Committee may decide not to apply any Deferral Election in whole or in
part. Without limiting the generality of the foregoing, the Committee may
decide not to apply a Deferral Election to the extent necessary or
appropriate in order to comply with applicable laws regarding tax
withholding, after application of Section 6.4 below.
Section 5 Accounts
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5.1 Accounts.
(a) A bookkeeping account shall be established in each Participant's name
(an "Account"). The Account of each individual who is a Participant in both
the Deferred Income Feature and the McCAP Feature of the Plan shall be
divided into two subaccounts, one representing the amounts credited to the
Participant's Account pursuant to Section 2 above of the Plan, and the
other representing the amounts credited to the Participant's Account
pursuant to Section 3 above, in each case, as adjusted pursuant to Section
5.2 below and as a result of distributions from the Account.
(b) The Participants' Accounts may be further subdivided as the Committee
may from time to time determine to be necessary or appropriate, including
without limitation to reflect different sources of credits to the Accounts
and different deemed investments thereof.
(c) Amounts deferred pursuant to a Deferral Election shall be credited to
the applicable Account as of the date the Participant would otherwise have
received the deferred amounts in the absence of a Deferral Election. Any
Equalization Amounts shall be credited to the applicable Account as soon as
administratively feasible after the date when the amount of the
corresponding employer contributions to the Profit Sharing Plan is
determined. Any amount credited under the McCAP Feature of the Plan shall
be credited to the applicable Account as of the date the amount would have
been allocated under the Profit Sharing Plan if the Limits had not applied.
Adjustments of a Participant's various subaccounts to reflect investment
experience and distributions shall in all cases be done on a pro-rata
basis, and such subaccounts shall be treated in the same manner for all
other purposes of the Plan, except as specifically provided in Section 9.2
below.
McDonald's Corporation 45
5.2 Investment Elections and Earnings Credits.
(a) Each Participant in the Plan shall be permitted from time to time to
make an investment election regarding the manner in which his or her
Account shall be deemed invested. Subject to the following, the
Committee shall establish and communicate to Participants the
investment choices that will be available to Participants and the
procedures for making and changing investment elections, as it may
from time to time determine to be appropriate. Unless otherwise
determined by the Committee, a Participant's investment election may
be split among the available choices in increments of 1%, totaling
100%. The procedures as in effect as of January 1, 2002 are attached
as Exhibit D to the Plan.
(b) As of January 1, 2002, the available investment choices under the Plan
are:
(i) a rate of return based upon the McDonald's Common Stock
Equivalent under the Profit Sharing Plan, after adjustment
for expenses under the Plan (the "Supplemental McDonald's
Common Stock Return");
(ii) a rate of return based upon the Stable Value Equivalent
under the Profit Sharing Plan, after adjustment for
expenses under the Plan (the "Supplemental Stable Value
Return"); and
(iii) a rate of return based upon the S&P 500 Index Equivalent
under the Profit Sharing Plan, after adjustment for
expenses under the Plan (the "Supplemental S&P 500 Index
Return").
(c) For any period during which a Participant has failed to make an
investment election, the Participant's Account shall be credited with
the Supplemental Stable Value Return. A Participant's investment
election will continue in effect until the Participant files a new
investment election.
5.3 Vesting. A Participant shall be fully vested at all times in the balance of
his or her Account, except as specifically provided in Section 6.3 below.
Section 6 Payment of Benefits
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6.1 Time and Method of Payment. Payments of a Participant's Account shall be
made to a Participant, or the Participant's beneficiary if the Participant
is deceased, in accordance with the rules set forth below:
(a) Time of Payment. Each payment under the Plan shall be made in a
particular calendar month as provided below. The payments under the
Plan that are to be made in a particular calendar month shall in all
cases be made as soon as administratively feasible after the first
business day of such calendar month.
(b) Default Rule and Participant Elections. Unless the Participant has
elected otherwise as provided for below, payment of the Participant's
Account shall be made in a single lump sum in April of the year
following the year in which the Participant terminates employment.
Participants shall be permitted to elect different times to receive
payments ("Payment Elections") and forms of payment other than a lump
sum ("Installment Elections"), subject to the rules set forth below.
Any filing, change or revocation of a Payment Election that occurs
after the applicable deadline set forth below shall be void and of no
effect. In each case, the most recent such filing, change or
revocation by a Participant on or before the applicable deadline shall
govern the Participant's entire Account except as expressly provided
below.
(c) Termination Distributions. Distributions from a Participant's Account
after termination of employment (other than distributions made
pursuant to Section 6.1(f) below) are referred to as "Termination
Distributions." A Participant may elect to have his or her Termination
Distributions paid, or begin to be paid in installments, later than
April of the year following the year in which the Participant
terminates employment. Such a Payment Election shall be made no later
than December 31 of the year in which the Participant terminates
employment.
(d) Installment Payments of Termination Distributions. A Participant may
make an Installment Election selecting one of the following
installment payment methods to apply to his or her Termination
Distributions:
(i) Monthly, quarterly or annual installments over a period ending
not later than the first April that begins after the 25th
anniversary of the date of the Participant's termination of
employment, as specified in the Installment Election. Such
installment payments shall be made in substantially equal
installments over the installment period specified. Each such
installment payment shall be computed by dividing the
then-balance of the Account by the number of payments remaining
in the installment period.
(ii) Monthly, quarterly or annual installments of a dollar amount
specified in the Installment Payment Election; provided, however,
that in any event, the last such installment must be paid not
later than the first April that begins after the 25th anniversary
of the date of the Participant's termination of employment.
46 McDonald's Corporation
(iii) An initial partial lump sum payment with subsequent monthly,
quarterly or annual installment payments, which shall be either
(A) made over a period of years (as described in Section
6.1(d)(i) above) or (B) of a specified dollar amount (as
described in Section 6.1(d)(ii) above), as specified in the
Installment Payment Election.
An Installment Election shall be made on or before the December 31 of
the calendar year preceding the date when the Participant's
Termination Distributions are scheduled to begin, and, once made with
respect to a Participant's Account, may not be revoked or changed by
the Participant or the Participant's beneficiary, except to the extent
permitted under Section 6.3 below.
(e) In-Service Withdrawals. A Participant may elect (an "In-Service
Withdrawal Election") to have all or a specified portion of his or her
Account paid in a specified month before termination of employment
(such payments being called "In-Service Withdrawals"), subject to the
following rules:
(i) such an election must be made before the Participant's
termination of employment, and once made, shall be irrevocable;
(ii) the month so elected for an In-Service Withdrawal must (A)
occur during a calendar year beginning subsequent to the date
of the election and (B) begin at least six months after the
date of the election; and
(iii) the amount distributed in an In-Service Withdrawal may not
include any amounts credited to the Participant's Account under
Section 2 or Section 3 on or after January 1 of the year
preceding the year in which the In-Service Withdrawal occurs,
nor any earnings on such amounts.
(f) Termination Before In-Service Withdrawal. If the Participant's
employment terminates at a time when one or more In-Service Withdrawal
Elections are in effect, the In-Service Withdrawals shall continue to
be paid in accordance with such elections, except that all In-Service
Withdrawals that remain unpaid at the earlier of (i) the beginning of
April of the year following the year in which the Participant
terminates employment, and (ii) the date when the Participant's
Termination Distributions are paid or begin to be paid, shall be
treated as Termination Distributions and paid in accordance with
Sections 6.1(a) through (d).
(g) Small Balance Rule. Notwithstanding any other provision of the Plan,
and notwithstanding any election that the Participant may have made,
if the balance in a Participant's Account as of the end of the month
during which the Participant's employment terminates is less than
$50,000, then such Participant's Account shall be paid in a single
lump sum as soon as administratively feasible after the end of such
month.
(h) Change in Control. The Committee may (but shall not be required to)
establish procedures under which Participants may be permitted to
elect to have all or a specified portion of their Accounts paid in a
single lump sum upon a Change in Control, as that term is defined in
the McDonald's Corporation 2001 Omnibus Stock Ownership Incentive
Plan, notwithstanding any other provision of the Plan, and
notwithstanding any other election that the Participant may have made.
6.2 Form of Payment. All payments shall be made in cash. However, a Participant
who has elected a McDonald's Common Stock Equivalent return and who uses
amounts that have been deemed so invested and then distributed in cash to
purchase shares of McDonald's common stock on the open market in one or
more transactions within seven months after the date such amounts were
distributed, shall be entitled to receive reimbursement from the Company
for all reasonable brokerage fees and other transaction costs incurred by
him or her in connection with such purchases, upon presentation to the
Committee not later than 60 days after the date of each transaction of
satisfactory evidence thereof.
6.3 Hardship Withdrawals and Acceleration of Installment Payments. The Company
recognizes that there will be circumstances in which a Participant will
need to withdraw amounts from his or her Account more quickly than is
permitted for In-Service Withdrawals under Section 6.1(e) above. Therefore,
a Participant shall have the right to withdraw in cash any portion of the
balance of his or her Account at any time before his or her termination of
employment, subject to the Committee's consent and a 10% forfeiture penalty
on the amount requested. A Participant who is receiving Termination
Distributions in installments may also accelerate payment of any unpaid
amount, subject to the Committee's consent and 10% forfeiture penalty on
the amount accelerated. Any withdrawals or accelerated payments pursuant to
this Section 6.3 (reduced by the 10% forfeiture penalty) shall be paid as
soon as administratively feasible after the election to withdraw or
accelerate payments is approved by the Committee.
6.4 Withholding of Taxes. The Company shall withhold any applicable Federal,
state or local income tax from payments due under the Plan in accordance
with such procedures as the Company may establish. Generally, any Social
Security taxes, including the Medicare portion of such taxes, shall be
withheld from other compensation to the Participant in question, or paid by
the Participant in question to the Company, at the time amounts are
credited to the Participant's Account. The Company shall also withhold any
other employment taxes as necessary to comply with applicable laws.
McDonald's Corporation 47
6.5 Beneficiary.
(a) A Participant shall have the right to name a beneficiary or beneficiaries
who shall receive the balance of a Participant's Account in the event of
the Participant's death prior to the payment of his or her entire Account
(a "Beneficiary Designation"). A beneficiary may be an individual, a trust
or an entity that is tax-exempt under Code Section 501(c)(3). If no
beneficiary is named by a Participant or if the Participant survives all of
the named beneficiaries, the Participant's Account shall be paid to the
Participant's estate. A Participant may change or revoke an existing
Beneficiary Designation by filing another Beneficiary Designation with the
Committee. The latest Beneficiary Designation received by the Committee
shall be controlling.
(b) A beneficiary designated by a Participant or another beneficiary who has
not yet received payment of the entire benefit payable to him or her under
the Plan shall have the right to name a beneficiary or beneficiaries to
receive the balance of such benefit in the event of the beneficiary's death
prior to the payment of the entire amount of such benefit, in accordance
with Section 6.5(a) above, as if the beneficiary were a Participant
(regardless of whether the Participant or such other beneficiary is still
alive).
(c) In addition, after the death of a Participant or a beneficiary thereof, any
beneficiary designated by the Participant or such deceased beneficiary, as
applicable, who has not yet received payment of the entire benefit payable
to him or her under the Plan shall be treated for all purposes of Sections
5 through 10 of the Plan in the same manner as the Participant with respect
to the Account or portion thereof of which such person is the beneficiary,
including, without limitation, for purposes of making investment elections,
Payment Elections and Installment Elections.
Section 7 Miscellaneous
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7.1 Funding. Benefits payable under the Plan to any Participant shall be paid
directly by the Company. The Company shall not be required to fund, or
otherwise segregate assets to be used for payment of benefits under the
Plan. While the Company may, in the discretion of the Committee, make
investments (a) in shares of McDonald's Common Stock through open market
purchases or (b) in other investments in amounts equal or unequal to
amounts payable hereunder, the Company shall not be under any obligation to
make such investments and any such investment shall remain an asset of the
Company subject to the claims of its general creditors. Notwithstanding the
foregoing, the Company may maintain one or more trusts (each, a "Trust") to
hold assets to be used for payment of benefits under the Plan. Any payments
by a Trust of benefits provided to a Participant under the Plan shall be
considered payment by the Company and shall discharge the Company of any
further liability under the Plan for such payments.
7.2 Account Statements. The Company shall provide Participants with statements
of the balances of their Accounts under the Plan at least annually.
7.3 Employment Rights. Establishment of the Plan shall not be construed to give
any employee or Participant the right to be retained in the Company's
service or that of its subsidiaries and affiliates, or to any benefits not
specifically provided by the Plan.
7.4 Interests Not Transferable. Except as to withholding of any tax under the
laws of the United States or any state or locality and the provisions of
Section 6.5 above, no benefit payable at any time under the Plan shall be
subject in any manner to alienation, sale, transfer, assignment, pledge,
attachment, or other legal process, or encumbrance of any kind. Any attempt
to alienate, sell, transfer, assign, pledge or otherwise encumber any such
benefits, whether currently or thereafter payable, shall be void. No person
shall, in any manner, be liable for or subject to the debts or liabilities
of any person entitled to such benefits. If any person shall attempt to, or
shall alienate, sell, transfer, assign, pledge or otherwise encumber
benefits under the Plan, or if by any reason of the Participant's
bankruptcy or other event happening at any time, such benefits would
devolve upon any other person or would not be enjoyed by the person
entitled thereto under the Plan, then the Company, in its discretion, may
terminate the interest in any such benefits of the person entitled thereto
under the Plan and hold or apply them to or for the benefit of such person
entitled thereto under the Plan or such individual's spouse, children or
other dependents, or any of them, in such manner as the Company may deem
proper.
7.5 Forfeitures and Unclaimed Amounts. Unclaimed amounts shall consist of the
amount of the Account of a Participant that cannot be distributed because
of the Committee's inability, after a reasonable search, to locate a
Participant or the Participant's beneficiary, as applicable, within a
period of two years after the Payment Date upon which the payment of
benefits become due. Unclaimed amounts shall be forfeited at the end of
such two-
48 McDonald's Corporation
year period. Penalties charged for withdrawals under Section 6.3 shall also
be forfeited in the year in which the penalty is charged. These forfeitures
will reduce the obligations of the Company under the Plan. After an
unclaimed amount has been forfeited, the Participant or beneficiary, as
applicable, shall have no further right to the Participant's Account.
7.6 Controlling Law. The law of Illinois, except its law with respect to choice
of law, shall be controlling in all matters relating to the Plan to the
extent not preempted by the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
7.7 Action by the Company. Except as otherwise specifically provided in the
Plan, any action required of or permitted by the Company under the Plan
shall be by resolution of the Board of Directors of the Company or by
action of any member of the Committee or person(s) authorized by resolution
of the Board of Directors of the Company.
7.8 Section 16. Notwithstanding any other provision of the Plan, the
Compensation Committee may impose such restrictions, rules and regulations
on the terms and conditions of participation in the Plan by any Participant
who has been deemed by the Board of Directors of the Company to be subject
to Section 16 of the Securities Exchange Act of 1934, as amended, as the
Compensation Committee may determine to be necessary or appropriate. Any
transaction that would result in liability or potential liability under
said Section 16 shall be void ab initio.
Section 8 Subsidiary Participation
-------------------------------------------------------------------------------
8.1 Adoption of Plan. Any entity in which the Company directly or through
intervening subsidiaries owns 25% or more of the total combined voting
power or value of all classes of stock, or, in the case of an
unincorporated entity, a 25% or more interest in the capital and profits (a
"Subsidiary") may, with the approval of the Compensation Committee and
under such terms and conditions as the Compensation Committee may
prescribe, adopt the corresponding portions of the Plan by resolution of
its board of directors and thereby become an "Adopting Subsidiary," except
that the Brands shall automatically be considered Adopting Subsidiaries.
The Compensation Committee may amend the Plan as necessary or desirable to
reflect the adoption of the Plan by an Adopting Subsidiary, provided,
however, that an Adopting Subsidiary shall not have the authority to amend
or terminate the Plan under Section 9 below.
8.2 Withdrawal from the Plan by Subsidiary. Any Adopting Subsidiary shall have
the right, at any time, upon the approval of and under such conditions as
may be provided by the Compensation Committee, to withdraw from the Plan by
delivering to the Compensation Committee written notice of its election so
to withdraw, upon which it shall be considered a "Withdrawing Subsidiary."
Upon receipt of such notice, the Compensation Committee may (but need not)
determine that notwithstanding any other provision of this Plan and without
regard to any Payment Elections made by the affected Participants, the
Company shall pay out the portion of the Accounts of Participants and
beneficiaries attributable to credits made while the Participants were
employees of such Withdrawing Subsidiary, plus any net earnings, gains and
losses on such credits.
8.3 Special Rule for Sales or Other Dispositions of Subsidiaries.
Notwithstanding any other provision of the Plan, if an Adopting Subsidiary
ceases to be a Subsidiary (thereby becoming a "Disaffiliated Subsidiary")
as a result of (a) a sale, spinoff, public offering or other transaction
involving the Disaffiliated Subsidiary, or if one or more businesses
conducted by an Adopting Subsidiary are sold to another entity (a "Buyer"),
any Participant who as a result of such transaction ceases to be employed
by the Company or one of its remaining Subsidiaries shall be considered to
have experienced a termination of employment for purposes of the Plan,
unless the next sentence applies. If in connection with such a transaction,
a Participant remains an employee of the Disaffiliated Subsidiary or
becomes an employee of the Buyer or one of its subsidiaries or affiliates,
as applicable, and the Disaffiliated Subsidiary or the Buyer, as
applicable, assumes all liabilities to the Participant under this Plan,
then the Participant shall not be considered to have experienced a
termination of employment for purposes of the Plan, but the Company and its
remaining Subsidiaries and affiliates shall have no further obligations to
the Participant or any of his or her beneficiaries under the Plan.
McDonald's Corporation 49
Section 9 Amendment and Termination; ERISA Issues
-------------------------------------------------------------------------------
9.1 Amendment and Termination. The Company intends the Plan to be
permanent, but reserves the right at any time by action of its Board of
Directors of the Company or the Compensation Committee to modify, amend or
terminate the Plan; provided, however, that any amendment or termination of
the Plan shall not reduce or eliminate any Account accrued through the date
of such amendment or termination; and provided, further, that no such
amendment made after a Change in Control or in contemplation of a Change in
Control may eliminate any of the Participants' choices as to the timing and
method of payments of Accounts under Section 6 with respect to amounts
credited to Accounts before the date of the Change in Control. The
Compensation Committee shall provide notice of amendments adopted by the
Compensation Committee to the Board of Directors of the Company on a
timely basis.
9.2 ERISA Issues. It is the intention of the Company that the Plan be
viewed, for purposes of ERISA, as comprising three distinct plans (each, a
"Subplan"), each of which is unfunded within the meaning of ERISA and
therefore exempt from the reporting, disclosure and fiduciary rules of
ERISA: (a) an "excess benefit plan" as defined in Section 3(36) of ERISA,
covering Participants whose Accounts contain only amounts credited pursuant
to Section 3.1(a) of the Plan; (b) a plan described in Sections 201(2),
301(a)(3) and 401(a)(1) of ERISA (a "Top Hat Plan") covering Participants
not described in the preceding clause (a) but whose Accounts contain only
amounts credited under the McCAP Feature of the Plan; and (c) a Top Hat
Plan covering Participants whose Accounts contain amounts credited under
the Deferred Income Feature of the Plan. Without limiting the generality of
the foregoing provisions of this Section 9, the Company reserves the right
to terminate any Subplan, and to pay out the Accounts of Participants under
the Subplan in connection with such termination, without regard to any
Payment Elections made by such Participants, if it is determined by any
competent authority, or by the Company with the advice of counsel, that
such Subplan does not qualify as an excess benefit plan or Top Hat Plan.
Section 10 Committee Actions and Electronic Elections
-------------------------------------------------------------------------------
10.1 Actions of Committees. Any actions by the Committee or the Compensation
Committee shall be taken upon the approval of a majority of the members
thereof at any in-person or telephonic meeting or in writing.
10.2 Electronic Elections. Anything in the Plan to the contrary notwithstanding,
the Committee may in its discretion may make disclosure or give information
to Participants and beneficiaries and permit Participants or their
beneficiaries to make electronic elections in lieu of written disclosure,
information or elections provided in the Plan. In making such a
determination, the Committee shall consider the availability of electronic
disclosure of information and elections to Participants and beneficiaries,
the protection of the rights of Participants and their beneficiaries, the
appropriateness of the standards for authentication of identity and other
security considerations involved in the electronic election system and any
guidance issued by any relevant governmental authorities.
Executed in multiple originals this 1st day of October, 2001.
McDONALD'S CORPORATION
By: /s/ Stanley R. Stein
---------------------------------------
Name: Stanley R. Stein
Title: Executive Vice President
50 McDonald's Corporation
EXHIBIT A Index of Defined Terms
-------------------------------------------------------------------------------
Defined Term Section
Account 5.1(a)
Adopting Subsidiary 8.1
Annual Bonus Plan 2.2(a)
Beneficiary Designation 6.5(a)
Brands Exhibit C
Buyer 8.3
Change in Control 6.1(h)
Code 1.2(b)
Company 1.1(a)
Committee 1.3
Compensation Committee 1.3
Compensation Limit 1.2(b)
Deferral Elections 3.1(d)(i)
Deferred Income Deferred Election 2.2(a)
Deferred Income Eligible Employees 2.1
Deferred Income Feature 1.2(a)
DIP 1.1(a)
Disaffiliated Subsidiary 8.3
Due Date 4.1
Elective Contribution Limit 1.2(a)
ERISA 7.6
415 Limits 1.2(b)
In-Service Withdrawal Election 6.1(e)
In-Service Withdrawals 6.1(e)
Installment Elections 6.1(b)
Limits 1.2(b)
Merger Document 1.1(a)
McDonald's 1.1(a)
McCap I 1.1(a)
McCap II 1.1(a)
McCap Deferral Election 3.1(d)(i)
McCap Feature 1.2(a)
McEqual 1.1(a)
Other Limits 1.2(b)
Participants 1.2(a)
Payment Elections 6.1(b)
Plan 1.1(a)
Prior Year 3.1(c)(i)
Profit Sharing Plan 1.2(a)
Specified Compensation 3.1(c)(i)
Specified Year 3.1(c)(i)
Subplan 9.2
Subsidiary 8.1
Supplemental McDonald's Common Stock Return 5.2(b)(i)
Supplemental S&P 500 Index Return 5.2(b)(iii)
Supplemental Stable Value Return 5.2(b)(ii)
Termination Distributions 6.1(c)
Top Hat Plan 9.2(b)
Trust 7.1
Withdrawing Subsidiary 8.2
McDonald's Corporation 51
EXHIBIT B Merger Document
-------------------------------------------------------------------------------
(a) WHEREAS, McDonald's Corporation (the "Company") has established and
maintained the following four non-qualified deferred compensation plans
(collectively, the "Plans"): the McDonald's Profit Sharing Program
Equalization Plan as amended and restated effective January 1, 1996
("McEqual"); the McDonald's 1989 Executive Equalization Plan as amended and
restated effective January 1, 1996 ("McCAP I"); the McDonald's Supplemental
Employee Benefit Equalization Plan as amended and restated effective
January 1, 1996 ("McCAP II"); and the McDonald's Corporation Deferred
Income Plan (the "DIP"); and
(b) WHEREAS, the Board of Directors of the Company has approved the merger of
McEqual, McCAP I and McCAP II into the DIP, and the amendment and
restatement of the DIP under the new name of the McDonald's Corporation
Supplemental Profit Sharing and Savings Plan (the "Combined Plan"), all as
more fully set forth below;
(c) NOW, THEREFORE, the following actions are hereby approved, effective as of
September 1, 2001:
1. The Combined Plan is hereby adopted substantially in the form presented to
the Board. Capitalized terms used and not defined herein shall have the
meanings given them in the Plans or in the Combined Plan, as applicable.
2. Each Participant in any of the Plans whose combined account balances under
the Plans equals $5,000 or less as of September 1, 2001 and either (i) has
terminated employment before September 1, 2001 or (ii) has 2001
Compensation (as defined below) of not more than $85,000, and each
beneficiary of such a Participant, shall be paid the entire balance in all
of his or her accounts under the Plans in a single lump sum payment not
later than December 31, 2001, and shall have no further rights under the
Plans. For these purposes the term "2001 Compensation" shall mean the sum
of (A) the amount of the Participant's annual base salary at the rate in
effect for one of the payroll periods during August of the Prior Year, as
specified by the Committee, and (B) the amount of the bonus, if any,
payable to the Participant under the McDonald's Target Incentive Plan
during 2001 (in each case without regard to any elective deferrals thereof
under the Plans, the Profit Sharing Plan or otherwise).
3. Each Participant in and each beneficiary under McEqual, McCAP I or McCAP II
whose account balances under those Plans are not paid out pursuant to
Section 2 above shall automatically become a Participant in or a
beneficiary under the McCAP Feature of the Combined Plan, as applicable,
and his or her McEqual Account, McCAP I Account and/or McCAP II Account, as
applicable, shall be included in his or her Account under the Combined
Plan.
4. Each Participant in and each beneficiary under the DIP whose Deferral
Account under the DIP is not paid out pursuant to Section 2 above shall
automatically become a Participant in or a beneficiary under the Deferred
Income Feature of the Combined Plan, as applicable, and his or her Deferral
Account shall be included in his or her Account under the Combined Plan.
5. Each Participant in any of the Plans whose employment has terminated on or
before December 31, 2001, but whose account balances under the Plans are
not paid out pursuant to Section 2 above, and each beneficiary of such a
Participant, shall be paid the entire balance in his or her Accounts under
the Combined Plan in a single lump sum payment in March of 2002, unless he
or she has previously elected a later payment date under Section 6.1(c) of
the Combined Plan or made an Installment Election under Section 6.1(d) of
the Combined Plan, in accordance with the rules set forth in the Combined
Plan; provided, that the due date for either such election shall be
December 15, 2001.
6. Effective as of January 1, 2002, except as specifically provided in Section
5 above, the provisions of Section 6 of the Combined Plan relating to the
time and method of payments of Accounts shall apply to the initial balances
of Participants' Accounts under the Combined Plan that are carried over
from accounts under the Plans (the "Prior Accounts") as provided in
Sections 4 and 5 above (such initial balances, the "Initial Combined
Accounts"), superseding all prior elections made under the Plans (including
without limitation Delinking Elections under the Prior Plans) and all rules
regarding the time and method of payments under the Plans as previously in
effect.
52 McDonald's Corporation
7. The Initial Combined Accounts shall be deemed invested, as of January 1,
2002, based upon how the corresponding account or accounts in the Plans
were invested immediately as of December 31, 2001, as follows: (a) the
portion of the Initial Combined Accounts that were invested in the Stable
Value or Money Market Equivalents shall be deemed invested in the
Supplemental Stable Value Return under the Combined Plan; (b) the portion
of the Initial Combined Accounts that were invested in the International
Stock, Diversified Stock, S&P 500 or Blended Stock and Bond Equivalents
shall be deemed invested in the Supplemental S&P 500 Return under the
Combined Plan; and (c) the portion of the Initial Combined Accounts that
were invested in the McDonald's Common Stock Equivalent shall be deemed
invested in the Supplemental McDonald's Common Stock Return under the
Combined Plan.
8. Any beneficiary designation that is in effect with respect to a Prior
Account as of December 31, 2001 (a "Prior Designation") shall apply as of
January 1, 2002 to the corresponding portion of the corresponding Initial
Combined Account in which such Prior Account is included, subject to any
subsequent beneficiary designations that may be made after January 1, 2002
by the applicable Participant or beneficiary under the terms of the
Combined Plan; provided, that the Committee may determine that in any
event, all Prior Designations shall cease to be effective as to Accounts
under the Combined Plan, upon reasonable advance notice to the individuals
who made such Prior Designations.
9. As soon as practicable after the date hereof, The McDonald's Profit Sharing
Program Equalization Trust, The McDonald's 1989 Executive Equalization
Trust, and The McDonald's Supplemental Employee Benefit Equalization Trust
shall be merged into a single trust, subject to the agreement of the
trustee of each such trust and the execution of a new trust agreement. Such
new trust agreement shall require full funding of the trust in connection
with a Change in Control as defined in the Combined Plan.
10. All actions and determinations that are necessary or appropriate to
implement the foregoing shall be taken by the Committee, as defined in the
Combined Plan, or its delegee.
Executed in multiple originals this 1st day of October, 2001.
McDONALD'S CORPORATION
/s/ Stanley R. Stein
------------------------------------
By: Stanley R. Stein
Title: Executive Vice President
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McDonald's Corporation 53
EXHIBIT C Brand Employees Who Are Deferred Income Eligible Employees
-------------------------------------------------------------------------------
The "Brands" means Chipotle, Boston Market, Donatos and their respective
subsidiaries.
The Deferred Income Eligible Employees of the Brands and McDonald's Corporation
are as follows:
[Enlarge/Download Table]
----------------------------------------------------------------------------------------------------------------
Maximum Salary Deferral % McDonald's Boston Market Donatos Chipotle
================================================================================================================
60% Senior Direction Band Officers Vice President Band C - Executives
70% Leadership & Sr. Leadership Team Sr. Vice President, Band B - Officers/
Leadership Bands CFO, CEO, COO Vice Presidents
80% Executive Management N/A N/A Band A - CEO
Band
90% 5 Highest Paid Officers N/A N/A N/A
of McDonald's
----------------------------------------------------------------------------------------------------------------
EXHIBIT D Procedures for Investment Elections
-------------------------------------------------------------------------------
[Attached]
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
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This ‘10-K405’ Filing | | Date | | First | | Last | | | Other Filings |
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| | |
Filed on: | | 3/25/02 |
| | 1/1/02 | | 1 | | 12 |
For Period End: | | 12/31/01 | | 11 | | 12 | | | 11-K |
| | 12/15/01 | | 11 |
| | 9/1/01 | | 1 | | 11 |
| | 9/1/00 | | 1 |
| | 9/1/99 | | 1 |
| | 12/1/98 | | 1 |
| | 8/1/98 | | 1 |
| | 7/15/97 | | 1 |
| | 1/1/97 | | 1 |
| | 8/15/96 | | 1 |
| | 2/1/96 | | 1 |
| | 1/1/96 | | 1 | | 11 |
| | 9/1/94 | | 1 |
| | 11/1/93 | | 1 |
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