McDONALD'S CORPORATION 1992 STOCK OWNERSHIP INCENTIVE PLAN AS AMENDED AND RESTATED - -------------------------------------------------------------------------------
THE PLAN
McDonald's Corporation, a
Delaware corporation (the "Company") established the McDonald's Corporation 1992 Stock Ownership Incentive Plan (the "Plan") effective as of June 1, 1992. The Plan was first amended and restated, effective as of June 1, 1995 and was subsequently amended and restated effective as of March 19, 1997, January 20, 1998 and May 1, 1999. Unless specifically provided for in an Award (as defined herein) to the contrary, an Award shall be governed by and subject to the applicable provisions of the Plan in effect on the date such Award was granted, or in the case of an amended Award, the date the Award was amended.
1. Purpose
The purpose of this Plan is to advance the interest of the Company by encouraging and enabling the acquisition of a larger personal financial interest in the Company by those employees upon whose judgment and efforts the Company is largely dependent for the successful conduct of its operations. An additional purpose of this Plan is to provide a means by which employees of the Company and its Subsidiaries can acquire and maintain Stock ownership, thereby strengthening their commitment to the success of the Company and their desire to remain employed by the Company and its Subsidiaries. It is anticipated that the acquisition of such financial interest and Stock ownership will stimulate the efforts of such employees on behalf of the Company, strengthen their desire to continue in the service of the Company and encourage shareholder and entrepreneurial perspectives through employee stock ownership. It is also anticipated that the opportunity to obtain such financial interest and Stock ownership will prove attractive to promising new employees and will assist the Company in attracting such employees.
2. Definitions
As used in this Plan, terms defined parenthetically immediately after their use shall have the respective meanings provided by such definitions and the terms set forth below shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
(a) "Award" means options, shares of restricted stock, stock appreciation rights, performance units or stock bonuses granted under this Plan.
(b) "Award Agreement" has the meaning specified in Section 4(c)(v).
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" includes termination based on the commission of any act or acts involving dishonesty, fraud, illegality or moral turpitude.
(e) "Change in Control" shall be deemed to have occurred at such time as:
(i) any "person" (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than any subsidiary of the Company, any employee benefit plan of the Company or any of its subsidiaries, or any related trust) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities representing 20% or more of the combined voting power
for election of directors of the then outstanding securities of the Company or any successor of the Company;
(ii) during any period of two consecutive years or less, individuals who at the beginning of such period constituted the Board of Directors of the Company cease, for any reason, to constitute at least a majority of the Board of Directors, unless the election or nomination for election of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period or whose election or nomination for election was so approved; or
(iii) the stockholders of the Company approve any a merger, reorganization, consolidation, or similar transaction, a plan or agreement for the sale or other disposition of assets which, as of the date of the Company's most recent annual or quarterly consolidated financial statements, accounted for 50% or more of the net book value of the Company's consolidated assets or 50% or more of the Company's consolidated revenues, or a plan of liquidation of the Company (any of the foregoing, a "Reorganization Transaction") that, based on information included in the proxy and other materials distributed by the Company to its stockholders in connection with the solicitation of such stockholder approval, is not expected to qualify as an Exempt Reorganization Transaction.
(f) "Code" means the Internal Revenue Code of 1986, as amended, and regulations and rulings thereunder. References to a particular section of the Code shall include references to successor provisions.
(g) "Committee" means the committee of the Board appointed pursuant to Section 4.
(h) "Company" has the meaning set forth in the introductory paragraph.
(i) "Disability" means, as relates to the exercise of an incentive stock option after termination of employment, a disability within the meaning of Section 22(e)(3) of the Code, and for all other purposes, a mental or physical condition which, in the opinion of the Committee, renders a Grantee unable or incompetent to carry out the job responsibilities which such Grantee held or the tasks to which such Grantee was assigned at the time the disability was incurred, and which is expected to be permanent or for an indefinite duration exceeding one year.
(j) "Effective Date" means June 1, 1992.
(k) "Exempt Reorganization Transaction" means a Reorganization Transaction that results in the persons who were the direct or indirect owners of the outstanding voting securities of the Company immediately before such Reorganization Transaction becoming, immediately after the consummation of such Reorganization Transaction, the direct or indirect beneficial owners of voting securities representing more than 70% of the combined voting power of the then- outstanding voting securities of the surviving corporation, in substantially the same respective proportions as such persons' ownership of the voting securities of the Company immediately before such Reorganization Transaction.
(l) "Fair Market Value" of any security of the Company means, as of any applicable date the price, regular way, of the security as reported on the New York Stock Exchange Composite Tape, or if no such reported sale of the security shall have occurred on such date, on the next preceding date on which there was such a reported sale.
(m) "Grant Date" means the date on which an Award shall be duly granted, as determined in accordance with Section 6(a)(i).
(n) "Grantee" means an individual who has been granted an Award.
(o) "including" or "includes" means "including, without limitation," or "includes, without limitation."
2
(p) "Job Elimination" includes terminations of employment by the Company due to corporate restructuring or reorganization, job restructuring, reductions in force, outsourcing or replacement of jobs by technology.
(q) "Measuring Period" has the meaning specified in Section 6(f)(i)(B).
(r) "Minimum Consideration" means $.01 per share or such larger amount determined pursuant to resolution of the Board to be capital within the meaning of Section 154 of the Delaware General Corporation law.
(s) "1934 Act" means the Securities Exchange Act of 1934, as amended. References to a particular section of, or rule under, the 1934 Act shall include references to successor provisions.
(t) "Option Price" means the per share purchase price of Stock subject to an option.
(u) "Performance Percentage" has the meaning specified in Section 6(f)(i)(C).
(v) "Plan" means the McDonald's Corporation 1992 Stock Ownership Incentive Plan, as amended and restated in the manner set forth in the introductory paragraph.
(w) "Retirement" means a termination of employment with the Company and its Subsidiaries any time after attaining age 60 with at least 20 years of Company service. For options granted on or after May 1, 1999, Retirement shall also mean a termination of employment with the Company and its Subsidiaries with combined age and years of service equal to or greater than 70.
(x) "SEC" means the Securities and Exchange Commission.
(y) "Section 16 Grantee" means a person subject to potential liability under Section 16(b) of the 1934 Act with respect to transactions involving equity securities of the Company.
(z) "Stock" means the common stock of the Company, par value $.01 per share.
(aa) "Subsidiary" means (i) with respect to incentive stock options, a corporation as defined in Section 424(f) of the Code with the Company being treated as the employer corporation for purposes of this definition, and (ii) for all other purposes any entity in which the Company directly or through intervening subsidiaries owns twenty-five percent (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 twenty-five percent (25%) or more interest in the capital and profits.
(bb) "10% Owner" means a person who owns stock (including stock treated as owned under Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of stock of the Company.
3. Scope of this Plan
(a) The number of shares of Stock which represented five percent (5%) of the number of issued and outstanding shares of Stock as of June 1, 1992 was made available and reserved for delivery on account of the exercise of Awards and payment of benefits in connection with Awards. Effective June 1, 1995, January 20, 1998 and May 20, 1999, an additional 64 million, 30 million and 10 million shares of Stock, respectively were made available and were reserved for delivery on account of the exercise of Awards and payment of benefits in connection with Awards. Such shares may be treasury shares or newly issued shares, as may be determined from time to time by the Board or the Committee.
3
(b) Subject to adjustment as provided in Section 22, the maximum number of Shares of Stock for which Awards may be granted to any Grantee in any three-year period shall not exceed 5,000,000.
(c) Subject to Section 3(a) and (b) (as to the maximum number of shares of Stock available for delivery in connection with Awards) and to Section 3(d), up to 10,000,000 shares of restricted stock, and up to 400,000 bonus shares of Stock may be granted under this Plan.
(d) If and to the extent an Award shall expire or terminate for any reason without having been exercised in full, or shall be forfeited, without, in either case, the Grantee having enjoyed any of the benefits of stock ownership (other than voting rights or dividends that are likewise forfeited), the shares of Stock (including restricted stock) associated with such Award shall become available for other Awards.
4. Administration
(a) Subject to Section 4(b), this Plan shall be administered by a committee ("Committee") of the Board of Directors. All members of the Committee shall be "Outside Directors" as defined or interpreted for purposes of Section 162(m) of the Code. The composition of the Committee shall also be subject to such limitations as the Board deems appropriate to permit transactions in Stock pursuant to this Plan to be exempt from liability under Rule 16b-3 under the 1934 Act.
(b) The Board may, in its discretion, reserve to itself or delegate to another committee of the Board any or all of the authority and responsibility of the Committee with respect to Awards to Grantees who are not Section 16 Grantees at the time any such delegated authority or responsibility is exercised. Such other committee may consist of two or more directors who may, but need not be, officers or employees of the Company or of any of its Subsidiaries. To the extent that the Board has reserved to itself or delegated to such other committee the authority and responsibility of the Committee, all references to the Committee in this Plan shall be to the Board or such other committee.
(c) The Committee shall have full and final authority, in its discretion, but subject to the express provisions of this Plan, as follows:
(i) to
Grant Awards (ii) to determine (A) when Awards may be granted, and (B) whether or not specific Awards shall be identified with other specific Awards, and if so whether they shall be exercisable cumulatively with or alternatively to such other specific Awards,
(iii) to interpret this Plan and to make all determinations necessary or advisable for the administration of this Plan,
(iv) to prescribe, amend, and rescind rules and regulations relating to this Plan, including rules with respect to the exercisability and nonforfeitability of Awards upon the termination of employment of a Grantee,
(v) to determine the terms and provisions and any restrictions or conditions (including specifying such performance criteria as the Committee deems appropriate, and imposing restrictions with respect to stock acquired upon exercise of an option, which restrictions may continue beyond the Grantee's termination of employment) of the written agreements by which all Awards shall be evidenced ("Award Agreements") which need not be identical and, with the consent of the Grantee, to modify any such Award Agreement at any time,
(vi) to authorize foreign Subsidiaries to adopt plans as provided in Section 15,
4
(vii) to delegate its duties and responsibilities under this Plan with respect to such foreign Subsidiary plans, except its duties and responsibilities with respect to Section 16 Grantees, and (A) the acts of such delegates shall be treated hereunder as acts of the Committee and (B) such delegates shall report to the Committee regarding the delegated duties and responsibilities,
(viii) to accelerate the exercisability of, and to accelerate or waive any or all of the restrictions and conditions applicable to, any Award, or any group of Awards for any reason,
(ix) subject to Section 6(a)(ii), to extend the time during which any Award or group of Awards may be exercised,
(x) to make such adjustments or modifications to Awards to Grantees working outside the United States as are necessary and advisable to fulfill the purposes of this Plan,
(xi) to impose such additional conditions, restrictions, and limitations upon the grant, exercise or retention of Awards as the Committee may, before or concurrently with the grant thereof, deem appropriate, including requiring simultaneous exercise of related identified Awards, and limiting the percentage of Awards which may from time to time be exercised by a Grantee, and
(xii) to prescribe rules and regulations concerning the transferability of any Awards granted on or after June 1, 1995 and to make such adjustments or modifications to Awards transferable pursuant to Section 8 as are necessary and advisable to fulfill the purposes of this Plan.
The determination of the Committee on all matters relating to this Plan or any Award Agreement shall be conclusive and final. No member of the Committee shall be liable for any action or determination made in good faith with respect to this Plan or any Award.
5. Eligibility
Awards may be granted to any full-time employee (including any officer) of the Company or any of its domestic Subsidiaries, or any employee, officer or director of any of the Company's foreign Subsidiaries. In selecting the individuals to whom Awards may be granted, as well as in determining the number of shares of Stock subject to, and the other terms and conditions applicable to, each Award, the Committee shall take into consideration such factors as it deems relevant in promoting the purposes of this Plan.
6. Conditions to Grants
(a) General conditions.
(i) The Grant Date of an Award shall be the date on which the Committee grants the Award or such later date as specified in advance by the Committee.
(ii) The term of each Award (subject to Section 6(c) with respect to incentive stock options) shall be a period of not more than 15 years from the Grant Date, and shall be subject to earlier termination as herein provided.
(iii) A Grantee may, if otherwise eligible, be granted additional Awards in any combination.
(b) Grant of options and option price. No later than the Grant Date of any option, the Committee shall determine the Option Price of such option. The Option Price of an option shall not be less than 100% of the Fair Market Value of the Stock on the Grant Date. Such price shall be subject to adjustment as provided in Section 22. The Award Agreement may provide that the option shall be exercisable for restricted stock.
5
(c) Grant of incentive stock options. At the time of the grant of any option, the Committee may designate that such option shall be made subject to additional restrictions to permit it to qualify as an "incentive stock option" under the requirements of Section 422 of the Code. Any option designated as an incentive stock option:
(i) shall not be granted to a 10% Owner;
(ii) shall be for a period of not more than 10 years from the Grant Date, and shall be subject to earlier termination as provided herein or in the applicable Award Agreement;
(iii) shall not have an aggregate Fair Market Value (determined for each incentive stock option at its Grant Date) of Stock with respect to which incentive stock options are exercisable for the first time by such Grantee during any calendar year (under this Plan and any other employee stock option plan of the Grantee's employer or any parent or Subsidiary thereof ("Other Plans")), determined in accordance with the provisions of Section 422 of the Code, which exceeds $100,000 (the "$100,000 Limit");
(iv) shall, if the aggregate Fair Market Value of Stock (determined on the Grant Date) with respect to all incentive stock options previously granted under this Plan and any Other Plans ("Prior Grants") and any incentive stock options under such grant (the "Current Grant") which are exercisable for the first time during any calendar year would exceed the $100,000 Limit, be exercisable as follows:
(A) the portion of the Current Grant exercisable for the first time by the Grantee during any calendar year which would, when added to any portions of any Prior Grants, be exercisable for the first time by the Grantee during such calendar year with respect to Stock which would have an aggregate Fair Market Value (determined as of the respective Grant Date for such options) in excess of the $100,000 Limit shall, notwithstanding the terms of the Current Grant, be exercisable for the first time by the Grantee in the first subsequent calendar year or years in which it could be exercisable for the first time by the Grantee when added to all Prior Grants without exceeding the $100,000 Limit; and
(B) if, viewed as of the date of the Current Grant, any portion of a Current Grant could not be exercised under the provisions of the immediately preceding sentence during any calendar year commencing with the calendar year in which it is first exercisable through and including the last calendar year in which it may by its terms be exercised, such portion of the Current Grant shall not be an incentive stock option, but shall be exercisable as a separate option at such date or dates as are provided in the Current Grant;
(v) shall be granted within 10 years from the earlier of the date this Plan is adopted or the date this Plan is approved by the stockholders of the Company;
(vi) shall require the Grantee to notify the Committee of any disposition of any Stock issued pursuant to the exercise of the incentive stock option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), within 10 days of such disposition; and
(vii) shall by its terms not be assignable or transferable other than by will or the laws of descent and distribution and may be exercised, during the Grantee's lifetime, only by the Grantee; provided, however, that the Grantee may, to the extent provided in this Plan and in a manner specified by the Committee, designate in writing a beneficiary to exercise his incentive stock option after the Grantee's death.
Notwithstanding the foregoing and Section 4(c)(v), the Committee may, without the consent of the Grantee, at any time before the exercise of an option (whether or not an incentive stock option), take any action necessary to prevent such option from being treated as an incentive stock option.
6
...