Offer Letter between Silvia Lagnado and the Company, dated June 8, 2015

A start date of the later of August 1, 2015 or two weeks after your visa or authorization to work in the U.S. is obtained. Your work location shall be Oak Brook, IL.

An annual base salary rate of $600,000 effective on your start date. You will be eligible for a salary increase and performance review in March 2016.

You will be eligible to participate in our Target Incentive Plan (“TIP”) on an annual basis. The current target percentage for the offered position is 80% of your base pay as of December 31 of the performance year. For 2015, you will be eligible for a pro-rated TIP payment, payable in March 2016. Any TIP payout will be based on TIP’s performance criteria.

You will be eligible for an annual Long Term Incentive (LTI) equity award beginning in 2016. The grant will consist of stock options and performance-based restricted stock units (RSUs) based upon the guideline ranges for an Officer level employee, subject to approval by McDonald’s Compensation Committee. The award value will be based on the standard criteria in use at the time of the grant. For the offered position, the current award range is $0 - $1,252,500, with a target of $835,000.

In addition to your eligibility for an annual LTI equity grant, in both 2016 and 2017 you will be granted an additional award of $700,000 of time-vested RSUs at the earliest granting opportunity available in the calendar year and in a manner consistent with the Company’s practice of granting equity awards. These RSUs will vest on the first anniversary of the grant date. In the event you are involuntarily terminated by the Company without cause prior to the vesting date of each respective award, you will vest in a prorata portion of the RSUs granted based on the number of months worked during the vesting period, with a minimum prorated vesting equal to 6 months of service. For purposes of this letter agreement, “cause” shall mean such term as defined in the 2012 Omnibus Stock Ownership Plan.

You will be eligible to participate in the Cash Performance Unit Plan (CPUP), which makes up the cash component of the long-term incentive compensation. The payout factor at the end of the three-year cycle is tied to performance against specified business measures. Your target award for the 2015 CPUP is $415,000, which will be pro-rated based on your start date. Any payout under the 2015 CPUP will occur in March 2018 pursuant to Company results against the CPUP performance thresholds.

You will receive a McDonald’s Sign-On Package which consists of the following:

a sign-on LTI grant valued at $700,000 will be granted to you following your start date, consistent with the Company’s practice of granting equity awards.  50% of the value of this grant will be in the form of stock options which will vest equally on the first 4 anniversaries of the grant date and 50% of the value in the form of performance-based RSUs, which will vest in full on the third anniversary of the grant date, subject to achievement of the performance conditions.

an additional sign-on LTI grant valued at $700,000 will be granted to you following your start date, consistent with the Company’s practice of granting equity awards. 100% of the value of this grant will be in the form of time-vested RSUs, which will vest in full on the first anniversary of the grant date. In the event you are involuntarily terminated by the Company without cause prior to the vesting date, you will vest in a prorata portion of the RSUs granted based on the number of months worked during the vesting period, with a minimum prorated vesting equal to 6 months of service.

All of the stock options and RSUs referred to in this letter are subject to the terms and conditions of the 2012 Omnibus Stock Ownership Plan and the respective stock option and restricted stock unit award agreements, which will be provided at the time of grant and shall incorporate all of the terms above for the three special $700,000 time-vested RSU grants.

In regards to all of the stock options, RSUs, and CPUP awards granted to you while an employee of McDonald’s, in the event you voluntarily or involuntarily terminate (excluding for cause) following three years from your start date, you will receive 1) a pro-rata portion of RSU and CPUP awards based on the number of months worked during the vesting period for RSUs and performance period for CPUP (further subject to applicable performance conditions), and 2) two years of additional vesting and a two year post-termination period to exercise for outstanding stock options. For example, as related to CPUP, if you were to terminate on December 31, 2018, you would vest in full for any earned payout from 2016 CPUP, two-thirds of the earned payout from 2017 CPUP, and one-third of the earned payout from 2018 CPUP. The preferential treatment noted above will be the same as defined for a company initiated termination under the applicable plans/award agreements, with any payment subject to specified performance goals.  To qualify for such treatment, you must provide a six month advance notice (as related to a voluntary termination) and execute and deliver any required release and non-compete agreements (non-compete agreement not to exceed 18 months following termination date). Stock option and RSU awards granted within 12 months of your termination date will be subject to forfeiture, excluding the three special $700,000 time-vested RSU grants noted above.  CPUP awards granted in the calendar year of termination will also forfeit, unless your termination date is December 31st of that year.

You will be subject to the McDonald’s Corporation Stock Ownership and Retention Policy, which requires you to attain, and then remain at or above, an ownership level equal to four times your base salary within five years of your start date. See enclosed attachment for details.

You will be eligible for entry into the unmatched Profit Sharing/401(k) program effective the first of the month following one month of service.

You will be eligible to participate in the salary and TIP deferral portion of the Excess Benefit and Deferred Bonus Plan on January 1, 2017.

You will be eligible for life, accident, medical/dental, and long-term disability insurance effective the first of the month following one full calendar month of service.

You will be eligible for short term disability effective the first of the month following three months of employment.

For each calendar year, you will be eligible for five (5) weeks of vacation.

For each calendar year, you are eligible for (10) ten days of sick time and (2) two days of paid personal time. 

You will be eligible to participate in McDonald’s Executive Physical Program.

You will be eligible to participate in McDonald’s Executive Financial Counseling Program. In addition, on an annual basis, you will receive up to $10,000 for tax preparation services.

You will be subject to the McDonald’s Corporation Severance Plan.