Human Capital & Careers

Less Stock-Based Comp for McDonald’s

Cash incentives will play a greater role at the fast-food giant.
Stephen TaubMarch 9, 2005

McDonald ‘s Corp. announced that it will greatly cut back on awarding stock-based compensation to its employees.

Acknowledging in its annual report that most companies will soon be required to expense the value of stock-based grants, the fast-food giant stated that it will limit the eligibility of employees to receive such compensation and shift a portion of that compensation primarily to cash-based incentives.

The company added that it expects to adopt the new accounting standard during the first quarter of 2005 using the modified-retrospective method for restating prior periods.

McDonald’s did not specify whether top executives would be affected by the new policy. Last month, however, the company announced in a regulatory filing that it granted equity securities to chief financial officer Matthew Paull, global chief marketing officer M. Lawrence Light, and Ralph Alvarez, president of McDonald’s North America, as part of the company’s 2005 broad-based equity grant.

Paull was awarded 29,899 non-qualified stock options and 9,970 restricted stock units; Light, 21,850 non-qualified stock options and 7,286 restricted stock units; and Alvarez, 36,799 non-qualified stock options and 12,270 restricted stock units. Each stock option has an exercise price of $32.60 per share and becomes exercisable in four equal installments on the first four anniversaries of the grant date.