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Food has been processed for nearly as long as it has been used. In early times, humans used to dry or
smoke meat or other foodstuff in order to preserve it for longer periods of time. Salt preservation was
also very common in the diet of sailors and soldiers during those times. Food processing essentially
remained unchanged until the 19th century with the invention of by Nicholas Appert
andby Louis Pasteur. Both of these innovations changed the way that food was processed
into a longer lasting food product that was canned or bottled.

During wartime, the food and beverage industry shifted, as food is often a precious commodity. Prices
were determined by availability and regulation. Most countries involved in World War II rationed food
and regulated prices in order to stabilize the economy. This increased innovation in the food processing
segment with the inventions of food coloring, juice concentrates, artificial sweeteners, and more
advanced preservatives, such as sodium benzoate. These innovations led to the current food processing
market in place today with convenience foods, such as frozen TV dinners and instant meals, prepared
snacks, and other instantly available foods.

The food distribution segment of this industry is fairly new. Prior to the industrial revolution, consumers
typically ate what foods were available to them in their regional market. Foods were processed from
these markets and used for journeys out of them. With the  of the industrial
revolution, such as railroads and barges, as well as the concurrent rise in technology such as canning, it
became feasible to transport food from one regional market for sale in another. Today, the industry
segment has evolved even further due to increased transportation technology such as airplanes.



In the distribution segment of this industry;

 , 


, and ! are the
major companies. In the processing segment; diversification and expansion has led to companies being
involved in many different markets. is a major part of the beverage and, with their
"
brand, food processing segment. #is the world¶s largest food conglomerate and $%and its
subsidiaries are very involved as well. In addition to PepsiCo, the nonalcoholic beverage is dominated
by "# and &"
#. The big companies in the alcoholic beverage market
are'(")(c), ##, and .


Due to the recent economic meltdown, consumers are looking to save as much money as possible. One
major way that consumers are doing so is by purchasing more % and making their own
meals, not going out to eat. This is causing food processing companies to become more to
decrease the cost of goods sold, attract more customers, and increase profit margins.

The large amount of * in the world has a major effect on the food and beverage industry. There has
been an increase in demand for (#(% and more informative nutritional labeling. Both of these
trends have caused companies to release lower calorie foods and to better control how their brand is
viewed. Companies want to be viewed as a healthy brand and are promoting activities, such as youth
sports, that show this healthy image. There also is mention of a tax on foods known to lead to obesity in
order to curb consumers¶ usage of them.

 of factors of production are a major factor to this industry as well. Since commodity prices
went up in the past year, food companies have had to increase prices of the final product as well. With the
economic collapse, this affected them two-fold, as consumers were less likely to want or even have the
money to pay the higher prices. Fortunately, commodity costs have been decreasing in the last few
months, which forecasts a lower final price for the products in this industry is to come.

The industry also has to deal with their reputation, as there have been incidents of unsafe food being
released in the past. These outbreaks have to major potential consequences: #%!
% and #. Already, research has shown that consumers do not trust their
food suppliers as much as they used to and nearly half of them have switched brands in the past year,
either to save money or because they believe the new food will be safer. Government control of the food
process has increased with the passage of new laws as well.

 #+

The food and beverage industry has seen their profit margins decrease recently. However, due to the
falling cost of commodities, these margins should increase in the coming years. Food is a necessary part
of life and will always be needed. Those are some reasons why this industry has an * future
outlook.

In addition, * are expected to become increasingly important, as

consumers are trying to stretch their dollar further and competition is increasing. With the increase in
competition, the only way companies can separate themselves from others is by brand recognition.
Consumers are now very concerned with the reputation of a company, or their brand image, with respect
to the safety and quality of product. Increased innovation in the industry will lead to newer, healthier
products and lower production costs, both of which should increase profit margins.
In the past half-century, the food and beverage industry has blossomed from a collection of mom-and-pop
operations to a trillion-dollar powerhouse led by huge international corporations. Familiar names
like Coca-Cola, Starbucks and McDonald's can be found in every corner of the globe. The overarching
theme dominating the food and beverage industry is exploding global demand and rapidly rising food
prices. The breakneck economic growth of countries such as China, India, Brazil and Vietnam gives
billions of people the ability indulge in ways previously enjoyed only by those in developed nations. A
massive influx of consumers onto the global food market has resulted in a rapid and sustained increase in
food prices, stoking global inflation.

*%(
)c

!

The farming subset of the food and beverage industry encompasses those businesses involved in the
production and collection of raw agricultural commodities such as corn, wheat, soybeans and rice. This
portion of the food and beverage industry includes seed producers such as Monsanto and Dupont as well
as agribusinesses such as ADM and closely held Cargill:

!

O? Monsanto Company (MON)

O? DuPont (DD)
O? Syngenta AG (SYT)

'*

O? Archer-Daniels-Midland Company (ADM)

O? Bunge (BG)
O? Corn Products International (CPO)
O? Smithfield Foods (SFD)
% increase in prices of wheat, corn, soya and rice from 2005-2007[1]

Over the past decade the world has witnessed a drastic rise in food prices. According to the World Bank,
over the past three years alone, global food prices have increased over 80%[2] These dramatic increases
can be attributed to the convergence of factors that has created the perfect storm for food prices. Prime
among these factors is a world that is growing both more populous and prosperous. New wealth in
rapidly developing nations such as China, India, Brazil and Vietnam is allowing billions of people to
increase their caloric intake, increasing global demand and straining supplies. Similarly in response to a
more prosperous and populous world, global energy prices have skyrocketed, increasing input prices for
food production. High energy prices, in turn, have triggered a shift toward ethanol and biodiesels which
further increases the demand for crops such as corn and soybeans. Finally, an increase in crop shortages
caused by "freak" weather occurrences such as a 10 year drought in Australia and floods in south Asian
as well as pest outbreaks.


!%#

McDonald's is the leading global foodservice retailer with more than 32,000 local restaurants serving
more than 60 million people in 117 countries each day. More than 75% of McDonald's restaurants
worldwide are owned and operated by independent local men and women.
We serve the world some of its favorite foods - World Famous Fries, Big Mac, Quarter Pounder,
Chicken McNuggets and Egg McMuffin.
Our rich history began with our founder, Ray Kroc. The strong foundation that he built continues
today with McDonald's vision and the commitment of our talented executives to keep the shine on
McDonald's Arches for years to come. To read more about McDonald's history, vision and executives

,!
+
Vice Chairman and Chief Executive Officer

)

Executive Vice President and Chief Financial Officer

,%%


Executive Vice President and Worldwide Chief Restaurant Officer



Honorary Chairman

#- 
!
McDonald's brand mission is to "be our customers' favorite place and way to eat." Our
worldwide operations have been aligned around a global strategy called the Plan to Win
centering on the five basics of an exceptional customer experience ± People, Products, Place,
Price and Promotion. We are committed to improving our operations and enhancing our
customers' experience.
The McDonald¶s #1 Store Museum is located at 400 N. Lee Street, Des Plaines, Illinois. The
museum is a re-creation of the first McDonald¶s restaurant opened on this site, April 15, 1955,
by McDonald¶s Corporation founder Ray Kroc.

Momentum
We continue to drive our business by focusing on what matters
most to customers. Our owner/operators, suppliers and
employees work together to meet customer needs in uniquely
McDonald's ways. The powerful combination of entrepreneurial
spirit and Systemwide alignment around our # 
. enables us to execute the best ideas with both large-scale
efficiency and local flair.

As a result, we're delivering simple, easy and enjoyable

restaurant experiences for customers and creating superior value
for shareholders.

To learn more about McDonald's, you can access our 2009

Annual Report and 2010 Proxy Statement.


/

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Corporate Governance Principles

McDonald¶s Corporation¶s Board of Directors is entrusted with, and responsible for, the
oversight of the assets and business affairs of McDonald¶s Corporation in an honest, fair, diligent
and ethical manner. This Board has long believed that good corporate governance is critical to
our fulfilling our obligations to shareholders. We firmly believe that good governance is a
journey, not a destination. Therefore, we are committed to reviewing our governance principles
at least annually, with a view to continuous improvement. As our governance processes evolve,
we will change this document. One thing that we will not change, however, is our commitment
to ensuring the integrity of the Company in all of its dealings with stakeholders. Our continued
focus on leadership in corporate governance is an integral part of fulfilling our commitment to
shareholders.
Adopted by the Board of Directors
with effect as of January 21, 2010
Roles and Responsibilities
1.? #%() ± The Board, which is elected by the shareholders, is the ultimate
decision-making body of the Company, except with respect to matters reserved to
shareholders. The primary function of the Board is oversight. The Board, in exercising its
business judgment, acts as an advisor and counselor to senior management and defines and
enforces standards of accountability ± all with a view to enabling senior management to
execute their responsibilities fully and in the interests of shareholders. The following are the
Board's primary responsibilities, some of which may be carried out by one or more
Committees of the Board or the independent Directors as appropriate:
o? Overseeing the conduct of the Company's business so that it is effectively
managed in the long-term interests of shareholders;
o? Selecting, evaluating and compensating the Chief Executive Officer (CEO) and
planning for CEO succession, as well as monitoring management¶s succession
planning for other key executives;
o? Overseeing and reviewing the Company¶s strategic direction and objectives,
taking into account (among other considerations) the Company's risk profile and
exposures;
o? Monitoring the Company¶s accounting and financial reporting practices and
reviewing the Company¶s financial and other controls;
o? Overseeing the Company¶s compliance with applicable laws and regulations; and
o? Overseeing the processes that are in place to safeguard the Company¶s assets and
mitigate risks.
In performing its oversight function, the Board is entitled to rely on the advice, reports and
opinions of management, counsel, auditors and outside experts. In that regard, the Board and its
Committees shall be entitled, at the expense of the Company, to engage such independent legal,
financial or other advisors as they deem appropriate, without consulting or obtaining the
approval of any officer of the Company.
2.? #%((! ± The Chairman shall be a member of the Board of Directors and
may, or may not be, an officer or employee of the Company. A non-executive Chairman
shall not be an officer or employee of the Company. The principal duty of the Company¶s
Chairman is to lead and oversee the Board of Directors. The Chairman should facilitate
an open flow of information between management and the Board, and should lead a
critical evaluation of Company management, practices and adherence to the Company¶s
strategic plan and objectives. In accordance with the Company¶s By-laws, the Chairman
shall preside at all meetings of the Board and the shareholders. The Chairman, in
consultation with the CEO, shall also establish an agenda for each meeting of the
Board.
3.? #%(  ! ± The Company's business is conducted by its
employees, managers and officers, under the direction of senior management and led by
the CEO. In carrying out the Company¶s business, the CEO and senior management are
accountable to the Board and ultimately to shareholders. Management¶s primary
responsibilities include the day-to-day operation of the Company¶s business, strategic
planning, budgeting, financial reporting and risk management; and in fulfilling those
 responsibilities, management must balance the unique relationships between and among
the McDonald¶s System of employees, franchisees and suppliers.
Functioning of the Board
4&)  ± The Board of Directors meets at least six times a year. Additional
meetings are scheduled as necessary or appropriate in light of prevailing circumstances. The
Chairman chairs all meetings of the Board of Directors. The Chairman, in consultation with
the CEO, establishes an agenda for each meeting. Agendas are set so as to ensure that the
Board will be able to fulfill its oversight responsibilities. Directors may at any time suggest
the addition of any matters to a meeting agenda or raise for discussion at any meeting any
subject that they wish, whether or not it is on the agenda for the meeting. The Secretary
attends all meetings of the Board and records the minutes. The Chief Operating Officer,
Chief Financial Officer and General Counsel also attend meetings of the Board. Any one or
all of these officers may be excused from all or any portion of a Board meeting at the request
of any Director.

@&A
 ± The Board of Directors refers to meetings of the independent

Directors as ³executive sessions.´ The Presiding Director chairs executive sessions; however,
he or she may choose to defer to a Committee Chair when the subject matter of the meeting
falls within the purview of a Board Committee. The independent Directors, led by the
Presiding Director, determine the frequency, length and agenda for executive sessions. An
executive session is generally scheduled immediately before or after each regular Board
meeting.

B&
: ± Directors are expected to visit Company facilities throughout the year.
Periodically, the Board may meet away from the Company¶s headquarters in order to visit
certain of the Company¶s operations and provide the Directors the opportunity to meet with
local management.

>&c%!**  ± Information regarding the Company¶s

business and performance is distributed to all Directors on a regular basis. In addition,
business updates and information regarding recommendations for action by the Board at a
meeting shall be made available to the Board a reasonable period of time before meetings.

Code of Conduct for the Board of Directors

The members of the Board of Directors of McDonald¶s Corporation acknowledge and accept the
scope and extent of our duties as Directors. We have a responsibility to carry out our oversight
responsibility in the interests of all McDonald's shareholders, within the scope of our authority
and consistent with our fiduciary duties and our governance documents. The Board of Directors
has adopted the following Code of Conduct and our Directors are expected to adhere to the
standards of loyalty, good faith, and the avoidance of conflict of interest that follow:
) !*1##:
 O? Act in the best interests of, and fulfill their fiduciary obligations to, all McDonald¶s
shareholders;
O? Act honestly, fairly, ethically and with integrity;
O? Conduct themselves in a professional, courteous and respectful manner;
O? Comply with all applicable laws, rules and regulations;
O? Act in good faith, responsibly, with due care, competence and diligence, without allowing
their independent judgment to be subordinated;
O? Act in a manner to enhance and maintain the reputation of McDonald¶s;
O? Disclose any potential conflicts of interest, including those that they may have regarding
any matters that may come before the Board, and abstain from discussion and voting on
any matter in which they have or may have a conflict of interest;
O? Make available to and share with fellow Directors information as may be appropriate to
ensure proper conduct and sound operation of McDonald¶s and its Board of Directors;
O? Respect the confidentiality of information relating to the affairs of the Company acquired
in the course of their service as Directors, except when authorized or legally required to
disclose such information; and
O? Not use confidential information acquired in the course of their service as Directors for
their personal advantage.
A Director who has concerns regarding compliance with this Code should raise those concerns
with the Chairman of the Board and the Chair of the Governance Committee, who will determine
what action shall be taken to deal with the concern. In the extremely unlikely event that a waiver
of this Code for a Director would be in the best interest of the Company, it must be approved by
the Governance Committee.
Directors will annually sign a confirmation that they have read and will comply with this Code.
Originally Adopted by the Board of Directors
As of May 22, 2003
Revised by the Board of Directors As of July 19, 2010
Policy for Pre-Approval of Audit and Non-Audit Services
Provided by External Audit Firm
,@C4C
'#*#%#
nder the Sarbanes-Oxley Act of 2002, the Audit Committee of the Board of Directors is
responsible for the appointment, compensation and oversight of the work performed by the
independent auditor engaged by McDonald¶s Corporation (the Company). As part of this
responsibility, the Audit Committee is required to pre-approve all audit and non-audit services
performed by the independent auditor to assure that they do not impair the auditor¶s
independence from the Company. Examples of these services are set out in Exhibit A.
Accordingly, the Audit Committee has adopted the following policy that sets forth the
procedures and conditions for pre-approving audit and permitted non-audit services to be
performed by the independent auditor responsible for auditing the Company¶s consolidated
financial statements or any separate financial statements that will be filed with the SEC.
The Audit Committee shall review this policy annually for purposes of assuring its continued
appropriateness and compliance with applicable law and listing standards, including regulations
of the SEC and the Public Company Accounting Oversight Board (PCAOB).
The SEC¶s rules establish two different approaches to pre-approving services, both of which the
SEC considers to be equally valid. Proposed services may either be pre-approved by the Audit
Committee on a categorical basis, without consideration of specific services (³general pre-
approval´), or may be subject to case-by-case pre-approval by the Audit Committee (³specific
pre-approval´). The Audit Committee believes that the combination of these two approaches will
result in an effective and efficient procedure for purposes of addressing the Company¶s auditing
and non-auditing services and when evaluating the potential impact of non-audit services on the
independence of the external auditor.

Regardless of whether a class of or individual service is proposed for general or specific pre-
approval, the Audit Committee shall consider whether such service is consistent with applicable
SEC and PCAOB rules and guidance with respect to auditor independence. The Audit
Committee shall also consider whether the independent auditor is best positioned to provide the
most effective and efficient service, for reasons such as familiarity with the Company¶s business,
people, culture, accounting systems, risk profile and other factors, and whether the service may
enhance the Company¶s ability to manage or control risk or improve audit quality. All such
factors will be considered as a whole, and no one factor should necessarily be determinative.
The Audit Committee shall also be mindful of the relationship between fees for audit and non-
audit services in determining whether to pre-approve any class of or individual service and may
determine, for each fiscal year, the appropriate ratio between the total amount of fees for
³Audit´, ³Audit-related´ and ³Tax´ services and the total amount of fees for permissible non-
audit services classified as ³All Other´ services.

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