McDonald's give former and new CEOs big pay bumps

[April 13, 2013]  NEW YORK (AP) -- McDonald's Corp. more than tripled the pay packages last year for its new CEO Don Thompson and the man he replaced, Jim Skinner.

The pay increases came at a challenging time for the world's biggest hamburger chain. McDonald's is facing intensifying competition, a trend toward healthier eating and weak economic conditions in many countries where it operates.

McDonald's, based in Oak Brook, Ill., gave Thompson a package worth $13.8 million, up from the $4.1 million he received in 2011, according to a regulatory filing made Friday.

Skinner's pay meanwhile rose to $27.7 million from $8.8 million the year before, reflecting a $10.2 million payment as part of his retirement under his contract agreement.

Thompson, who has been with the company for more than 20 years, had been serving as chief operating officer before he took over for Skinner in July. The 50-year-old inherited the top post at a sensitive time for McDonald's.

Late last year, a monthly sales figure dropped for the first time in nearly a decade as McDonald's came under pressure from new menu launches by Burger King, Wendy's and Taco Bell, which is owned by Yum Brands Inc. Soon after the drop, McDonald's fired the head of its U.S. business. It has renewed its emphasis on its Dollar Menu.

Thompson has also noted that McDonald's will introduce more new offerings this year.

The troubles come after a period of strong growth for McDonald's, which managed to grow even through the recession and was a standout in the industry. The success was largely credited to the company's "Plan to Win," which was rolled out in 2003. Under the plan, McDonald's scaled back on new stores openings, got rid of unprofitable businesses and expanded its menu items.

Skinner, who had been CEO since 2004, was among the group of executives that designed the plan.

For 2012, Skinner's pay included a base salary of $753,333, stock awards of $1.7 million and option awards of $3 million, according to a filing with the Securities and Exchange Commission. His incentive pay came to $11.6 million.

All other compensation came to $10.6 million, reflecting the $10.2 million he was given as part of his retirement, contributions to retirement plans and use of a company plane. The company noted that Skinner will also get "secretarial services" for two years after his retirement.

As for Thompson, his pay included a base salary of $979,167 and stock awards of $660,129. His pay increase came mostly from his option awards, which rose to $3.2 million from $785,902, and his incentive pay, which rose to $8.6 million from $1.5 million.

All other compensation came to $324,816 and also included perks such as use of a company plane and retirement plan contributions.

The Associated Press formula for compensation takes into account an executive's base salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year.

The value that a company assigned to an executive's stock and option awards for 2012 was the present value of what the company expected the awards to be worth over time.

[Associated Press; By CANDICE CHOI]

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