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Policy for Pre-Approval of Audit and Non-Audit Services

Provided by External Audit Firm


January 2010 Update

Purpose and Applicability of Policy

Under 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.
Pre-Approval Requirement and Disclosure
All audit and permitted non-audit services to be provided by the independent auditor shall be
pre-approved by the Audit Committee. Pre-approval fee levels for all services to be provided by
the independent auditor shall generally be established annually by the Audit Committee, subject
to the following limitations:
Yc When considering whether to grant an approval, the Audit Committee should
consider the nature, scope and fees of the service to be provided to the Company as
well as the principles and guidance established by the SEC and PCAOB with respect
to auditor independence, including the fact that an auditor cannot (i) function in the
role of management; (ii) audit his or her own work; or (iii) serve in an advocacy role
for the Company.

Yc Dn general, classes of predictable and recurring audit and permitted non-audit


services shall be considered for general pre-approval by the full Audit Committee on
an annual basis at the beginning of each fiscal year.

Unless a class of or individual audit or non-audit service shall have received a general pre-
approval, it will require specific pre-approval by the Audit Committee or its delegate. Also, any
proposed service for which the estimated fees would cause the total fees for that class of service
to exceed the applicable estimated fee threshold shall require specific approval by the Audit
Committee or its delegate. In addition, specific pre-approval by the Audit Committee or its
delegate is required before engaging Ernst & Young to perform any due diligence services or
internal control review, regardless of the size of the fee.

Schedule 1 lists services that are expected to be the subject of general pre-approval on an annual
basis and an indication of the historical amount of fees paid for each class of service, the time
frame and process for approval, and the estimated pre-approval fee threshold.

Services as to which a general pre-approval shall have been granted on an annual basis shall be
effective for the applicable fiscal year. Any specific pre-approval of an audit or permitted non-
audit service may be provided up to one year prior to commencement of the service. In any case
in which a service is to be provided over a period of years, the approval shall be reviewed for
renewal on an annual basis.

Delegation of Pre-Approval

The Audit Committee elects to delegate pre-approval authority to the Chairman of the Audit
Committee to approve any one or more individual audit or permitted non-audit services for
which estimated fees do not exceed $250,000 as well as adjustments to any estimated pre-
approval fee thresholds up to $100,000 for any individual service. Any services that would
exceed such limits should be pre-approved by the full Audit Committee. The Chairman shall
report any pre-approval granted at the next scheduled meeting of the Audit Committee.
Prohibited Services
The Company may not under any circumstances engage the independent auditor to provide any
service that is prohibited by applicable law. The Audit Committee should consult with General
Counsel if any question arises as to whether a proposed audit or non-audit service is permissible
under applicable law. The Audit Committee may determine to prohibit other services that in its
view may compromise, or appear to compromise, the independence and objectivity of the
independent auditor.

Monitoring Procedures

The Audit Committee has designated the Corporate Controller to monitor the performance of all
services provided by the independent auditor and to determine whether such services are in
compliance with this policy. The Corporate Controller shall report to the Audit Committee on a
periodic basis with respect to compliance with the policy. The Corporate Controller shall
promptly report to the Chairman of the Audit Committee any non-compliance (or attempted non-
compliance) with this policy of which he or she becomes aware. On a periodic basis, the nature
of actual services provided by the independent auditor as well as the associated fees shall be
reported to the Audit Committee.

Additional Requirements
The Audit Committee shall take additional measures on an annual basis as may be appropriate to
meet its responsibility to oversee the work of the independent auditor and to assure the auditor¶s
independence. Such measures shall include the review of a written statement from the
independent auditor describing all relationships between the independent auditor and the
Company, consistent with PCAOB Rule 3526; a discussion with the independent auditor with
respect to its methods and procedures for ensuring independence; and an annual review of the
Company¶s hiring policy for employees of the external audit firm.

De Minimis Exception
Applicable law provides for an exception to the pre-approval requirements for permissible non-
audit services provided that (1) all such services do not, in the aggregate, amount to more than 5
percent of the total fees paid by the Company to the independent auditor, (2) such services were
not recognized as non-audit services at the time of the relevant engagement, and (3) such
services were promptly brought to the attention of and approved by the Audit Committee (or its
delegate) prior to the completion of the annual audit.

Disclosure of Pre-Approval Policies and Procedures


The Company shall publicly disclose the Audit Committee¶s pre-approval policies and
procedures in its Proxy Statement.
AUDIT COMMITTEE REPORT

I. Statement of Purpose

The Audit Committee is a standing committee of the Board of Directors. The purpose of the
Committee is to assist the Board of Directors in fulfilling its oversight responsibility relating to
(i) the integrity of the Company¶s financial statements and financial reporting process and the
Company¶s systems of internal accounting and financial controls; (ii) the performance of the
internal auditors; (iii) the annual independent audit of the Company¶s financial statements, the
engagement of the independent auditors and the evaluation of the independent auditors¶
qualifications, independence and performance; (iv) the compliance by the Company with legal
and regulatory requirements, including the Company¶s disclosure controls and procedures; (v)
the evaluation of management's process to assess and manage the Company's enterprise risk
issues; and (vi) the fulfillment of the other responsibilities set out herein. The Committee shall
also prepare the report of the Committee required to be included in the Company¶s annual proxy
statement.

In discharging its responsibilities, the Committee is not itself responsible for the planning or
conduct of audits or for any determination that the Company¶s financial statements are complete
and accurate or in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditors.

II. Organization

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III. Responsibilities

1.c @  


 
 
 The Committee shall directly appoint, retain,
compensate, evaluate and terminate the Company¶s independent auditors. The Committee
shall have the sole authority to approve all engagement fees to be paid to the independent
auditors. The independent auditor shall report directly to the Committee.

2.c °  


 
 
 
 
 
 The
Committee shall receive periodic reports from the independent auditors as required under
generally accepted auditing standards, applicable law or listing standards regarding the
auditors¶ independence, which shall be not less frequently than annually. The Committee
shall discuss such reports with the auditors, and if so determined by the Committee, take
appropriate action to satisfy itself of the independence of the auditors. The Committee
shall review the performance of the Company¶s independent auditors annually. In doing
so, the Committee shall consult with management and the Company¶s internal auditors
and shall obtain and review a report by the independent auditors describing their internal
control procedures, material issues raised by their most recent internal quality control
review, or by any inquiry or investigation by governmental or professional authorities
within the preceding five years and the response of the independent auditors. The
Committee shall consider whether or not there should be a regular rotation of the
independent audit firm. Any selection of the auditors by the Committee may be subject to
shareholders¶ approval, as determined by the Board of Directors.

3.c

 
 
 The Committee shall discuss with the independent
auditors the overall scope, plans and budget for the audit, including the adequacy of
staffing and other factors that may affect the effectiveness of the audit. In this connection,
the Committee shall discuss with financial management, the internal auditors and the
independent auditors the Company¶s major risk exposures (whether financial, operating
or otherwise), the adequacy and effectiveness of the accounting and financial controls,
and the steps management has taken to monitor and control such exposures and manage
legal compliance programs, among other considerations that may be relevant to the audit.
The Committee shall review with financial management and the independent auditors
management¶s annual internal control report.

4.c V  


 
 
    

 The Committee shall annually review the structure, resources and performance
of the Company¶s internal audit department. In that regard, the Committee shall discuss
with the internal auditors the overall scope, plans and budget for the annual internal audit
plan, including the adequacy of staffing and other factors that may affect the
effectiveness and timeliness of the internal audits. In addition, the internal auditors shall
report periodically to the Committee regarding any significant deficiencies in the design
or operation of the Company¶s internal controls, material weaknesses in internal controls
and any fraud (regardless of materiality) involving persons having a significant role in the
internal controls, as well as any significant changes in internal controls implemented by
management during the most recent reporting period of the Company.

5.c  



 
 The Committee shall establish and
maintain guidelines for the retention of the independent auditors for any non-audit service
and the fee for such service and shall determine procedures for the approval of audit and
non-audit services in advance. The Committee shall, in accordance with such procedures,
approve in advance any audit or non-audit service provided to the Company by the
independent auditors, all as required by applicable law or listing standards.

6.c V @  The Committee shall review with management and the
independent auditors the Company¶s Annual Report on Form 10-K, including the
disclosures under ³Management¶s Discussion and Analysis of Financial Condition and
Results of Operations,´ their judgment about the quality, not just acceptability, of
accounting principles, the reasonableness of significant judgments, the clarity of the
disclosures in the financial statements and the adequacy of internal controls. The
Committee shall also discuss the results of the annual audit and any other matters
required to be communicated to the Committee by the independent auditors under
generally accepted auditing standards, applicable law or listing standards, including
matters required to be discussed by Statement on Auditing Standards No. 61, as amended
by Statement on Auditing Standards No. 90. The Committee may discuss with the
national office of the independent auditors issues on which it was consulted by the
Company¶s audit team and matters of audit quality and consistency. Based on such
review and discussion, the Committee shall make a determination whether to recommend
to the Board of Directors that the audited financial statements be included in the
Company¶s Form 10-K.
Ë.c V @ 
   . The Committee shall meet
to review and discuss with management and the independent auditors the quarterly
financial information to be included in the Company¶s Quarterly Reports on Form 10-Q,
including the disclosures under ³Management¶s Discussion and Analysis of Financial
Condition and Results of Operations,´ and shall discuss any other matters required to be
communicated to the Committee by the independent auditors under generally accepted
auditing standards, applicable law or listing standards. Management shall review and
discuss the Company's quarterly earnings press releases with the Committee Chairman
prior to their issuance. The Committee shall also periodically review and discuss the
Company's earnings press releases as well as the types of financial information provided
to analysts and rating agencies. The Committee shall also discuss the results of the
independent auditors¶ review of the Company¶s quarterly financial information
conducted in accordance with Statement on Auditing Standards No. Ë1.

8.c V°  



. The Committee shall review with the
Chief Executive Officer, the Chief Financial Officer and the General Counsel the
Company¶s disclosure controls and procedures and shall review periodically, but in no
event less frequently than quarterly, management¶s conclusions about the effectiveness of
such disclosure controls and procedures, including any significant deficiencies in, or
material non-compliance with, such controls and procedures.

9.c V !  



 
 
 The Committee shall
review periodically with financial management, the internal auditors and independent
auditors the effect of new or proposed regulatory and accounting initiatives on the
Company¶s financial statements and other public disclosures.

10.c   


 
 
. The Committee shall review with the
independent auditors any problems or difficulties the auditors may have encountered in
connection with the annual audit or otherwise, any management letters provided to the
Committee and the Company¶s responses. Such review shall address any difficulties
encountered in the course of the audit work, including any restrictions on the scope of
activities or access to required information, any disagreements with management
regarding generally accepted accounting principles and other matters, material
adjustments to the financial statements recommended by the independent auditors and
adjustments that were proposed but ³passed´, regardless of materiality.

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11.c  V "  The Committee shall prepare the report
required to be included in the Company¶s annual proxy statement, all in accordance with
applicable rules and regulations.

12.c@  


 The Committee shall establish and maintain
guidelines for the Company¶s hiring of former employees of the independent auditors,
which shall meet the requirements of applicable law and listing standards.

13.cv  #


 The Committee shall establish and maintain procedures
for the receipt, retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters and for the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.

14.cV$
V   . The Committee shall periodically review
with management, including the General Counsel, and the independent auditors any
correspondence with, or other action by, regulators or governmental agencies and any
employee complaints or published reports that raise concerns regarding the Company¶s
financial statements, accounting or auditing matters or compliance with the Company¶s
Standards of Business Conduct. The Committee shall also meet periodically, and may
request to meet separately, with the General Counsel and other appropriate legal staff of
the Company, and if appropriate, the Company¶s outside counsel, to review material legal
affairs of the Company and the Company¶s compliance with applicable law and listing
standards.

15.cVV
 %  . The Committee shall review periodically the
Company's policy with respect to related person transactions and shall review, but no less
frequently than annually, a summary of the Company¶s transactions with Directors and
executive officers of the Company and with firms that employ Directors, as well as any
other material related party transactions, for the purpose of recommending to the
disinterested members of the Board of Directors that the transactions are fair, reasonable
and within Company policy, and should be ratified and approved.
16.cÎ   The Committee shall approve the appropriateness of an initial grant
of franchise(s) to a Company officer or a former Company officer in accordance with the
Company¶s policy with regard to such grants of franchises. The Committee shall also
approve the purchase of restaurants from a franchisee who immediately thereafter
becomes a Company officer.

1Ë.cV   The Committee shall review annually with the General
Counsel the adequacy and appropriateness of the Company¶s compliance programs. The
review shall include a summary of employees¶ compliance with the Company¶s
Standards of Business Conduct. The Committee shall be responsible for determining
whether and on what terms to grant to any executive officer a waiver from the
Company¶s Standards of Business Conduct.

18.c V
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  The Committee shall have the full resources
and authority (i) to investigate any matter brought to its attention with full access to all
books, records, facilities and personnel of the Company; (ii) to retain outside legal,
accounting or other consultants to advise the Committee; and (iii) to request any officer
or employee of the Company, the Company¶s outside counsel, internal auditor, internal
audit service providers or independent auditors to attend a meeting of the Committee or
to meet with any members of, or consultants to, the Committee.

19.c° . The Committee may delegate any of its responsibilities to a subcommittee


comprised of one or more members of the Committee. The Committee shall also carry
out such other duties that may be delegated to it by the Board of Directors from time to
time.

Approved by the Audit Committee


Date: March 18, 2008
Approved by the Board of Directors
Date: March 19, 200

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Getting to Know Us...

McDonald's Corporation (NYSE: MCD) is one of the


world's largest chain of hamburger fast food restaurants,
serving nearly 4Ë million customers daily.
In addition to its signature restaurant chain, McDonald¶s
Corporation held a minority interest in Pret A Manger until
2008, was a major investor in the Chipotle Mexican Grill until
2006, and owned the restaurant chain Boston Market until
200Ë.
A McDonald's restaurant is operated by either a franchisee, an
affiliate, or the corporation itself. The corporation's revenues
come from the rent, royalties and fees paid by the franchisees,
as well as sales in company-operated restaurants. McDonald's
revenues grew 2Ë over the three years ending in 200Ë to
$22.8 billion, and 9 growth in operating income to $3.9
billion.
McDonald's primarily sells hamburgers, cheeseburgers,
chicken products, french fries, breakfast items, soft drinks,
shakes, and desserts. In response to obesity trends in Western
nations and in the face of criticism over the healthiness of its
products, the company has modified its menu to include
healthier alternatives such as salads, wraps and fruits
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Yc McDonald's is the leading global foodservice retailer


with more than 32,000 local restaurants serving more
than 60 million people in 11Ë countries each day. More
than Ë5 of McDonald's restaurants worldwide are
owned and operated by independent local men and
women.

Yc We serve the world some of its favorite foods - World


Famous Fries, Big Mac, Quarter Pounder, Chicken
McNuggets and Egg McMuffin.

Yc 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'sArches for years to come.

Audit Committee Report


°
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The Audit Committee is composed of four Directors, each of whom meets the independence and other requirements
of the New York Stock Exchange. As stated previously, Enrique Hernandez, Jr., Cary D. McMillan and Roger W.
Stone qualify as the ³audit committee financial experts.´ The Committee has the responsibilities set out in its
charter, which has been adopted by the Board of Directors and is reviewed annually.
Management is primarily responsible for the Company¶s financial statements, including the Company¶s
internal control over financial reporting. Ernst & Young LLP, the Company¶s independent auditors, is responsible
for performing an audit of the Company¶s annual consolidated financial statements in accordance with generally
accepted accounting principles (GAAP) and the Company¶s internal controls over financial reporting and for issuing
reports on the statements and internal controls. Ernst & Young also reviews the Company¶s interim financial
statements in accordance with Statement on Auditing Standards No.100 (interim financial information). The
Committee oversees the Company¶s financial reporting process and internal control structure on behalf of the Board
of Directors. The Committee met nine times during 2004, including meeting regularly with Ernst & Young and the
internal auditors, both privately and with management present.
In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management and Ernst
& Young the audited and interim financial statements, including Management¶s Discussion and Analysis, included
in the Company¶s Reports on Form 10-K and Form 10-Q. These reviews included a discussion of:

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In connection with its review of the Company¶s annual consolidated financial statements, the Committee also
discussed with Ernst & Young other matters required to be discussed with the auditors under Statement on Auditing
Standards No. 61, as modified or supplemented (communication with audit committees) and those addressed by
Ernst & Young¶s written disclosures and its letter provided under Independence Standards Board Standard No. 1, as
modified or supplemented (independence discussions with audit committees).

The Committee is responsible for the engagement of the independent auditors and appointed Ernst & Young
to serve in that capacity during 2004 and 2005. In that connection, the Committee:

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Among other matters, the Committee also:

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Based on the reviews and discussions referred to above, the Committee recommended to the Board of
Directors the audited financial statements be included in the Company¶s Annual Report on Form 10-K for the year
ended December 31, 2004 for filing with the SEC.
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