McDonald's Corp. trimmed its CEO's pay package by 10 percent to $8.8 million last year as the world's biggest hamburger chain continued to post sales gains amid economic uncertainty and rising costs around the globe.
The compensation for top executive Jim Skinner compared with $9.7 million the previous year, according to an Associated Press analysis of a regulatory filing.
The drop was the result of Skinner's performance-based cash bonus, which fell to $3.3 million, down 27 percent from $4.5 million. McDonald's determines bonuses as a percentage of the executive's salary.
The exact percentage varies depending on a mix of metrics, including the corporate and individual performance measures. Skinner's bonus fell last year as a result of a lower overall corporate metric.
In addition to annual bonuses, McDonald's also gives its executives a long-term bonus once every three years; Skinner received an $8.3 million long-term bonus in 2009 and is due for another this year.
Skinner's salary of $1.47 million in 2011 was up slightly from $1.43 million the previous year. He also received stock and options worth $3.23 million, up from $3.17 million.
The value of Skinner's other perks _ including personal use of the company aircraft, physical exams and security _ also rose 19 percent to $752,000.
McDonald's, which serves as a bellwether for the fast-food industry, posted strong results through the recession by attracting cash-strapped customers with low prices and limited-time specials. It has continued the run of sales increases as the economy has recovered.
The company has also put an emphasis on remodeling restaurants and introducing new menu items like Chicken McBites, smoothies and lattes. Its stock price increased steadily last year and is up 33 percent from a year ago.
But the company is nevertheless facing rising costs for ingredients and labor, as well as persistent economic volatility in some of its key regions.
On Thursday, the Oak Brook, Ill.-based company cited such challenges when it reported that a key revenue figure fell short of Wall Street expectations for February. The results were dragged down by a weak performance in Europe, which is McDonald's biggest market and accounts for 40 percent of its revenue, and the region that encompasses Asia, the Middle East and Africa.
The AP formula for executive pay calculates the total compensation by adding salary, bonuses, perks, above-market interest paid on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive's stock and option awards for 2011 was the present value of what the company expected the awards to be worth to the executive over time.
Companies use one of several formulas to calculate that value. The number is an estimate and the amount an executive ultimately receives will depend on the performance of the company's stock.
Most stock compensation programs require an executive to wait a set time to receive shares or exercise options.