Director Compensation, ESG Integration, and Corporate Governance: A Case Study of McDonald's
Research Article
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Director Compensation, ESG Integration, and Corporate Governance: A Case Study of McDonald's

Peiguo Guo 1*
1 University of Bristol
*Corresponding author: kx24865@bristol.ac.uk
Published on 11 July 2025
Volume Cover
AEMPS Vol.201
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-259-1
ISBN (Online): 978-1-80590-260-7
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Abstract

The role of the directors' remuneration system in the corporate governance structure has become increasingly prominent as companies focus on long-term strategic development and sustainable governance. Using McDonald's Corporation as a case study, this paper examines the reflection of its director compensation system in incentive and constraint mechanisms, strategic goal alignment and ESG (environmental, social and governance) performance orientation. The results of the study show that McDonald's director compensation system is mainly characterised by a clear structure and long-term incentives, with approximately 70% of the compensation in restricted stock units, reinforcing the binding relationship between directors and the long-term interests of the company. The company has gradually introduced ESG performance indicators in recent years, linking 20 per cent of equity incentives to non-financial targets, demonstrating a high awareness of sustainable governance. At the same time, it outperforms its peers in terms of pay transparency, director shareholding requirements and strategic alignment. However, there are still problems such as insufficient quantification of ESG objectives, subjectivity in performance assessment and lack of flexibility in shareholding rules. The study concludes that the McDonald's director compensation system is effective in strengthening corporate governance and raising directors' awareness of their responsibilities, but it needs to further improve the system's scientificity and adaptability to adapt to the changes in the external environment and the diversified demands of investors.

Keywords:

Director Compensation, Corporate Governance, Long-term Incentives, ESG Performance

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Guo,P. (2025). Director Compensation, ESG Integration, and Corporate Governance: A Case Study of McDonald's. Advances in Economics, Management and Political Sciences,201,29-35.

References

[1]. Mozammel, S. 2019. An analysis of McDonald’s Corporation from modernist and postmodernist perspectives. Humanities & Social Sciences Reviews, 7(2), 572-580.

[2]. Rothaermel, F. T., & Arthaud-Day, M. L. 2015. McDonald’s Corporation.

[3]. McDonald’s Corporation.  2024 Annual Report. McDonald’s Corporation, 2024. Available at: https: //corporate.mcdonalds.com/content/dam/sites/corp/nfl/pdf/McD%20-%202024%20Annual%20Report%20to%20Shareholders.pdf

[4]. Opait, G. 2019. The McDonald’s Corporation, a “Star” in the “Galaxy of the Businesses”. Annals of “Dunarea de Jos” University of Galati Fascicle I. Economics and Applied Informatics Years XXV, 3, 1-13.

[5]. PepsiCo, Inc.  2024 Proxy Statement. PepsiCo, Inc., 2024. Available at: https: //www.pepsico.com/docs/default-source/annual-reports/2024-pepsico-proxy-statement.pdf

[6]. Vicente, C. D. S. 2024. Equity valuation: Coca-Cola Company (Master's thesis).

[7]. Santos, J. E. B. 2023. Equity Valuation of Nike, Inc.  ISCTE-Instituto Universitario de Lisboa (Portugal).

[8]. Whelan, T., Atz, U., Van Holt, T., & Clark, C. 2021. ESG and financial performance. Uncovering the Relationship by Aggregating Evidence from, 1(2015-2020), 10.

[9]. Yang, W. 2024. Starbucks deep brew AI solution effect on long-term strategy implementation. Available at SSRN 4987473.

[10]. Associated Press. 2025.  CEO pay rose nearly 10% in 2024 as stock prices and profits soared. Retrieved from:   https: //apnews.com/article/1b968327984edfc67486c2e0e3dc2fff

References

[1]. Mozammel, S. 2019. An analysis of McDonald’s Corporation from modernist and postmodernist perspectives. Humanities & Social Sciences Reviews, 7(2), 572-580.

[2]. Rothaermel, F. T., & Arthaud-Day, M. L. 2015. McDonald’s Corporation.

[3]. McDonald’s Corporation.  2024 Annual Report. McDonald’s Corporation, 2024. Available at: https: //corporate.mcdonalds.com/content/dam/sites/corp/nfl/pdf/McD%20-%202024%20Annual%20Report%20to%20Shareholders.pdf

[4]. Opait, G. 2019. The McDonald’s Corporation, a “Star” in the “Galaxy of the Businesses”. Annals of “Dunarea de Jos” University of Galati Fascicle I. Economics and Applied Informatics Years XXV, 3, 1-13.

[5]. PepsiCo, Inc.  2024 Proxy Statement. PepsiCo, Inc., 2024. Available at: https: //www.pepsico.com/docs/default-source/annual-reports/2024-pepsico-proxy-statement.pdf

[6]. Vicente, C. D. S. 2024. Equity valuation: Coca-Cola Company (Master's thesis).

[7]. Santos, J. E. B. 2023. Equity Valuation of Nike, Inc.  ISCTE-Instituto Universitario de Lisboa (Portugal).

[8]. Whelan, T., Atz, U., Van Holt, T., & Clark, C. 2021. ESG and financial performance. Uncovering the Relationship by Aggregating Evidence from, 1(2015-2020), 10.

[9]. Yang, W. 2024. Starbucks deep brew AI solution effect on long-term strategy implementation. Available at SSRN 4987473.

[10]. Associated Press. 2025.  CEO pay rose nearly 10% in 2024 as stock prices and profits soared. Retrieved from:   https: //apnews.com/article/1b968327984edfc67486c2e0e3dc2fff

Cite this article

Guo,P. (2025). Director Compensation, ESG Integration, and Corporate Governance: A Case Study of McDonald's. Advances in Economics, Management and Political Sciences,201,29-35.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

About volume

Volume title: Proceedings of ICEMGD 2025 Symposium: Digital Transformation in Global Human Resource Management

ISBN: 978-1-80590-259-1(Print) / 978-1-80590-260-7(Online)
Editor: Florian Marcel Nuţă Nuţă, An Nguyen
Conference website: https://www.icemgd.org/committee.html
Conference date: 26 September 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.201
ISSN: 2754-1169(Print) / 2754-1177(Online)

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