McDonald’s files lawsuit against former CEO for concealing relationships with three employees

McDonald’s files lawsuit against former CEO for concealing relationships with three employees
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On Monday, McDonald’s Corporation filed a lawsuit against its former chief executive officer Steve Easterbrook, alleging that Easterbrook lied to the company about the extent of his sexual relations with employees.

Easterbrook was removed from his post in October 2019 after it was found that he had violated company policy and “demonstrated poor judgment” by engaging in an inappropriate relationship with a subordinate.

During the 2019 probe, Easterbrook told the company’s outside investigators that the relationship was consensual and not physical in nature as only texts and videos were exchanged.

Nonetheless, Easterbrook was fired by the board, but without cause, meaning there was no dishonesty or crime involved.

As Easterbrook was not fired for cause, he was given severance pay for 26 weeks and prorated bonuses, benefits that in total amounted to roughly US$42 million, according to compensation consulting firm Equilar.

In its lawsuit, filed in a state court in Delaware, the company said that the board wanted to remove Easterbrook “with as little disruption as possible.” The board feared that firing him with cause could “embroil the company in a lengthy dispute with him.”

A new probe began this July, when McDonald’s received an anonymous report claiming that Easterbrook had engaged in a sexual relationship with another McDonald’s employee when he was CEO of the company.

The lawsuit now alleges that Easterbrook lied in his investigation. It claims that he engaged in sexual relationships with not one, but three employees before he was fired last year.

The lawsuit states that the evidence for this allegation comes from “dozens of nude, partially nude, or sexually explicit photographs and videos of various women," including the three employees, from his email account.

The lawsuit adds that the previous investigation did not conduct a search of Easterbrook’s email account and that Easterbrook had deleted several emails from his phone.

According to the lawsuit, the new investigation also revealed that Easterbrook “approved an extraordinary stock grant, worth hundreds of thousands of dollars, for one of those employees in the midst of their sexual relationship."

McDonald’s severance plan, which applies to Easterbrook, says that the company holds the rights to recover any severance payments if it is found that the employee was dishonest and should have been fired for cause.

Therefore the lawsuit demands that Easterbrook pay back the nearly US$42 million he was paid in severance money.

McDonald’s current CEO, Chris Kempczinski, commented on the lawsuit in a letter to the company employees, stating, “We recently became aware, through an employee report, of new information regarding the conduct of our former CEO, Steve Easterbrook.”

“We now know that his conduct deviated from our values in different and far more extensive ways than we were aware when he left the company last year. McDonald’s does not tolerate behavior from any employee that does not reflect our values."

Easterbrook became CEO of McDonald’s in 2015, having been a part of the company for nearly two decades before that. He was largely seen as responsible for turning around McDonald’s business following a financial downturn.

Easterbrook streamlined McDonald’s business and oversaw the company during a time when its shares doubled. He introduced customer favorite all-day breakfast options and technological innovations such as touch screen machines that allowed customers to place their own orders.

After he was fired in 2019 following the initial investigation, Easterbrook stated that he regretted his actions.

“As for my departure, I engaged in a recent consensual relationship with an employee, which violated McDonald’s policy," Easterbrook wrote in an email to employees.

“This was a mistake. Given the values of the company, I agree with the board that it is time for me to move on. Beyond this, I hope you can respect my desire to maintain my privacy."

Easterbrook’s lawyers have yet to respond to the lawsuit.

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