In early November 2019, it was reported that McDonald’s board of directors had terminated its relationship with Steve Easterbrook, the fast-food chain’s CEO. At the time, the board, according to a company statement, said Easterbrook “demonstrated poor judgment involving a recent consensual relationship with an employee.”
About nine months later, new allegations were raised. Easterbrook stood accused of engaging in multiple sexual relationships with underlings. The burger giant filed a lawsuit against Easterbrook alleging that he lied to the company, hid evidence and engaged in fraud based upon his behavior.
Easterbrook, who is divorced, said about his termination, “As for my departure, I engaged in a recent consensual relationship with an employee, which violated McDonald’s policy.” The ex-CEO continued, “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.”
McDonald’s brand is closely associated with a family-friendly environment. The restaurant chain promotes its image as a wholesome place for families to enjoy a quick and inexpensive meal together. Conducting an inappropriate relationship with a subordinate does not resonate with the image that the biggest burger chain desires to present.
Easterbrook was seen as a highly successful chief executive. He had served as CEO since March 2015 and had worked at the company since 1993. Easterbrook was the global chief brand officer, president of McDonald’s Europe and CEO of McDonald’s U.K. He also spent some time as a restaurant manager at the chain.
Under Easterbrook’s stewardship, McDonald’s expanded and rapidly remodeled stores to include digital menu boards and artificial intelligence to improve the drive-thru experience and enhance sales. McDonald’s sales had been growing under Easterbrook’s leadership—and even Wall Street approved. The stock price doubled since he took over as CEO.
According to the Wall Street Journal, a number of new allegations were levied against Easterbrook. Due to an anonymous tip, McDonald’s took a deeper dive into the activities of its former CEO. An ensuing investigation concluded that Easterbrook was alleged to have been involved with at least three separate sexual relationships with employees during his tenure at the fast-food chain.
It was ascertained via the investigation that Easterbrook destroyed evidence concerning the sexual relationships and lied about the true nature of his encounters with the employees. One of those workers with whom he was alleged to have had a relationship with was granted McDonald’s stock.
At the time of his termination, CBS News reported that Easterbrook “could pocket $70 million worth of stock and options in compensation as part of his forced exit. The number could rise as high as $85 million if the restaurant chain meets certain financial targets over the next three years.” The CBS reporting added, “That princely sum is on top of the nearly $16 million in McDonald’s shares that Easterbrook has already been paid during his nearly five years at the company, and another $20 million in salary and cash bonuses he has received in the past three years alone.”
The company filed suit to clawback a $40 million exit package that he was allowed to keep, despite his termination. The lawsuit alleges “McDonald’s has now learned that Easterbrook concealed evidence and lied about his wrongdoing. Recently identified evidence shows that Easterbrook had physical sexual relationships with three McDonald’s employees in the year before his termination; that he approved an extraordinary stock grant, worth
hundreds of thousands of dollars, for one of those employees in the midst of their sexual relationship; and that he was knowingly untruthful with McDonald’s investigators in 2019.”
The suit claims, “These actions constitute breaches of Easterbrook’s duties to McDonald’s. Had Easterbrook been candid with McDonald’s investigators and not concealed evidence, McDonald’s would have known that it had legal cause to terminate him in 2019 and would not have agreed that his termination was ‘without cause.’”
The evidence, according to the company, includes dozens of naked or explicit photographs and videos of different women including some McDonald’s employees. Easterbrook allegedly sent these images as attachments to his personal email account from his work account in late 2018 or early 2019.”
In an interview with FOX Business, former McDonald’s USA CEO Ed Rensi said,
“Any CEO knows full well what his responsibilities are or her responsibilities and to engage with subordinates in a power move is just not acceptable.” Rensi added, “Most boards in their compensation committees have instituted clawback provisions so if there is any kind of fraud or damage done to the brand by the CEO or any other executive that they have the right to go back and clawback any benefits that they may have reaped during that period.”
He summed it up, “It sends a great message to every executive of the United States: Behave yourself, do the moral thing. Don’t take advantage of your employees.”