Settlement ends McDonald’s lawsuit over Easterbrook’s sexual improprieties
Former McDonald’s CEO Steve Easterbrook gave back $105 million-plus in compensation and apologized in order to resolve a long-running dispute concerning his firing over improper sexual relationships with subordinates. Easterbrook returned cash and stock he received from the company upon being dismissed in November 2019 after admitting that he had a consensual relationship with an employee, according to the company. He had led the company for about 4½ years.
The settlement avoids a trial against the former top executive that had been scheduled to start in Delaware Court of Chancery in May 2022. With the settlement announcement, Easterbrook, 54, released a statement saying, “McDonald’s and its Board of Directors value doing the right thing and putting customers and people first. During my tenure as CEO, I failed at times to uphold McDonald’s values and fulfill certain of my responsibilities as a leader of the company. I apologize to my former co-workers, the Board, and the company’s franchisees and suppliers for doing so.”
Board Chairman Enrique Hernandez Jr. said that the settlement, which was approved by the board, holds Mr. Easterbrook accountable for misconduct, “including the way in which he exploited his position as CEO,” according to a court filing.
There are a handful of twists and turns to this story. When McDonald’s fired Easterbrook, it was done without cause, which entitled him to severance pay and benefits. If he had been fired for cause, those benefits would not have been made available to him.
But then in 2020, Hernandez was given further information regarding Easterbrook’s sexual improprieties. The company then investigated internally and in doing so, discovered emails from late 2018 and early 2019 with sexually explicit and nude photos and racy videos attached; these had been sent to company employees and to other women.
In August 2020, McDonald’s took legal action to void the severance deal. In its lawsuit, McDonald’s asserted Easterbrook lied to investigators and its board to cover up relationships with employees so that he could secure the severance package. The suit also stated that he had breached his fiduciary duties as a company officer and committed fraud.
Investor groups had called for some McDonald’s board members to resign because of the board’s initial handling of Easterbrook’s behavior. His successor, Chris Kempczinski, has promised to nurture a more professional culture while boosting diversity and inclusiveness at McDonald’s in both corporate and franchise environments.
Although Easterbrook’s actions obviously put some big black marks on the burger franchise‘s image, he is credited with instituting technology upgrades such as mobile ordering and delivery crucial to McDonald’s stability during the pandemic.