McDonald’s sues former CEO Easterbrook, alleges he lied about relationships he had with workers

Steve Easterbrook, chief executive officer of McDonald’s Corp., speaks during the opening of the company’s new headquarters in Chicago, Illinois, U.S., on Monday, June 4, 2018.

Joshua Lott | Bloomberg | Getty Images

McDonald’s is trying to recover millions in compensation it paid out to former CEO Steve Easterbrook by suing him for allegedly lying during the company’s internal probe into his behavior, according to a filing with the Securities and Exchange Commission.

The fast-food chain’s board announced in November that it had terminated Easterbrook for having a consensual relationship with an employee and tapped Chris Kempczinski as his successor. 

“McDonald’s does not tolerate behavior from any employee that does not reflect our values,” Kempczinski wrote in a letter to the McDonald’s system about the lawsuit. “These actions reflect a continued demonstration of this commitment.”

McDonald’s now alleges that new information about Easterbrook’s actions came to light in July, prompting further investigation from the company. A probe allegedly revealed that Easterbrook lied to the company and destroyed information regarding his inappropriate behavior, including three additional sexual relationships with employees before his firing. 

Uncovered evidence includes dozens of nude or sexually explicit photos and videos of women — including images of the female employees — that were taken in late 2018 or early 2019 and sent as attachments from his corporate email account to his personal email, according to the lawsuit. Easterbrook allegedly deleted those photos and emails from his phone before it was searched by an outside investigator. 

Easterbrook also approved “an extraordinary stock grant, worth hundreds of thousands of dollars” for one of the employees while they were involved in a sexual relationship, according to the complaint.

The board said it would not have signed a separation agreement with Easterbrook had it known about this alleged conduct. McDonald’s is suing him in Delaware state court to recover the compensation and severance benefits he received as part of that agreement. The company said it has also taken action to prevent him from exercising any stock options or selling any stock from outstanding equity rewards. 

Easterbrook’s separation agreement included 26 weeks of severance. In 2018, he earned $15.9 million in total compensation, including a $1.3 million base salary. He was also eligible for prorated payment for hitting 2019 performance targets. Equilar, which tracks executive compensation, estimated that his severance package was worth nearly $42 million.

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