Former McDonald’s CEO Steve Easterbrook paid back $ 105 million in cash and stock to settle a lawsuit the fast-food company brought against him that accused him have an inappropriate relationship with subordinates and cover it up.
Easterbrook was fired from McDonald’s after violating the company’s policies by entering into amicable relationships with employees.
Who is Steve Easterbrook?
Steve Easterbrook, 52, is a British business graduate. Easterbrook was born in Watford, England and studied science at Durham University. He came to McDonald’s in 1993. In 2006 he took over McDonald’s UK and was named President of McDonald’s Europe. In 2007, Easterbrook was asked to run the company in Sweden, Finland, Denmark, Norway and Ireland, becoming President of McDonald’s Northern European business. Easterbrook left the company in 2011 to become CEO of Pizza Express and Wagamama a year later. Easterbrook joined McDonald’s in 2013 as Senior Executive Vice President and Chief Brand Officer. In 2015 he became the company’s President and Chief Executive Officer. He remained CEO until he was dismissed for violating company policy and having a close relationship with his employees.
McDonald’s released a statement Thursday quoting Easterbrook, saying, “McDonald’s and its board of directors are committed to doing the right thing and putting customers and people first. During my tenure as CEO, I have sometimes failed to uphold McDonald’s values and fulfill some of my responsibilities as a company leader. I apologize to my former employees, the board of directors and the company’s franchisees and suppliers. “
Why did McDonald’s file a lawsuit against Steve Easterbrook?
In October 2019, McDonald’s has one examination Relationship with an employee reported in Easterbrooks. During the investigation, it was found that Easterbrook had a “non-physical, consensual relationship involving texting and video calling.”
According to the lawsuit filed of McDonald’s against Easterbrook, he had told investigators at the company that his relationship with another McDonald’s employee was intimate, but that he had never had “a physical sexual relationship with a McDonald’s employee”.
The board of directors of McDonald’s had ousted Easterbrook as CEO, saying that he had “shown poor judgment”. The board concluded that Easterbrook had violated the company’s policies by entering into an inappropriate relationship with a subordinate. Directors had also stated that Easterbrook’s behavior was against the corporate culture of professionalism and integrity.
Since the directors had to prove “dishonesty, fraud, illegality or moral depravity” according to Easterbrook’s agreement to terminate him, the board decided to fire Easterbrook in November 2019 “without giving a reason”. The board also negotiated an agreement with him that gave him sizable millions in benefits and, the New York Times reported, a $ 40 million compensation package.
The disentanglement
In July 2020, McDonald’s received an anonymous report that Easterbrook had entered into a sexual relationship with another employee while serving as CEO. McDonald’s conducted another internal investigation that revealed photographic evidence showing that Easterbrook had entered into a physical sexual relationship with three employees.
The lawsuit stated: “This evidence consisted of dozens of nude, partially nude, or sexually explicit photos and videos of various women, including photos of these company employees, which Easterbrook attached to messages from his company email account had sent personal email account. The date and time stamps on the photos of the company’s three employees show that the photos were all taken in late 2018 or early 2019. “
The photographic evidence was “indisputable” evidence, which clearly indicated that Easterbrook had lied during the previous investigation.
The evidence had also led to the conclusion that Easterbrook had granted one of the employees “a special discretionary grant of restricted storage units valued at hundreds of thousands of dollars” shortly after their first sexual encounter.
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It was only after receiving this evidence that McDonald’s decided to do one Lawsuit against Easterbrook.
The company stated that Easterbrook’s sexual relationship with three employees, approval of a discretionary stock allotment to one of the employees with whom he had a physical relationship, and the misrepresentation of never having had a sexual relationship with an employee were sufficient Reasons for a legal dispute were to terminate Easterbrook for an important reason.
Had McDonald’s known when it quit Easterbrook, the company would not have agreed to sign a settlement agreement, which would have resulted in a loss of millions for the company.
McDonald’s said in a press release on Thursday, “McDonald’s Corporation announced today that the board of directors has reached a settlement to settle the company’s lawsuit against former president and chief executive officer Steve Easterbrook for his wrongdoing, lies, and preventive investigation has agreed. ” in his actions. As part of the settlement, Mr. Easterbrook returned stock awards and cash currently valued at over $ 105 million that he would have forfeited if he had been truthful at the time of his termination and had been terminated for cause. “
What legal violations did Easterbrook cause?
As detailed in the lawsuit, Easterbrook has been charged with violating fiduciary duties and acting fraudulently.
Easterbrook violated “fiduciary duties of openness, diligence and loyalty” by acting in his own interest and violating the company’s standards of business conduct by engaging in sexual activities and granting one of his intimate partners a discretionary share allocation. He also violated loyalty and candor by lying to the company about its affairs and causing the company a loss in the settlement agreement.
“Easterbrook’s breaches of fiduciary duty have placed costs and other damages on the Company, including (but not limited to) the benefits granted and withheld to Easterbrook under the separation agreement, other indemnities Easterbrook has received, and related costs investigate and respond to allegations of Easterbrook’s breach of McDonald’s policy. “
