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Ousted McDonald's CEO returns $105M after misconduct

Easterbrook was approved to keep his separation on the condition there was only one employee relationship but an investigation revealed otherwise.

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Ousted McDonald's CEO returns $105M after misconduct

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By DEE-ANN DURBIN | AP Business Writer

Former McDonald’s CEO Steve Easterbrook has paid back more than $105 million in equity awards and cash to the burger giant after it learned that he had lied about the extent of his misconduct while he was its top executive.

“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,” Easterbrook said in a prepared statement issued Thursday by McDonald’s. “I apologize to my former co-workers, the board and the company’s franchisees and suppliers for doing so.”

McDonald’s fired Easterbrook in late 2019 after he acknowledged exchanging videos and text messages in a non-physical, consensual relationship with an employee.[1] At the time of his firing, Easterbrook told the company there were no other similar instances and an inspection of his cell phone seemed to back that up. McDonald’s board approved a separation agreement “without cause” that allowed Easterbrook to keep tens of millions in stock-based benefits and other compensation.

Then, in July 2020, the company received an anonymous tip from an employee claiming that Easterbrook had engaged in a sexual relationship with another employee. After an investigation, McDonald’s confirmed that relationship as well as two other physical, sexual relationships with employees in the year before it fired its top executive. The company said Easterbrook had removed evidence of those relationships from his phone.

McDonald’s board sued Easterbrook in August 2020, saying it wouldn’t have terminated him without cause if it had known the extent of his misconduct.[2] The company sought the return of equity awards granted in 2018 and 2019, since Easterbrook’s separation agreement made clear he would forfeit those if the company determined he had engaged in “detrimental conduct.”

The settlement announced Thursday holds Easterbrook accountable and affirms the board’s decision to pursue the case, McDonald’s Chairman Enrique Hernandez Jr. said in a prepared statement.

“The resolution avoids a protracted court process and allows us to move forward,” Hernandez said.

The action against Easterbrook came amid a larger reckoning at the company over sexual harassment in its ranks. Over the last five years, at least 50 workers have filed charges against the company, alleging physical and verbal harassment and, in some cases, retaliation when they came forward.

In October 2019 __ a month before Easterbrook was fired __ McDonald’s introduced a new harassment training program for its 850,000 U.S. employees, but franchisees weren’t required to provide it.

McDonald’s went further this spring, saying it will mandate worker training to combat harassment, discrimination and violence in its restaurants starting next year. The training will be required for 2 million workers at 39,000 stores worldwide.

Notes & References

  1. Bussewitz, Cathy. “McDonald's CEO Pushed out after Relationship with Employee.” AP NEWS. Associated Press, November 4, 2019. ↩︎

  2. Durbin, Dee-ann. “McDonald's Sues Ousted CEO, Alleging Employee Relationships.” AP NEWS. Associated Press, August 10, 2020. ↩︎

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