McDonalds Sues Former CEO for USD 40 Million — Is He Going to Return the Money?

McDonald’s filed a lawsuit on Monday against its former CEO, Steve Easterbrook, over allegations that he lied to the board about the extend of his relationship with subordinates.

According to the court filings, Easterbrook misled investigators about engaging in sexual relationships with three employees in the year before he was terminated.

The fast-food giant fired Easterbrook in 2019 after learning that he had a sexual relationship over video and text messages with one subordinate.

In July 2020, the company received an anonymous tip claiming that the former CEO was involved in a physical, sexual relationship with two more employees.

Subsequently, McDonald’s renewed the internal investigation to discover dozens of sexually explicit photographs of various women, including those of employees that Easterbrook had allegedly sent from his business e-mail to his account in 2018 and 2019.

The company also found out that Easterbrook authorized a stock grand valued at “hundreds of thousands of dollars,” to one of those employees while in a sexual relationship.

The fast-food chain confirmed on Monday that it would not have agreed on the Easterbrook’s USD 40 million severance deal if it had been aware of the other relationships with employees.

Furthermore, McDonald’s also wants him to recoup legal fees and damages and give back all the cash and stock awards from his separation contract.

The chain is also taking action to prevent the former CEO from exercising stock options or trading stock fro his equity rewards.

McDonald’s new CEO, Chris Kempczinski, who replaced Easterbrook, reportedly sent a memo to all the employees on Monday, saying that the company’ ‘does not tolerate behavior from any employee that does not reflect McDonald’s values.”

Before his termination in 2019, the British-born Easterbrook had worked at McDonald’s for around two decades. In an e-mail sent to all the employees before his departure, he confessed to having a consensual relationship with a subordinate. Easterbrook pointed out it was a mistake.

He also noted that as per the company’s internal policy and corporate values, he agreed with the board that it was time for him to turn a new page. Easterbrook highlighted that his time as a CEO was the most fulfilling period of his career.

The New York Times opined that McDonald’s lawsuit is indicative of the changes in corporate behavior after the #MeToo and Black Lives Matter movements.

What do you think? Is the lawsuit going to result in a real change in corporate behavior?