Former McDonald’s CEO Stephen Easterbrook opens the company’s new headquarters during the grand opening ceremony on June 4, 2018 in Chicago.
Scott Olson | Getty Images
McDonald’s announced Thursday that it has settled a lawsuit against former CEO Steve Easterbrook by returning him a $ 105 million severance pay.
The fast food giant first filed a lawsuit against its disgraced former CEO in August 2020, claiming he committed fraud and lied during an internal company investigation into his behavior a few months earlier. As a result of this investigation, the company’s board found Easterbrook had an agreed relationship with the employee and fired him in November 2019. Despite their findings, the board still granted him severance pay, which included cash and stock.
In the lawsuit, McDonald’s argued that new information about Easterbrook’s actions became known in July 2020, prompting further investigation by the company. Investigations allegedly revealed Easterbrook lied to the company and destroyed information about his misconduct, including three alleged additional sexual relationships with employees prior to his firing.
According to McDonald’s, Easterbrook returned the share capital and money awarded in its outage agreement as part of the dispute settlement. He also apologized for his behavior.
When Easterbrook’s severance pay was granted in 2019, Equilar estimated the severance pay at $ 42 million, which takes into account executive compensation. Since then, the share price has risen 37% to over $ 264 per share.
“During my tenure as CEO, I have sometimes failed to uphold McDonald’s values and fulfill some of my responsibilities as a company leader,” he said in a statement. “I apologize to my former colleagues, the Board of Directors, franchisees and suppliers of the company for this.”
Easterbrook’s lawyer declined to comment further.
When the lawsuit was filed, it shed more light on Easterbrook’s behavior as CEO. It also led to more attention being paid to McDonald’s and its board of directors.
Corporate governance experts questioned Easterbrook’s initial boardroom investigation, asking why the investigation was completed so quickly and why its servers were not verified, which is typical of such investigations. Easterbrook allegedly deleted the emails from his phone, but the company did not check internal servers until new information became known.
Teamsters Local 237 Additional Security Fund and two affiliates have sued the company and board members, claiming they had breached their fiduciary obligations. Shareholders, led by CtW Investment Group and New York Commander Scott Stringer, opposed the re-election of two McDonald’s board members, but ultimately failed.
Under current CEO Chris Kempchinski, McDonald’s is trying to change the way people think about corporate culture by holding general meetings with employees and other stakeholders and introducing new corporate values.
“This settlement makes Steve Easterbrook responsible for his blatant misconduct, including the way he used his position as CEO,” McDonald’s chairman Enrique Hernandez Jr. said in a statement. “The ruling avoids a lengthy lawsuit and allows us to move forward. It also reaffirms the Council’s original decision to initiate this case. ”
McDonald’s shares are up 23% this year, bringing its market value to $ 204 billion.