When former McDonald's CEO Steve Easterbrook was fired for a consensual relationship with a subordinate last year, he left with an exit payout estimated over $40 million. Now, McDonald's is suing him for that money, citing new evidence of additional relationships and accusing him of lies and fraud.
Easterbrook was fired in November "without cause" after apologizing for a consensual relationship with a subordinate, which amounted to sexting. But now, in the legal documents disclosed Monday, McDonald's officials lay out new damning accusations against Easterbrook and argue he should have been fired "with cause" and disqualified from exit compensation.
The company says it has learned that Easterbrook had sexual relationships with at least three McDonald's employees in the year before he was fired — and even "approved an extraordinary stock grant, worth hundreds of thousands of dollars" for one of them. The legal documents accuse Easterbrook of erasing evidence of these relationships from his phone and telling investigators at the time "deliberate falsehoods."
"Easterbrook's silence and lies — a clear breach of the duty of candor — were calculated to induce the Company to separate him on terms much more favorable to him than those the Company would have offered and agreed to had it known the full truth of his behavior," the company says in the legal complaint.
This is an unusually public airing of damning details from an internal investigation by a fairly conventional American corporation.
Easterbrook's compensation for being fired — including six months of severance pay, shares and other equity — drew much attention and criticism last year. Workers at the time pointed out that his pay in 2018 was 2,124 times more than the median income of a McDonald's employee. They also used the moment to highlight allegations of rampant sexual harassment of female employees by male co-workers and managers across McDonald's restaurants.
This summer, an anonymous tip about a second relationship between Easterbrook and a McDonald's employee led the company to revisit his case. On a company server, the company found evidence of "dozens of nude, partially nude, or explicitly sexual photographs and videos of various women" that Easterbrook had attached to emails from his corporate account, the legal documents say. McDonald's calls this "undisputable evidence" that the former CEO violated rules about intimate relationships at work and "that Easterbrook lied during the investigation."
Easterbrook's legal team did not immediately respond to NPR's inquiry.
In a note to employees on Monday, current McDonald's CEO Chris Kempczinski said that "McDonald's does not tolerate behavior from any employee that does not reflect our values."
"We now know that [Easterbrook's] conduct deviated from our values in different and far more extensive ways than we were aware when he left the company last year," Kempczinski said. "While the Board made the right decision to swiftly remove him from the Company last November, this new information makes it clear that he ... should not have retained the contractual compensation he did upon his exit."
Editor's note: McDonald's is among NPR's recent sponsors.
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McDonald's has made striking new allegations against its former CEO. The company says Steve Easterbrook hid sexual relationships with employees and concealed the evidence. The fast food giant fired Easterbrook last year. Now it is suing him to get back his multi-million-dollar severance package. NPR's Alina Selyukh reports.
ALINA SELYUKH, BYLINE: What makes this case pretty remarkable is that it's been nine months since Easterbrook was fired. The reason - a consensual relationship with an employee that amounted to sexting. And American corporate culture typically is all about sorting these kinds of internal scandals quickly and behind closed doors. Here's Tim Hubbard, a professor at the University of Notre Dame.
TIM HUBBARD: There's always this tendency to want to settle it quietly and get it completely out of the media.
SELYUKH: But here we are talking about it again because now McDonald's is suing Easterbrook, saying he covered up more inappropriate behavior. McDonald's made this unusual choice because back in November, Easterbrook left with a severance estimated at over $40 million. But in July, an anonymous tip led the company to search corporate servers. And there, investigators found explicit photos and videos sent from Easterbrook's corporate account. Evidence of sexual relationships with three employees, including one woman for whom Easterbrook approved a stock grant worth hundreds of thousands of dollars.
HUBBARD: I think that there was an expectation as they were negotiating a settlement that the former chief executive officer be open and honest.
SELYUKH: The company says he lied to get a better exit payout and is suing to get that money back. Few companies fight these kind of public battles with former executives. McDonald's says it's already moved to block Easterbrook from selling any stock he might still have from his equity awards.
HUBBARD: I don't really see the likelihood of him returning the money without a bit of force needed. I think it gets pretty nasty.
SELYUKH: Easterbrook's legal team did not respond to NPR's inquiries, and we should note that McDonald's is among NPR's recent sponsors. Easterbrook's compensation for being fired drew much attention and criticism last year. It included six months of severance pay, shares and other equity, leading many low-wage frontline workers to muse about their pay gap with executives and use the moment to highlight allegations of rampant sexual harassment of female employees by male co-workers and managers across McDonald's restaurants. Sharyn Tejani directs the TIME'S UP Legal Defense Fund, which is backing workplace sexual harassment lawsuits by McDonald's workers.
SHARYN TEJANI: If we're going to say you can't do certain things and we're going to take conduct seriously, then they should be taking it seriously when it comes to their workers being sexually harassed and, at a minimum, commit the 40 million they're trying to get back from Easterbrook to stop that.
SELYUKH: Easterbrook's successor, CEO Chris Kempczinski, often speaks about recommitting to company values of integrity and inclusion. On Monday, McDonald's told workers it's conducting a global survey and listening sessions to assess the state of its corporate culture.
Alina Selyukh, NPR News.
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