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BUSINESS Tuesday 11 augusT 2020
McDonald's sues ousted CEO, alleging employee relationships

By DEE-ANN DURBIN in its ranks. In 2017, Easter-
AP Business Writer brook assured McDonald's
McDonald's says it's suing board that he and other
Stephen Easterbrook, the executives were complet-
CEO it ousted last year over ing anti-harassment train-
an inappropriate relation- ing. Last October — a
ship with an employee, month before Easterbrook
alleging Monday that he was fired — McDonald's
covered up relationships introduced a new harass-
with three other employees ment training program for
and destroyed evidence. its 850,000 U.S. employees.
The company now wants But franchisees — who own
to reclaim millions of dollars 95% of McDonald's U.S. res-
in compensation paid to taurants — aren't required
Easterbrook. to offer it.
"McDonald's does not toler- McDonald's shares were
ate behavior from employ- flat at $204.23 in midday
ees that does not reflect trading.q
our values," said McDon-
ald's President and CEO
Chris Kempczinski, who
was promoted following
Easterbrook's departure, in
a message to employees
Monday.
The lawsuit puts a spotlight In a July 26, 2017 file photo, McDonald's CEO Steve Easterbrook is interviewed at the New York
— again — on a years- Stock Exchange.
long reckoning over sexual Associated Press
harassment at Chicago- changing videos and text explicit photos and videos companies not to reach
based McDonald's and its messages in a non-physi- sent from corporate email severance agreements
39,000 restaurants. In the cal, consensual relationship accounts — from his cell without a thorough investi-
U.S. alone, more than 50 with an employee. Easter- phone, preventing investi- gation.
workers have filed separate brook told the company gators from learning about "That's my big hope with this
sexual harassment charges that there were no other them prior to his firing. But thing, that we learn from it,"
against McDonald's with similar instances. An initial that evidence remained he said. "Companies are
the U.S. Equal Employment search of his cellphone on the company's email not going to settle for this
Opportunity Commission or confirmed that. servers. anymore."
in state courts. Based on what the com- McDonald's didn't say McDonald's is now at-
Leaders with Fight for $15, pany knew at the time, Mc- why those servers weren't tempting to block Easter-
which supports higher Donald's board approved checked during its initial in- brook from exercising his
wages and unions for fast a separation agreement vestigation. In the lawsuit, stock options and said it will
food workers, said Monday "without cause" that al- the company says it relied seek compensatory dam-
that McDonald's should use lowed Easterbrook to keep on Easterbrook — its high- ages.
any money it recoups from nearly $42 million in stock- est ranking executive — to It's unclear how much East-
Easterbrook for worker-led based benefits, accord- be truthful. erbrook might have to pay.
programs that combat sex- ing to Equilar, which tracks "That reliance caused the In the lawsuit, McDonald's
ual harassment. executive compensation. company injury," McDon- says Easterbrook's sepa-
In his message to employ- Easterbrook also collected ald's said in the lawsuit. ration agreement makes
ees, Kempczinski said he is 26 weeks of pay, amount- In the lawsuit, which was clear that his 2018 and 2019
committed to making sure ing to compensation of filed in Delaware, McDon- equity awards may be for-
that employees are "en- about $670,000. ald's said it would not have feited if the company de-
couraged and comfort- According to the lawsuit, terminated Easterbrook termines he has engaged
able coming forward with McDonald's received an without cause if it had in "detrimental conduct."
information about any be- anonymous tip in July that known of the additional re- Easterbrook was awarded
havior that doesn't align Easterbrook had engaged lationships. more than $29 million in
with our values." in a sexual relationship with Tim Hubbard, an assistant stock-based compensa-
McDonald's also told work- another employee. After professor of management tion in those two years.
ers Monday it is conduct- an investigation, McDon- at the University of Notre Telephone and email mes-
ing a global survey and ald's confirmed that rela- Dame's Mendoza College sages seeking comment
listening sessions to assess tionship as well as two other of Business, said firing a were left with Easterbrook's
the current state of its cor- physical, sexual relation- CEO with cause can lead attorney.
porate culture. The assess- ships in the year before he to protracted, expensive Easterbrook and his wife
ment will be completed was fired. Easterbrook also legal battles, which is why divorced in 2015, the same
and shared with employ- approved a special grant boards try to avoid it. East- year he became McDon-
ees in November, McDon- of restricted stock, worth erbrook's case seemed ald's CEO. Easterbrook,
ald's Chief People Officer hundreds of thousands of clear-cut, he said. who is British, began his
Heidi Capozzi said in a mes- dollars, to one of those em- But Hubbard applauded career with McDonald's in
sage obtained by The Asso- ployees, the lawsuit said. McDonald's for reopening 1993 when he served as a
ciated Press. The company said Monday the investigation when new finance manager in Lon-
McDonald's fired Easter- that Easterbrook removed information came forward. don.
brook last November af- evidence of those relation- He said McDonald's expe- McDonald's has taken
ter he acknowledged ex- ships — including sexually rience may teach other steps to halt harassment