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Verdicts & Settlements

McDonald’s Announces Settlement with Ousted CEO Easterbrook

— December 17, 2021

McDonald’s will claw back Easterbrook’s severance package, now valued at about $105 million.

On Thursday, McDonald’s announced that it had settled its lawsuit against former CEO Steve Easterbrook, taking back the entirety of his $105 million severance package.

According to CNBC, the fast food chain launched its lawsuit against Easterbrook in August 2020, claiming he had committed fraud and lied during the company’s internal investigation into his alleged misconduct some months earlier.

As part of the probe, McDonald’s found that Easterbrook had violated company policy by having consensual, sexual relations with at least one McDonald’s employee.

Despite their findings, though, McDonald’s still permitted Easterbrook to leave with a severance package constituting both cash and equity, valued at around $105 million.

However, in its August filing, McDonald’s said that “new information” about Easterbrook’s misconduct had come to light, prompting yet another probe.

An empty McDonald's French fry sleeve resting on a tarmac surface.
Photo by Lucas van Oort on Unsplash.

The latest investigation, claims the company, revealed that Easterbrook not only had sexual relations with other employees, but had destroyed evidence to cover his tracks.

The New York Times notes that corporate investigators found “dozens of nude, partially nude or sexually explicit photographs and videos of various women, including photographs of these company employees, that Easterbrook had sent as attachments from his company email account to his personal email account.”

Easterbrook also allegedly awarded “hundreds of dollars in stock” to one of the women with whom he was having a sexual relationship.

In its lawsuit, McDonald’s said that, had Easterbrook been honest about the extent and scope of his misconduct, “McDonald’s would have known that it had legal cause to terminate him in 2019.”

As part of the settlement, Easterbrook has retuned the equity and cash awarded in his settlement, and has also issued a public apology.

“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. “I apologize to my former co-workers, the Board, and the company’s franchisees and suppliers for doing so.”

CNBC notes that, in spite of Easterbrook’s now-public punishment, corporate governance experts had already criticized McDonald’s for its hasty, apparently sloppy handling of the affair.

McDonald’s board, for instance, appears to have rushed its initial investigation, and failed to check internal servers for any evidence against Easterbrook.

While Easterbrook was later revealed to have deleted emails from his phone, the company didn’t check its own server until “new information” surfaced.

McDonald’s current chairman, Enrique Hernandez Jr., said that the company is now trying to improve its image with employees, investors, and other stakeholders by increasing transparency.

“This settlement holds Steve Easterbrook accountable for his clear misconduct, including the way in which he exploited his position as CEO,” Hernandez said. “The resolution avoids a protracted court process and allows us to move forward. It also affirms the Board’s initial judgment to pursue this case.”


Former McDonald’s C.E.O. Repays Company $105 Million

McDonald’s claws back $105 million from fired CEO Easterbrook, accused of hiding relationships from board

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