McDonald’s, the fast-food giant, has filed a lawsuit against former CEO Steve Easterbrook seeking damages or to return compensation that he retained when the company's board fired him without cause in November.
Easterbrook was summarily asked to leave the company after he was accused of sexual misconduct. He allegedly engaged in sexual relationships with three employees and conspired to keep evidence of the affairs in videos and photographs secret. The company said his behavior was in willful violation of its policies.
Easterbrook, a British citizen, during his dismissal, admitted to having a "non-physical, consensual relationship involving texting and video calls" with an employee. That person was not one of the three women with whom Easterbrook allegedly had sexual relationships detailed in the lawsuit.
McDonald's said an internal investigation recently discovered "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 to messages from his Company e-mail account to his personal e-mail account."
McDonald's said Easterbrook had "lied to the Company and the Board and destroyed information regarding" his behavior, which allegedly occurred in 2018 and 2019.
Easterbrook was given a severance package after his dismissal as at that time the present evidence of sexual misconduct was not available. But after an internal investigation, evidence of his liaisons with three others was found, along with photographic evidence. Hence, McDonald decided to sue him. The company said he would have been fired rather than let go with compensation.
The photographs were found on the company server, although he had deleted it from his phone before handing it over. But he had inadvertently used the company email to send the photographs to his personal email, which left a trail.
In an email statement to company employees, the present CEO Chris Kempczinski reiterated the values of MCDonald's and its ethics and what it stood for. He wrote: ”We recently became aware through an employee report of new information regarding the conduct of our former CEO, Steve Easterbrook. We now know that his conduct deviated from our values in different and far more extensive ways than we were aware when he left the company last year. While the Board made the right decision to swiftly remove him from the Company last November, this new information makes it clear that he lied and destroyed evidence regarding inappropriate personal behavior and should not have retained the contractual compensation he did upon his exit. As such, the Company, at the direction of the Board of Directors, has filed litigation to recover the compensation he retained upon his departure from McDonald’s and align his exit payout with a “for cause” termination.”
In a bid to improve the company ethos and make some value additions to the human resource policies. the fast-food giant has appointed a Chief People Officer, Heidi Capozzi, to identify more opportunities to support employees, customers, and suppliers.
"McDonald’s would have been well served by doing a more thorough investigation" in the first place, said Tim Hubbard, assistant professor of management at the University of Notre Dame’s Mendoza College of Business, in an email interview to the USA Today. "I think, though, the board had an expectation of honesty from Mr. Easterbrook given the large sum of money that was going to be paid out.”
Hubbard said that this case should serve as an example for corporate to do thorough research into any rumors circulating about executive conduct, before hastily packing them off with millions in compensation for fear of bad press.