McDonald’s sues fired CEO to recoup $40m parting package

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McDonald’s is suing its former CEO, who was fired last year for having an inappropriate relationship with an employee, after claiming he covered up sexual relationships with three other workers and destroyed evidence so he wouldn’t be caught. 

Stephen Easterbrook, 52, was ousted from McDonald’s in November last year after he admitted to exchanging videos and text messages with an employee in a non-physical, consensual relationship.


Easterbrook, who told the fast food company that there were no other similar instances, was allowed to keep about $40 million in stock-based benefits and 26 weeks of pay, which amounted to about $670,000 in compensation, as part of his ‘without cause’ severance agreement. 

In a lawsuit filed in Delaware on Monday, McDonald’s says it received an anonymous tip last month that led to the discovery of sexual relationships between Easterbrook and three other employees in the year prior to his termination. 

McDonald’s also alleges Easterbrook approved an ‘extraordinary’ stock grant, worth hundreds of thousands of dollars, for one of those employees during their sexual relationship. 


Stephen Easterbrook was ousted from McDonald's in November last year after he admitted to exchanging videos and text messages with an employee

Stephen Easterbrook was ousted from McDonald's in November last year after he admitted to exchanging videos and text messages with an employee

Stephen Easterbrook was ousted from McDonald’s in November last year after he admitted to exchanging videos and text messages with an employee

The company has accused Easterbrook of deleting evidence of those relationships from his cell phone, including sexually explicit photos and videos sent from corporate email accounts, in a bid to prevent investigators from learning about them prior to his firing. 






‘That evidence consisted of 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 email account to his personal email account,’ the lawsuit says. 

The emails were sent in late 2018 and early 2019, according to the lawsuit. 

The filing argues that the photos prove Easterbrook initially lied to investigators.   


McDonald’s said in the lawsuit that Easterbrook’s board-approved separation agreement was based on what the company knew at the time.

The lawsuit says McDonald’s would not have terminated Easterbrook without cause if it had known of the additional relationships.

The company is now attempting to block Easterbrook from exercising his stock options and is seeking compensatory damages.

‘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,’ McDonald’s said in the filing. 

‘Had Easterbrook been candid with McDonald’s investigators and not concealed evidence, McDonald’s would have known that it had legal cause to terminate him in 2019.’ 

Easterbrook, a divorcé and father-of-three from Watford, United Kingdom, joined the company in 1993 and had been chief executive since March 2015. He and his wife divorced in 2015 – the same year he became McDonald’s CEO. 

Under his leadership the company’s shares nearly doubled in value while sales at its US locations stagnated. 

In a lawsuit filed in Delaware on Monday, McDonald's says it was made aware last month of sexual relationships between Easterbrook and three other employees in the year prior to his termination

In a lawsuit filed in Delaware on Monday, McDonald's says it was made aware last month of sexual relationships between Easterbrook and three other employees in the year prior to his termination

In a lawsuit filed in Delaware on Monday, McDonald’s says it was made aware last month of sexual relationships between Easterbrook and three other employees in the year prior to his termination

At the time he was pushed out, McDonald’s said Easterbrook had violated company policy by engaging in a consensual relationship with an employee. McDonald’s forbids managers from having romantic relationships with direct or indirect subordinates. 

In an email to employees at the time, Easterbrook acknowledged he had a relationship with an employee and said it was a mistake.


‘Given the values of the company, I agree with the board that it is time for me to move on,’ Easterbrook said in the email at the time.

The company said at the time that Easterbrook was eligible for six months of severance pay, which would have been $675,000, based on his 2018 base salary of $1.35 million. He was also eligible for prorated payment for hitting 2019 performance targets. 

Under McDonald’s severance plans, the company says it has the right to claim back any payouts if it determines employees have been dishonest and there is evidence they could have been fired with cause. 

McDonald’s said this clause in the agreement also applied to Easterbrook.

Easterbrook could not be immediately reached for comment on Monday. 

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