McDonald's Is Suing Its Former CEO For Lying And Fraud [Updated]

Update, August 31, 2020: The volley of vitriol between McDonald's and ex-CEO Steve Easterbrook continues. In early August, McDonald's filed a lawsuit against Easterbrook, alleging that the terms of his severance package (valued around $40 million) were negotiated under fraudulent terms. Easterbrook had lied to the company during these negotiations to cover up his multiple affairs with employees, McDonald's alleges, and the corporation might be hoping to recoup some of that severance money as a result.

Reuters reports that Easterbrook has shot back at the company, claiming that McDonald's actually had full knowledge of his many affairs at the time it negotiated the severance package. McDonald's, in turn, has denied this allegation.

"When McDonald's investigated, Steve Easterbrook lied," said a company spokesperson this morning. "He violated the company's policies, disrespected its values, and abused the trust of his co-workers, the Board, our franchisees, and our shareholders."

This whole situation is probably only going to get worse before it gets better. No matter who gets the last laugh, it might be good for all of us to recall that wise Mark Twain quote: if you tell the truth you don't have to remember anything.

Original post, August 10, 2020: Late last year we wrote about how the McDonald's board of directors fired then-CEO Steve Easterbrook, who had been secretly sexting with an employee in violation of company policy. Easterbrook received tens of millions of dollars in exit compensation, and McDonald's U.S.A. president Chris Kempczinski became the new CEO. Now, according to The New York Times, a lawsuit filed against Easterbrook by the McDonald's corporation alleges that not only was he engaged in three separate sexual relationships with McDonald's employees, he awarded one of them with a batch of shares worth hundreds of thousands of dollars.

The fact that McDonald's is openly suing Easterbrook is in itself unusual. Per the Times, when CEOs are ousted from their positions the corporations they worked for typically like to keep the transitions on the down-low, without airing the full extent of the malfeasance that lost their leaders their positions. But those days may be ending thanks to the #MeToo and Black Lives Matter (BLM) movements, which have advocated for corporations, as the Times puts it, "to position themselves as good corporate citizens, responsible not only to shareholders but also to customers, employees and society at large."

Beyond this societal shift, Easterbrook may be facing this lawsuit due to the sheer breadth of his fooling around.

"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," McDonald's said in the lawsuit. The company said the emails were sent in late 2018 and early 2019.

The size of Easterbrook's exit compensation is also likely a factor. The Times says that the compensation consulting firm Equilar values Easterbrook's severance package at $40 million. Given that the severance contract stipulated that a package could be recouped if it was found that "an employee was dishonest and actually deserved to be fired for cause," if McDonald's can prove its claim it stands to recoup quite a large sum of money.