McDonald's Goes After Former CEO's Severance Payment In Lawsuit, Says He Lied About Employee Relationships

McDonald's MCD is suing former CEO Steve Easterbrook to recover severance payments following an internal probe that found that Easterbrook had sexual relationships with three employees, the company said in a Monday SEC filing. 

McDonald's is suing Easterbrook for the amount of his exit package — around $40 million — in Delaware's Court of Chancery. 

What Hapened: In October 2019, McDonald's had learned of an allegation that Easterbrook engaged in an inappropriate personal relationship with a McDonald’s employee, the company said.  The board commissioned an investigation of the allegation.

The investigation confirmed that the alleged relationship had occurred and revealed that it had been a non-physical, consensual relationship involving texting and video calls, according to McDonald's. 

Easterbrook told internal investigators the relationship was the only one of an intimate nature he had ever had with a McDonald’s employee, the company said, Easterbrook said he never engaged in a physical sexual relationship with any McDonald’s employee, the company said. On Nov. 1, the McDonald’s board fired  Easterbrook.

Why It's Imortant: The board concluded that Easterbrook violated company policy by engaging in an inappropriate relationship with a subordinate, but also that his conduct demonstrated poor judgment that disqualified him from continued service as the CEO.

MCD Price Action: McDonald's shares were trading down 0.67% at $203.25 at last check Monday. The stock has a 52-week high of $221.93 and a 52-week low of $124.23.

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Photo courtesy of McDonald's.