McDonald’s sues fired CEO

Alleged employee relationships threaten severance pay

McDonald’s says it’s suing Stephen Easterbrook, the chief executive officer it ousted last year over an inappropriate relationship with an employee, alleging Monday that he covered up relationships with three other employees and destroyed evidence.

The company now wants to reclaim millions of dollars in compensation paid to Easterbrook.

“McDonald’s does not tolerate behavior from employees that does not reflect our values,” said McDonald’s President and CEO Chris Kempczinski, who was promoted following Easterbrook’s departure, in a message to employees Monday.

McDonald’s fired Easterbrook in November after he acknowledged exchanging videos and text messages in a nonphysical, consensual relationship with an employee. Easterbrook told the company that there were no other similar instances. An initial search of his cellphone confirmed that.

Based on what the company knew at the time, McDonald’s board approved a separation agreement “without cause” that allowed Easterbrook to keep nearly $42 million in stock-based benefits, according to Equilar, which tracks executive compensation. Easterbrook also collected 26 weeks of pay, amounting to compensation of about $670,000.

According to the lawsuit, McDonald’s received an anonymous tip in July that Easterbrook had engaged in a sexual relationship with another employee. After an investigation, McDonald’s confirmed that relationship as well as two other sexual relationships in the year before he was fired. EasterThe brook also approved a special grant of restricted stock, worth hundreds of thousands of dollars, to one of those employees, the lawsuit says.

The company said Monday that Easterbrook removed evidence of those relationships — including sexually explicit photos and videos sent from corporate email accounts — from his cellphone, preventing investigators from learning about them before his firing. But that evidence remained on the company’s email servers.

McDonald’s didn’t say why those servers weren’t checked during its initial investigation. In the lawsuit, the company says it relied on Easterbrook — its highestranking executive — to be truthful.

“That reliance caused the company injury,” McDonald’s says in the lawsuit.