An investment group that works with union-backed pension funds is calling for shareholders to oust McDonald’s Chairman Enrique Hernandez along with Director Richard Lenny over the exit deal given to former CEO Steve Easterbrook.
CtW Investment Group, which holds substantial shares in McDonald’s, has been a fierce critic of the exit deal following Easterbrook’s ouster in November over a consensual affair with a staffer. Easterbrook left with stock and options that CtW says could be worth $44 million.
The fund believes that Hernandez and Lenny, who chairs the McDonald’s board’s compensation committee, should be voted out as directors over that pay package, saying that Easterbrook “violated the company’s non-fraternization policy.”
“It’s time to hold the board accountable for its poor decision-making related to former CEO Steve Easterbrook’s severance, which granted him a potential windfall upon his termination,” CtW Executive Director Dieter Waizenegger said in a letter to shareholders.
CtW was one of two firms that in November called on McDonald’s to adopt a “clawback” policy to recover stock options awarded to executives with cause. But its letter is now taking issues to shareholders.
“McDonald’s board of directors has utterly failed to set a strong standard for its executives, instead seemingly rewarding them for code of conduct violations and sidestepping allegations of systemic problems,” Waizenegger said in a statement.
McDonald’s didn’t comment on the letter, referring only to its November announcement of Easterbrook’s ouster.
CtW says Easterbrook “set a poor tone at the top that tacitly condoned inappropriate workplace behavior,” which is “particularly concerning in light of McDonald’s ongoing struggle to address widespread concerns over sexual harassment in its restaurants.”
Workers in Florida earlier this month filed a lawsuit against the company alleging sexual harassment. The lawsuit was supported by a union-backed group, Fight for $15, that has undertaken a campaign to convince the company to raise workers’ pay to $15 an hour and allow them unionize.