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McDonald’s investigating whether former CEO covered others’ problems

The company said that Steve Easterbrook destroyed evidence of the extent of his behavior before his ouster last year.
Photograph: Shutterstock

McDonald’s investigation of its former CEO has reportedly uncovered more than just his relationships with employees.

The Chicago-based burger giant’s investigation of Steve Easterbrook also involves an allegation that he covered up other employees’ inappropriate behavior. Bloomberg first reported about the allegation, saying that McDonald's is working with a law firm to investigate the matter.

McDonald’s also conducted a review of its human resources department, which began in April following the hiring of Heidi Capozzi as chief people officer, company executives told Restaurant Business. Capozzi replaced David Fairhurst, who was ousted from McDonald’s the day after Easterbrook was fired.

“In July of this year, the board was made aware of new allegations regarding additional misconduct by the company’s former CEO,” McDonald’s Chairman said in a statement. “As it did last fall, the board took immediate steps to investigate those allegations with the help of outside counsel. Based on that investigation, it became clear that the company’s former CEO had lied and destroyed evidence regarding the extent of his inappropriate behavior.

“The board unanimously determined to take action equivalent to effectively terminating him for cause and send a clear signal to shareholders and the broader McDonald’s community that his misconduct, which clearly deviated from McDonald’s values, must not be ignored.”

The allegation comes on top of McDonald’s discovery that Easterbrook had three additional sexual relationships with employees that he didn’t inform the company about before he was fired last year after the discovery of another relationship that was deemed consensual.

McDonald’s this month sued Easterbrook, seeking to claw back stock options and other bonuses he was allowed to keep as part of a severance payment provided with his separation agreement. The severance payments are worth at least $42 million.

Easterbrook in a response denied that McDonald’s did not know he had multiple relationships, saying the information was all on the company’s email servers at the time, which should have been seen during the initial investigation.

The incident has led to a significant change at McDonald’s corporate offices, with Chris Kempczinski the company’s new CEO and several other executives taking roles with the company. That includes Capozzi, a former Boeing executive who has taken several actions following a review of the company’s human resources department.

That includes a cultural assessment, including surveys and listening sessions with employees that ask for feedback on “blind spots” around the company’s values. The company is also reviewing how employees are hired, how performance is evaluated, and how employee concerns are raised and investigated.

Shortly after Easterbrook was ousted, reported surfaced of a party culture in which the company’s executives mingled with employees. McDonald’s own lawsuit said the company found dozens of photos of nude women on Easterbrook’s email, including some of company employees.

Just 10 days before that lawsuit was filed, however, the company held a virtual, global meeting in which Kempczinski revealed numerous corporate values that would drive the company’s actions. Those values include focusing on inclusion and doing “the right thing.”

“The Board will follow the facts wherever they may lead,” the company said in a statement. “Our board and CEO are committed to leading with integrity. Since being appointed CEO in November, Chris has installed a new chief people officer, announced refreshed values with input from employees around the world, and has committed to making these values part of everything we do. We will continue to make changes, where necessary, to support all parts of our organization.”

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