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Leadership

McDonald’s settles lawsuit against former CEO Steve Easterbrook

He has returned $105 million in cash and equity awards and apologized to the company for “failing to uphold McDonald’s values.”
McDonald's lawsuit settlement
Photo by Jonathan Maze

McDonald’s has settled its lawsuit against former CEO Steve Easterbrook, who has repaid $105 million in cash and equity awards and apologized to the company, the burger giant announced on Thursday.

Easterbrook has also apologized to the company “for failing to uphold McDonald’s values and fulfill his responsibility as a leader of the company.” McDonald’s has also agreed to drop its lawsuit against its former CEO.

The settlement comes more than two years after Easterbrook was fired for having an affair but was then allowed to keep much of his severance package in exchange for not commenting on the company or working with a competitor. McDonald’s then sued Easterbrook to recover that settlement last year after discovering he had more affairs with employees and lied about it to the company’s board.

“This settlement holds Steve Easterbrook accountable for his clear misconduct, including the way in which he exploited his position as CEO,” Enrique Hernandez, McDonald’s chairman, said in a statement. “The resolution avoids a protracted court process and allows us to move forward. It also affirms the board’s initial judgment to pursue this case.”

In a message to the system seen by Restaurant Business on Thursday, Hernandez said that Easterbrook has returned equity awards that he would have forfeited “had he been truthful at the time of his termination and, as a result, been terminated for cause.”

In a statement, Easterbrook said he failed to uphold the company’s values. “McDonald’s and its board of directors value doing the right thing and putting customers and people first,” he said. “During my tenure as CEO, I failed at times to uphold McDonald’s values and fulfill certain of my responsibilities as a leader of the company.

“I apologize to my former coworkers, the board and the company’s franchisees and suppliers for doing so.”

The settlement ends an extraordinary legal battle between the world’s largest restaurant chain and a CEO largely given credit for helping the company emerge from a years-long, post-recession malaise after he took over in 2015.

Easterbrook was fired in November 2019, and replaced by Chris Kempczinski, after he admitted to a consensual affair with a staffer. The company was roundly criticized, however, for letting him leave with his severance package despite being fired “for cause.” (See a timeline of the case here.)

Those criticisms only intensified when McDonald’s sued Easterbrook to get the severance payments back and the additional affairs came to light.

The company since then has overhauled its human resources function and launched “Speak Up” training at the corporate environment to create a better working environment and help people speak up when issues arise.

“There are lessons that cannot be forgotten, including the importance of continuing to foster a culture where the expectation is that people will speak up in response to wrongdoing,” Hernandez said in his system message.

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