McDonald’s sues ex-boss for ‘lying’ about sexual relationships

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Former CEO Steve Easterbrook at McDonald’s HQ opening in Chicago in 2018. Photo: Stacey Wescott/Zuma Press/PA Images

McDonald’s Corporation has launched legal action to recover tens of millions of dollars of severance pay and benefits from its former chief executive Steve Easterbrook after accusing him of covering up sexual relationships with former colleagues.

British-born Easterbrook was dismissed last November after the McDonald’s board decided a relationship he had with a colleague, although consensual, demonstrated poor judgement and was not in accordance with the company’s workplace policies. In an email to staff, Easterbrook wrote at the time: “Given the values of the company, I agree with the board that it is time for me to move on.”

Workplace relationships: key problems for employers

Employers responding to an XpertHR survey on workplace relationships found problems with:

complaints of favouritism from co-workers;
decreased morale of co-workers;
bullying or unpleasant behaviour between employees;
couple’s productivity decreasing; and
claims of sexual harassment.

But a lawsuit filed in Delaware yesterday claims he deleted numerous explicit photos he had sent using his work email and phone and that he concealed three other sexual relationships.

McDonald’s received an anonymous report last month alleging that a McDonald’s worker, “Employee-2”, engaged in a sexual relationship with Easterbrook while he was CEO.

The lawsuit reads: “An internal investigation into this allegation discovered photographic evidence that, while he was CEO, Easterbrook had engaged in a physical sexual relationship not only with Employee-2, but also with two other company employees in the year before his termination.

“That evidence consisted of dozens of nude, partially nude, or sexually explicit photographs and videos of various women, including photographs of these company employees, that Easterbrook had sent as attachments to messages from his company email account to his personal email account.”

The deleted emails and photos, sent in late 2018 and early 2019, remained on a McDonald’s server without Easterbrook’s knowledge. “The photos are indisputable evidence that Easterbrook repeatedly violated the company’s prohibition of any kind of intimate relationship between employees in a direct or indirect reporting relationship,” says the lawsuit.

It adds that Easterbrook “lied during the investigation into his behaviour in October 2019, when independent outside counsel expressly asked him if he had ever engaged in a physical sexual relationship with any company employee”.

McDonald’s also alleges that he approved an “extraordinary stock grant”, worth hundreds of thousands of dollars, for one of those employees in the midst of their sexual relationship.

The board decided to dismiss Easterbrook “without cause”, which entitled him to receive substantial severance benefits.

McDonald’s is suing Easterbrook to recover an estimated £42m that he received in compensation and severance benefits as part of his separation agreement. It is also taking action to prevent Easterbrook exercising stock options received as part of his severance or from selling any stock from outstanding equity rewards.

The company’s complaint alleges that Easterbrook breached his fiduciary duties as an officer and director and is seeking compensatory damages for all the amounts paid to him under the separation agreement and “other costs and expenses incurred by the company by virtue of his misconduct”.

Easterbrook became CEO and president of McDonald’s UK in 2006, having joined McDonald’s from PricewaterhouseCoopers in 1993 as an accountant. He held CEO roles at Pizza Express and Wagamama, before rejoining McDonald’s as global chief brand officer in 2013. He became global CEO in 2015.

Interviewed by Personnel Today in October 2006, he was a strong advocate of good HR practice. “If you get the people part right, the rest will follow,” he said. “HR is a key driver in shaping and implementing our strategy as a progressive employer. I never underestimate the challenge of looking after our workforce, and our people practices are absolutely fundamental. I want our workforce to feel comfortable, respected and valued. There is a hierarchy, but there are no airs and graces here.”