CHICAGO – Board members of McDonald’s Corp. believe there’s even more to the story of alleged misconduct by the company’s former chief executive officer, Stephen Easterbrook. The company is investigating whistleblower claims that Easterbrook, in addition to lying about his own misconduct, allegedly tried to cover up the inappropriate behavior of other McDonald’s executives.
“In July of this year, the board was made aware of new allegations regarding additional misconduct by the company’s former CEO,” said Rick Hernandez, chairman of McDonald’s Corp. “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,” Hernandez said.
The board fired Easterbrook in November of 2019 over a consensual relationship with an employee that violated the company's policies. The board of directors named Chris Kempczinski to replace Easterbrook, effective immediately.
Easterbrook received a severance package valued at nearly $42 million, according to executive compensation experts at Equilar. But the company now seeks to claw back the money after a whistleblower, and a subsequent investigation, alerted the board to other inappropriate relationships involving Easterbrook and three McDonald’s employees.
In its complaint filed with the Delaware Court of Chancery, the company said it would not have approved the terms of the separation agreement between McDonald’s and Easterbrook, had the board been aware of this information.
Easterbrook has denied the claims that he lied about his behavior and has moved to have the lawsuit dismissed.
In the wake of the controversy, McDonald’s also launched a review of the company’s human resources department led by Heidi Capozzi, executive vice president and global chief people officer since April. Capozzi implemented a top to bottom review of the HR department and people practices, company executives said.
“Working with Chris, and with the full support of the board, she has initiated several actions as part of this review:
- A cultural assessment, which will include surveys and listening sessions with employees and ask, based on their experience at McDonald’s, for their feedback on bright spots and blind spots we have around our values.
- Further embedding values into the organization.
- Reviewing how MCD employees are hired, how performance is evaluated and how employee concerns are raised and investigated.”
The company has pledged that the Board “will follow the facts wherever they may lead.”
“Our Board and CEO are committed to leading with integrity,” the company said. “We know actions speak louder than words. 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.”