McDonald's sues ex-boss Easterbrook over alleged sexual relationships

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Steve Easterbrook, CEO McDonald, poses with Ronald McDonald during the new McDonald's Flagship Restaurant re-opening at Frankfurt International Airport, Terminal 2, on March 30, 2015 in Frankfurt am Main, Germany. (Image source, Reuters
Image caption,
Steve Easterbrook, pictured with company mascot Ronald McDonald, the month he became head of McDonald's in 2015

McDonald's has taken new legal action against former chief executive Steve Easterbrook, accusing him of lying about sexual relationships with staff.

The company fired Mr Easterbrook last year after finding he had a consensual relationship with an employee.

But the firm says further investigation found the British executive had three additional relationships with staff, about which he lied to the board.

McDonald's is suing to recover his pay-off, reportedly worth $40m (£35m).

The fast food giant prohibits "any kind of intimate relationship between employees in a direct or indirect reporting relationship".

At the time of Mr Easterbrook's removal in November, McDonald's said it had evidence of only of a non-physical, consensual relationship, consisting of intimate text messages and video calls.

It agreed to terminate Mr Easterbrook's contract "without cause", fearing a protracted legal battle, according to the firm's legal filing.

But after receiving a tip from an employee in July, the fast food giant started a second investigation, which uncovered "undisputable evidence" of three other sexual relationships.

It says investigators found nude photographs sent from Mr Easterbrook's company email account as well as messages showing that he approved a grant of company shares worth hundreds of thousands of dollars to one of the employees "shortly after their first sexual encounter".

McDonald's said that had it been aware of this information, it would not have approved his multi-million dollar pay-off.

'Undisputable evidence'

McDonald's said it did not initially find the photos and messages because Mr Easterbrook had deleted them from his phone. The second investigation also searched company servers.

It said Mr Easterbrook violated his duty to the company by lying when asked about his behaviour in an effort to secure a bigger severance package, committing fraud.

Mr Easterbrook, who is divorced, could not immediately be reached for comment. At the time of his dismissal, he acknowledged a relationship in an email to staff, calling it a "mistake".

"Given the values of the company, I agree with the board that it is time for me to move on," he wrote.

Image source, Reuters
Image caption,
McDonald's claims Steve Easterbrook lied

Mr Easterbrook, a UK citizen who grew up in Watford, Hertfordshire, led McDonald's from March 2015 to November 2019, after previously leading its UK operations.

He was widely credited with revitalising the firm's menus, remodelling stores and using better ingredients. The value of its shares more than doubled during his tenure in the US.

Last year, he received more than $17m in total compensation.

Broader pattern?

The size of Mr Easterbrook's severance package had drawn earlier pushback, including from a shareholder advisory group.

The firm has also faced accusations that it has not taken sexual harassment seriously.

A global coalition of labour unions filed a similar complaint with the Organization for Economic Cooperation and Development in May.

At the time, one of the organisers, Sue Longley, general secretary of the International Union of Foodworkers, said the firm had a "culture rotten from the top".