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McDonald’s to sue former CEO amid claims of past relationships with employees

The fast food chain is alleging that Steve Easterbrook covered up relationships with employees and destroyed evidence.

Steve Easterbrook.
Steve Easterbrook.
Image: PA

MCDONALD’S SAYS IT is suing Steve Easterbrook, the British former CEO it ousted last year over an inappropriate relationship with an employee.

The fast-food chain is alleging that Mr Easterbrook covered up relationships with other employees and destroyed evidence.

“McDonald’s does not tolerate behaviour from employees that does not reflect our values,” said McDonald’s president and CEO Chris Kempczinski, who was promoted following Mr Easterbrook’s departure, in a message to employees today.

In his message to employees, Mr Kempczinski said he is committed to making sure that employees are “encouraged and comfortable coming forward with information about any behaviour that doesn’t align with our values”.

McDonald’s fired Mr Easterbrook last November after he acknowledged exchanging videos and text messages with an employee. He told the company that there were no other similar instances.

Based on what the company knew at the time, McDonald’s board approved a separation agreement “without cause” that allowed Mr Easterbrook to keep around $40 million (€38 million) in stock-based benefits plus 26 weeks of pay, amounting to compensation of about $670,000 (€620,000).

According to the lawsuit, McDonald’s received an anonymous tip in July that Mr Easterbrook had engaged in a sexual relationship with another employee. After an investigation, McDonald’s confirmed that relationship as well as two other physical, sexual relationships in the year before he was fired. Mr Easterbrook also approved a special grant of restricted stock, worth hundreds of thousands of dollars, to one of those employees, the lawsuit said.

The company said Mr Easterbrook removed evidence of those relationships – including sexually explicit photos and videos sent from corporate email accounts – from his mobile phone, preventing investigators from learning about them prior to his firing. But that evidence remained on the company’s email servers.

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McDonald’s did not say why those servers were not checked during its initial investigation. In the lawsuit, the company says it relied on Mr Easterbrook – its highest ranking executive – to be truthful.

“That reliance caused the company injury,” McDonald’s said in the lawsuit.

In the lawsuit filed in Delaware, McDonald’s said it would not have fired Mr Easterbrook without cause if it had known of the additional relationships.

McDonald’s is now attempting to block Mr Easterbrook from exercising his stock options and said it will seek compensatory damages.

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