WILMINGTON, Del. (CN) — Saying the ex-CEO it fired last year for sexting a subordinate lied about the extent of his misconduct, McDonald’s filed suit Monday to recoup millions in severance payments.
The fast-food chain had labeled the termination at the time as one “without cause,” saying it could only establish that Steve Easterbrook had violated a company policy against inappropriate relationships with subordinates.
Represented by Garrett Moritz of Ross Aronstam & Moritz, McDonald’s says its conclusions rested on Easterbrook’s insistence that his relationship with the unidentified female “was consensual, non-physical, and did not involve any allegation of sexual harassment.” Easterbrook also averred that “he had not engaged in a personal relationship with any other McDonald’s employee,” the restaurant says.
Suing now in Delaware’s Court of Chancery, McDonald’s emphasizes that Easterbrook’s severance plan included a provision allowing it to revoke the “without cause” determination and subsequent financial payouts if it finds evidence he deserved to be fired.
“Had Easterbrook been candid with McDonald’s investigators and not concealed evidence, McDonald’s would have known that it had legal cause to terminate him in 2019 and would not have agreed that his termination was ‘without cause,’” McDonald’s says. “Accordingly, McDonald’s brings this action to redress the injuries it has suffered by virtue of Easterbrook’s fiduciary breaches and deceit.
As estimated by the executive-compensation tracking firm Equilar, Easterbrook’s deal allowed him to walk away with $42 million in stock-based benefits, on top of 26 weeks’ pay that would amount to $670,000.
The terms also benefitted McDonald’s, giving the company a better forecast for its sales growth and stocks if Easterbrook separated quietly.
Now, however, McDonald’s points to an anonymous report it received last month from another female employee who says she engaged in a sexual relationship with Easterbrook during his CEO tenure.
McDonald’s says its investigation confirmed this relationship and revealed that Easterbrook gave the woman hundreds of thousands of dollars of restricted stock units “after their first sexual encounter and within days of their second,” as well as two others in the year prior to 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 e-mail account to his personal e-mail account,” the complaint states.
Date and time stamps on the photographs of the three company employees show that the photographs were taken between 2018 and 2019, the complaint also notes.
“The photographs are undisputable evidence that Easterbrook repeatedly violated the company’s prohibition of any kind of intimate relationship between employees in a direct or indirect reporting relationship,” the suit continues. “They are undisputable evidence that Easterbrook lied during the investigation into his behavior 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 says Easterbrook turned over his company-issued phone to the company’s legal examiners in October 2019, but that he attempted to hide this evidence by deleting the photographs and emails at issue. Unfortunately for Easterbrook, however, McDonald’s says it found the originals in its July 2020 investigation.
Sexual harassment is a recurring theme for fast-food chains and the restaurant industry as a whole. One survey by the National Partnership for Women and Families reported that 40% of female fast food workers said they had experienced sexual harassment.
Over the course of 2019, the American Civil Liberties Union and the labor group Fight for $15 filed a series of complaints against the fast food company alleging from assembly line workers’ experiences being sexually harassed by management as an extension of the #MeToo movement.
Gillian Thomas, senior staff attorney at the American Civil Liberties Union's Women's Rights Project, said in an email Monday that McDonald’s lawsuit against Easterbrook shows distorted priorities.
"McDonald's says it 'doesn't tolerate behavior at odds with its values,' yet it has failed to put an end to its rampant culture of sexual harassment that impacts thousands of workers in its restaurants across the country,” she said. “A company's culture starts at the top, and Steve Easterbrook obviously didn't take sexual misconduct seriously.”
Christopher Kempczinski, president of McDonald’s USA, who was chosen to succeed Easterbrook as president and CEO, has since called for the company to renew its commitment to corporate values.
“As we recommit to our values, now, more than ever, is the time to lean in to what we stand for and act as a positive force for change,” Kempczinski said. “That includes working together to enhance our culture by continuing to do the things we do well while developing solutions for how we can improve noting that the lawsuit demonstrates a continued demonstration of McDonald’s commitment.”
Barbara Johnson, a former McDonald’s worker who experienced sexual harassment during her time at the chain, called out Kempczinski in a statement Monday through Fight for 15, where she is a leader through the movement in St. Louis.
“We will never really believe that he's serious about leaning in until he addresses the rampant sexual harassment faced by workers at McDonald's,” Johnson said. “McDonald's needs an overhaul from the C-Suite to the kitchen.”
Johnson said whatever money McDonald’s gets from Easterbrook should go to more deserving recipients.
“As a first step, McDonald's must pledge to use any money it recoups from Steve Easterbrook's golden parachute to support worker-survivors and establish a worker-led program to address sexual harassment at McDonald's once and for all,” Johnson said.
Moritz did not immediately respond to a request for comment Monday.
Easterbrook’s attorney has not returned a request for comment.
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