Ousted McDonald's CEO returns $105M in misconduct settlement

McDonald’s fired Easterbrook in late 2019

Former McDonald’s CEO Steve Easterbrook has returned more than $105 million in equity awards and cash to the fast-food chain as part of a settlement to resolve allegations that he lied about the extent of his misconduct while serving as its top executive. 

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"During my tenure as CEO, I failed at times to uphold McDonald’s values and fulfill certain of my responsibilities as a leader of the company," Easterbrook said in a prepared statement issued by McDonald's on Thursday. "I apologize to my former co-workers, the board and the company’s franchisees and suppliers for doing so."

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In this July 26, 2017, file photo, then-McDonald's CEO Steve Easterbrook is interviewed at the New York Stock Exchange. (AP Photo/Richard Drew)

Easterbrook was fired from McDonald's in late 2019 after admitting to exchanging videos and text messages in a non-physical, consensual relationship with one of his employees. 

McDonald's insider Chris Kempczinski then took the reins as CEO. 

Chris Kempczinski was named McDonald's new president and CEO. (Credit: McDonald's)

At the time of the firing, Easterbrook said there were no similar instances and an inspection of his cellphone records appeared to back that claim up, resulting in an approved separation agreement "without cause" that allowed him to keep tens of millions in stock-based benefits and other compensation.

However, McDonald's later received an anonymous tip in July 2020 from an employee who claimed that Easterbrook had engaged in a sexual relationship with another employee. An investigation into the allegation confirmed the relationship as well as two other sexual relationships with employees in the year before Easterbrook's termination. McDonald's said Easterbrook had removed evidence of those relationships from his phone.

Following the revelations, the company's board sued Easterbrook in August 2020 for concealing the extent of his misconduct. The suit sought the return of Easterbrook's equity awards granted in 2018 and 2019, which would have been forfeited under his original separation agreement had he been found to have engaged in "detrimental conduct." 

Easterbrook called for the suit to be dismissed, arguing McDonald's claim that the company didn't know about his relationships with multiple employees when offering a separation agreement was false. McDonald's then fired back, calling his attempt to dismiss the suit "morally bankrupt." 

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McDonald’s board chairman Enrique Hernandez Jr. said the settlement holds Easterbrook accountable for his "clear misconduct," affirms the board’s initial judgment to pursue the case and avoids a "protracted court process," allowing the company to move forward.

"With this settlement, Company employees, management and the Board can continue to focus their attention on the growth of the business and building community both inside and outside the System," he said. 

The action against Easterbrook comes as at least 50 workers have filed complaints against the company over the last five years, alleging physical and verbal harassment and, in some cases, retaliation when coming forward.

McDonald's introduced a new harassment training program in October 2019, a month before Easterbrook's termination, for its 850,000 employees. However, franchisees were not required to provide it. Starting next year, McDonald's says it will mandate training for 2 million workers at 39,000 McDonald's stores globally to promote a safe and respectful workplace. 

The Associated Press contributed to this report.