A British former CEO of McDonald’s has agreed to pay the company more than £78million in compensation after he was accused of lying about inappropriate workplace relationships.
After being sued by McDonald’s, Steve Easterbrook from Watford agreed to repay the amount in cash and equity. He had lied about consensual affairs with 3 other employees.
He was fired in 2019 – and given a £31million severance package – after racy videos and text messages he had sent to an employee with whom he had a non-physical, consensual relationship, emerged.
McDonald’s, at 54, sued Easterbrook to recover the money. The fast-food chain discovered that Easterbrook had been in three relationships sexually with his employees, and stored nude photos of them on their email.
Announcing the settlement on Thursday, Easterbrook issued a grovelling apology for failing to ‘uphold McDonald’s values and fulfil certain of my responsibilities as a leader of the company’.
“I am sorry to my ex-coworkers and board, as well as the franchisees of the company and their suppliers.
After he sent racy texts and videos to an employee, McDonald’s terminated Easterbrook.
McDonald’s has clawed back more than £78million in severance benefits from former CEO Steve Easterbrook (right) who is accused of lying about inappropriate workplace relationships
Easterbrook is pictured with his former girlfriend Denise Paleothodoros, whom he dated from 2014 to 2018 when she was assigned to the McDonald’s account by her PR firm
Easterbrook claimed that there had never been any similar incidents and an examination of his phone showed this to be true at the time of Easterbrook’s firing.
McDonald’s Board approved an agreement to separate ‘without cause’ which allowed Easterbrook to retain tens and millions of stock-based benefits as well as other compensation.
The severance deal was valued at nearly £31million when issued in 2019, according to an analysis at the time by executive-pay firm Equilar, but the company’s stock has since risen by more than a third.
From 2015 to 2019, Easterbrook realised £46million in compensation, according to Equilar, suggesting that the massive clawback revokes nearly all he earned during his tenure as CEO.
In July 2020 however, an anonymous employee reported to the company that Easterbrook was having a relationship with another employee.
McDonald’s has confirmed the relationship and two other sexual, physical relationships that McDonald’s had with its employees during the preceding year. McDonald’s claimed Easterbrook had deleted all evidence of these relationships from his cellphone.
Easterbrook also dated Denise Paleothodoros when she was assigned to the McDonald’s account by her PR firm.
McDonald’s ruled that the couple did not break its rules after it was discovered in 2015. Paleothodoros’s employers, Golin, moved her to another account.
McDonald´s fired Easterbrook in late 2019 after he acknowledged exchanging videos and text messages in a non-physical, consensual relationship with an employee
McDonald’s Board sued Easterbrook in August 2020. It claimed that it would have not terminated Easterbrook without cause, had it known of the severity of his misconduct.
The complaint said that the evidence included dozens of sexually explicit photos and videos, some partially or nude, of women from various countries, as well as photographs taken by employees of the company.
The email stated that Easterbrook sent the photos, which were said to have been taken late 2018, and early 2019, to an attachment to messages from his company account. It also indicated that Easterbrook was sending them to his personal account.
Easterbrook stated in his defense to the lawsuit that McDonald’s held information about Easterbrook’s relationships when it decided on his severance package.
Since Easterbrook had made it clear in his separation agreement that he was not allowed to receive equity awards in 2018, and 2019, the company demanded the refund of those.
McDonald’s chairman Enrique Hernandez Jr. stated that the settlement reached Thursday held Easterbrook responsible and confirmed the board’s decision not to continue the case.
The settlement announced Thursday holds Easterbrook accountable and affirms the board’s decision to pursue the case, McDonald´s Chairman Enrique Hernandez Jr. said
Hernandez stated that the resolution avoided a lengthy court process and allowed Hernandez to continue his work.
Easterbrook was the victim of a wider scandal at the company, which included sexual harassment within its ranks.
At least 50 workers filed complaints against the company over the past five-years, alleging harassment, verbal and physical violence, as well as retaliation for coming forward.
In October 2019 – a month before Easterbrook was fired – McDonald’s introduced a new harassment training program for its 850,000 U.S. employees, but franchisees wee not required to provide it.
In April, McDonald’s announced that it will require additional training in its restaurants to combat harassment and discrimination.
After profits fell, the Brit is credited with turning McDonald’s around by changing their menu to focus on high-quality cuts of meat.
Under his leadership the company’s shares nearly doubled in value while sales at its US locations stagnated
After McDonald’s suffered a 15% profit shortfall the previous year, Steve Easterbrook assumed the leadership of McDonald’s on March 15, 2015.
Easterbrook was able to increase the profit margin of the company by over 12 percent within the first nine months after his takeover. Margins rose from 13.62 percent up to 25 percent. During his tenure, the former CEO doubled the share of company.
“Part of what I believed in my youth was how to organize a complex, large business so it can be adaptable. In an interview with Entrepreneur, he stated that he was not content to use his size as an excuse. “Instead of using size as an excuse for our failure to do things, [how can we]Increase our market share and provide customer service?
In the first three months of his time as CEO, Easterbrook regrouped and consolidated market segment by need, instead of by geographic region. Easterbrook created four markets for the company: the US, the international lead markets (high-growth and high-growth), foundational markets, and the US.
China’s and South Korea’s markets were removed from the Asia/Pacific/Middle East/Africa area and put in the “high-growth” category.
Easterbrook emphasized the importance of improving food quality.
He said, “In the last five year, the world moved faster without the business than it did inside.” “The message from customers is too clear for the business to ignore. We are not in our game,” he said.
Easterbrook took several McDonald’s offerings off the menu, including six chicken sandwiches and a Deluxe Quarter Pounder hamburger. The chain was instructed to remove difficult-to-pronounce items and announced that the Sirloin Third Pounder would be available in a limited number.
In the first half of 2016, he saw sales rise by more than 5.7%. Easterbrook supported McDonald’s decision to use fresh beef in their burgers in 2017, a change that McDonald’s took.
In less than three years the CEO was able to convince McDonald’s that its franchised store percentage increased from 81 to 91 per cent. This exceeded his target of 4,000 by 2019. It was due to a deal that saw 2,740 restaurants sold to Citic in Hong Kong and China by the Carlyle Group.
Easterbrook made his mark on the company over two decades before his appointment as CEO.
Brittanica reports that Easterbrook was first hired by the company in 1993 to be a London-based financial reporting manager. Then, he became the senior executive responsible for all McDonald’s locations in the UK.
After being selected in 2006 to lead the UK’s operations, he went on to take over the management of all northern Europe (roughly 1800 outlets) in less that a year.
Easterbrook was back in 2013, after a brief absence from the company. He is now the chief executive vice-president and chief brand officer.
After a 2014 scandal with questionable meat, Easterbrook helped to restore McDonald’s’ reputation in China. In Australia, and the USA, he helped to roll out customized hamburgers. This innovator was all about convenience. He helped implement dual-lane drive throughs at the restaurant as well the popular all day breakfast menu.