McDonald’s has agreed to drop its lawsuit against disgraced former CEO Steve Easterbrook, who will return more than $105 million in equity and cash he received upon the termination of his employment in 2019.
The company announced the settlement Thursday, saying the $105 million Easterbrook returned would have been forfeited “had he been truthful at the time of his termination and, as a result, been terminated for cause.”
Easterbrook was accused of having sexual relationships with three McDonald’s employees that violated the company’s code of conduct. The company also accused Easterbrook of lying about the relationships and attempting to cover them up by deleting incriminating texts on his corporate phone. The texts were later found during an internal investigation because they were saved on the company’s server.
Easterbrook also made a discretionary stock grant to one of the female employees with whom he was having a sexual relationship.
McDonald’s board fired Easterbrook in November 2019. The separation agreement stated the company fired him “without cause.” At the time of the settlement, the board knew about one consensual, non-physical relationship Easterbrook had with a female McDonald’s employee.
The company paid him a severance package worth an estimated $41 million at the time and promoted McDonald’s President Chris Kempczinski in his place. McDonald’s stock was at $193 per share in November 2019; it closed at $269 per share on Dec. 16.
The board later learned from a whistleblower about two additional sexual relationships Easterbrook had had with female McDonald’s employees, both of which were physical. Easterbrook repeatedly denied having the relationships when confronted by the company’s investigators and destroyed evidence, the company said. On Thursday, McDonald’s said Easterbrook engaged in “misconduct, lies, and efforts to impede investigations into his actions.”
“This settlement holds Steve Easterbrook accountable for his clear misconduct, including the way in which he exploited his position as CEO,” said Enrique Hernandez Jr., chairman of the board of directors of McDonald’s Corp., in the statement. “The resolution avoids a protracted court process and allows us to move forward. It also affirms the board’s initial judgment to pursue this case.”
On Thursday, Easterbrook apologized for his actions.
“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,” he said in a statement that was part of McDonald’s announcement. “I apologize to my former coworkers, the board, and the company’s franchisees and suppliers for doing so.”