McDonald’s sues to claw back money from fired CEO after whistleblower complaint

The lawsuit, filed Monday in a Delaware state court and part of an 8-K filing with the Securities and Exchange Commission, alleges Easterbrook “concealed evidence and lied about his wrongdoing” and “was knowingly untruthful” to McDonald’s investigators during a 2019 investigation into violations of the company’s code of conduct.

Easterbrook was fired by McDonald’s in November 2019 for having a consensual, non-physical relationship with a female McDonald’s employee that was judged by the company’s board of directors to have violated the company’s code of conduct. An internal investigation concluded that the weeks-long relationship was conducted entirely via video and texts. At the time, it was the only such allegation levied against Easterbrook. As a result, the board decided to fire Easterbrook, who had been the company’s leader for four years, “without cause” for violating its rules. The company paid him a severance package worth an estimated $41 million and promoted McDonald’s President Chris Kempczinski in his place.

In July, a whistleblower came forward claiming Easterbrook had a sexual relationship with a second female McDonald’s employee.

In the ensuing internal investigation, McDonald’s said it uncovered evidence Easterbrook had sexual relations with three female McDonald’s employees. The company alleged Easterbrook deleted nude photos of the women from his corporate cell phone before handing it over to investigators. However, investigators later found the images had also been saved on the company’s server. In addition, McDonald’s alleged Easterbrook made a “a special discretionary grant of restricted stock units—worth hundreds of thousands of dollars” to one of the female employees, identified as Employee-2, “shortly after their first sexual encounter and within days of their second,” according to the lawsuit.

“The Board would not have agreed to the terms of the Separation Agreement had it then been aware of Easterbrook’s physical sexual relationships with three McDonald’s employees, his approval of a discretionary stock grant for Employee-2 while they were in a sexual relationship, and the falsity of his representation to outside counsel that he had never engaged in a physical sexual relationship with a Company employee,” the company wrote in the lawsuit. “That conduct constituted a clear legal basis to terminate Easterbrook for cause.” The company filed the lawsuit “to redress the injuries it has suffered by virtue of Easterbrook’s fiduciary breaches and deceit.”

With regard to Easterbrook, Kempczinski said while the board “made the right decision to swiftly remove him from the company last November, this new information makes it clear that he lied and destroyed evidence regarding inappropriate personal behavior and should not have retained the contractual compensation he did upon his exit,” in a letter to employees and news release.

“McDonald’s does not tolerate behavior from any employee that does not reflect our values,” Kempczinski said.

Easterbrook could not be reached for comment.