Stephen Easterbrook (Stephen Easterbrook)

Stephen Easterbrook (Stephen Easterbrook)

Biography

2019: McDonald's CEO fired over office romance

In early November 2019, McDonald's announced  the resignation of CEO Stephen Easterbrook over an office romance. The top manager will be paid severance pay in the amount of salary for six months, writes The Wall Street Journal (WSJ), citing a statement from a fast food chain.

How much Easterbrook will receive from his former employer is not specified. It is known that in 2018 his base salary amounted to $1.35 million, and total payments as CEO reached $15.9 million.

52-year-old Stephen Easterbrook was fired due to an affair with an employee prohibited by corporate rules. Easterbrook was not saved even by the fact that he had long been divorced, and the relationship was by mutual agreement. He admitted his mistake and stated that the management made the right decision.

Amid news of the dismissal of the head, McDonald's shares fell in price by more than 3%, as a result of which the company's market capitalization fell by $3 billion. At the same time, since Easterbrook's appointment to the post of CEO in 2015, McDonald's share price has more than doubled.

Chris Kempchinsky, who headed the company's divisions in the United States, has been appointed the new CEO of McDonald's. He was assigned a salary of $1.25 million.

As the WSJ notes, Kempczinski and Easterbrook worked on a strategy that was supposed to increase the flow of guests at the chain's restaurants in the United States by spending on new technologies and adding new dishes to the menu. Their efforts led to increased sales and higher prices, but the flow of visitors remained at the same level. 

Stephen Easterbrook

The scandal at McDonald's didn't come out of nowhere. Network employees often complain of harassment from colleagues, and the company says it will do everything to protect workers. The ban on office romances is indeed enshrined in corporate rules.^[1]

2021: Payment of $105 million for sex with subordinates

On December 16, 2021, Steve Easterbrook, the former chief executive officer of McDonald's, who was fired due to sexual relations with subordinates, agreed to return $105 million in cash and pay a share reward to settle the fast food chain's lawsuit.

That amount represents compensation Easterbrook would have lost if he had spoken candidly about his actions and been fired in the case, the company said. Easterbrook, 54, also apologised for the behaviour that led to his dismissal in 2019.

During my tenure as CEO, I sometimes failed to stand up for McDonald's values and fulfill some of my duties as a company executive, he said in a statement on Dec. 16. - I apologize to my former colleagues, the board, franchisees and suppliers of the company for this.

Fired McDonald's chief Steve Easterbrook to pay $105m for sex with subordinates

The lawsuit allows McDonald's to close a painful chapter and prevent the litigation from dragging out, Chairman Rick Hernandez told employees and franchisees in a memo. The board first learned of the situation because the worker "had the courage to speak up," he said.

Even as we move forward, there are lessons that should not be forgotten, including the importance of continuing to shape a culture where people are expected to speak out in response to wrongdoing, Hernandez said.

Some shareholders criticized Hernandez and other board members for paying Easterbrook severance pay, but later filed a lawsuit to bring him back that they were misled about the extent of Easterbrook's misconduct. But Hernandez was re-elected by investors at the May 2021 annual meeting.

While Easterbrook left a tarnished legacy at McDonald's, during his four-and-a-half-year tenure, he pushed for technological changes, mobile ordering and delivery services that ultimately helped the company weather the pandemic when stores were forced to stop eating indoors. The stock is up about 37% since his firing, compared with a 52% gain for the S&P 500.

Under current CEO Chris Kempczinski, McDonald's has made changes to improve its corporate culture, including tying executive pay to diversity and conducting anti-harassment training in its stores. As part of his efforts to restore the company's image, Kempczinski caused fresh uproar in 2021 when a private text message surfaced in which he appeared to blame the parents of two children killed in the Chicago shooting. He apologized.

There is no place for discrimination at McDonald's, the company said. - While we were confident in the strength of our argument, this resolution is consistent with McDonald's values and allows us to continue to focus on our commitments to the communities we serve.[2]

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