McDonald's sues ousted CEO, alleging employee relationships

Daniel Fowler
August 10, 2020

The lawsuit filed in DE state court alleges that Easterbrook not only lied when he said this was the only inappropriate relationship he'd had, but also covered up evidence of three sexual relationships with other employees. Easterbrook also approved a special grant of restricted stock, worth hundreds of thousands of dollars, to one of those employees, the lawsuit said.

"The company's complaint alleges that Mr. Easterbrook breached his fiduciary duties as an officer and director of the company and committed fraud in the inducement", the company told investors in its filing.

The company fired Mr Easterbrook previous year after finding he had a consensual relationship with an employee.

Based on what the company knew at the time, McDonald's board approved a separation agreement "without cause" that allowed Easterbrook to keep almost US$42 million ($58.5 million) in stock-based benefits, according to Equilar, which tracks executive compensation.

Ousted McDonald's CEO Steve Easterbrook lied to the board about the extent of his relationships with employees, the company alleged in a new lawsuit.

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Now, McDonald's is suing Easterbrook for the amount of his exit package: about $40 million.

Easterbrook lied during the investigation into his behavior, the filing showed.

McDonald's claimed that it wouldn't have fired Easterbrook without cause if they knew about this in 2019.

Now, the company is trying to block Easterbrook from exercising his stock options and will seek compensatory damages.

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