You would be forgiven for failing to remember the ins and outs of McDonald’s battle with its disgraced former CEO Steve Easterbrook, a saga that has been playing out for over two years. A lot has happened in the intervening months! This week, though, the matter appears to be more or less put to rest, as CNBC reports that McDonald’s and Easterbrook have reached a settlement requiring Easterbrook to repay his $105 million in severance to the company. That payment, McDonald’s argued all along, should never have gone to the departing executive in the first place.
Easterbrook was fired from his role in November 2019 for violating company policy by having a consensual relationship with an employee. At the time, Easterbrook said, “This was a mistake... Given the values of the company, I agree with the board that it is time for me to move on.” He was given a hefty severance package and sent on his way.
However, things really escalated in August 2020 when McDonald’s brought a lawsuit against Easterbrook, claiming that Easterbrook didn’t tell the truth during the company’s 2019 probe into his inappropriate behavior prior to his termination. Specifically, McDonald’s claims that he committed fraud by hiding the fact that he was involved in more than one sexual relationship with an employee—there were three relationships, not just one—and that he gave one of his romantic partners shares of the company worth hundreds of thousands of dollars. Because of this, McDonald’s claimed the severance package was negotiated, and paid out, under fraudulent terms and should be returned to the company.
And now, 16 months into that lawsuit, McDonald’s and Easterbrook have settled. While the severance was valued at around $40 million at the time of Easterbrook’s termination two years ago, its value has climbed dramatically since then, as the package contains a combination of cash and equity.
CNBC reports that Easterbook is required by the terms of the settlement to return the entire severance amount—both the cash and the equity. He apologized for his conduct.
“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., McDonald’s chairman, in a 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.”
While $105 million is a drop in the bucket for McDonald’s, a company valued at $204 billion, the fast food chain has made it abundantly clear that it’s the principle of the thing. (Wouldn’t it be cool if that severance was distributed among McDonald’s minimum-wage workers?)