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McDonald’s Sues Former CEO Stephen Easterbrook

August 10, 2020

On November 3, 2019, McDonald’s announced the termination of its former chiefexecutive officer, Stephen Easterbrook, following the determination of the Board of Directors that he violated Company policy and demonstrated poor judgment involving a consensual relationship with an employee. Additional information about Mr. Easterbrook’s conduct has recently come to the attention of the Board through an employee report and prompted further investigation.

Based on the results of the investigation, the Board concluded that Mr. Easterbrook lied to the Company and the Board and destroyed information regarding inappropriate personal behavior and in fact had been involved in sexual relationships with three additional Company employees prior to his termination, all in violation of Company policy.

Had the Board been aware of this information, it would not have approved the terms of the Separation Agreement dated as of November 1, 2019, by and between Mr. Easterbrook and the Company.

Accordingly, the Company has brought an action against Mr. Easterbrook in the Court of Chancery of the State of Delaware to recover compensation and severance benefits that would not have been retained by Mr. Easterbrook had he been terminated for cause. In addition, the Company has taken immediate action to prevent Mr. Easterbrook from exercising any stock options or selling any stock issuable in respect of outstanding equity awards.

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, and seeks, among other things, compensatory damages for all the amounts paid to Mr. Easterbrook under the Separation Agreement and other costs and expenses incurred by the Company by virtue of his misconduct.

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