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Ex-McDonald’s CEO Fires Back at Chain’s Effort to Strip Pay

Bloomberg logoBloomberg 8/16/2020 Jef Feeley

(Bloomberg) -- McDonald’s Corp.’s former Chief Executive Officer Steve Easterbrook fired back at his former company for suing to clawback tens of millions of dollars in compensation, denying company claims he covered up sexual relationships with subordinates.

McDonald’s officials claimed that after firing Easterbrook last year they found new information that showed the former top executive “concealed evidence and lied about his wrongdoing.” Easterbrook says McDonald’s had the information about his relationships with employees when it negotiated his separation agreement.

“McDonald’s -- a sophisticated entity represented by numerous internal and external experts when it entered into the separation agreement -- is aware it cannot credibly allege a breach of contract claim,” Easterbrook’s lawyers said Friday in a filing Delaware Chancery Court, seeking to have the lawsuit thrown out. “Instead, it improperly seeks to manufacture claims for a breach of fiduciary duty or fraud.”

Steve Easterbrook wearing a suit and tie: McDonald's Corp. Unveils New Headquarters © Bloomberg McDonald's Corp. Unveils New Headquarters

Steve Easterbrook

Joshua LottBloomberg

It’s the latest salvo in a legal battle over Easterbrook’s ouster, which was covered by the severance agreement that allowed him to keep stock awards worth more than $37 million as well as $675,000 severance and health insurance benefits.

“McDonald’s stands by its complaint, both the factual assertions and the court in which it was filed,” the company said.

Easterbrook also claims agreements covering stock grants targeted by the company must be heard in Illinois courts, where McDonald’s is based. He also accused the chain of filing the lawsuit knowing he couldn’t immediately respond because of a gag clause in the agreement.

“McDonald’s Corporation filed a meritless -- and misleading -- lawsuit in the wrong forum,” Easterbrook’s lawyers said.

While McDonald’s is based in Illinois, it’s incorporated in Delaware. The chancery court in the state is the premier venue for resolving high-profile corporate disputes.

In return for his severance package, Easterbrook agreed to a two-year non-compete clause specifying more than 40 companies that he couldn’t join. He was also required to write a letter “to employees acknowledging that he made a mistake,” according to the filing.

The case is McDonald’s Corp. v. Easterbrook, 2020-0658, Delaware Chancery Court (Wilmington).

(Updates with comment from McDonald’s in fifth paragraph. An earlier version of this story corrected the type of agreement requiring litigation in Illinois.)

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©2020 Bloomberg L.P.


Video: McDonald’s Sues Former CEO Easterbrook After Allegedly Discovering Other Relationships With Employees (Veuer)

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