McDonald’s sues ousted CEO Steve Easterbrook

Yahoo Finance’s Alexis Keenan joins Zack Guzman to discuss McDonald’s decision to sue former CEO Steve Easterbrook after the company claims he lied about affairs with employees.

Video Transcript

ZACK GUZMAN: But speaking of internal reviews, there is also a lot of drama to discuss over at McDonald's, all that coming out after McDonald's took a closer look at the behavior of its ousted former CEO, Steve Easterbrook, filing a lawsuit to claw back some of that severance pay. We discussed this on the show when it happened. But tens of millions of dollars in severance pay after the company said internal emails showed he wasn't exactly telling the truth. What's going on on that front?

ALEXIS KEENAN: Right, so a deal was already done with Easterbrook's termination. That was back in November when the board, an independent board convened and concluded that based on some relationships-- one relationship, actually, that he had with an employee. This was a consensual, non-physical intimate relationship. But nonetheless, the company said nope, you've got to go.

But with that deal, he got a huge severance agreement-- $40 million plus, plus additional fees. He was determined by these directors to have now, after the fact, now that this deal is done, now that he has an agreement, to have lied to this group who was doing the investigation internally there at McDonald's. He was let go without cause. And that meant he could keep his severance agreement.

But the company is now saying, no, we should have terminated him with cause, that we could have met the bar that would have been required for the company to show that he should be terminated in that manner, and with it lose his right to all of his benefits. So that's what this lawsuit is looking for. McDonald's has sued in chancery court. It's a court of equity in Delaware, where the company is incorporated.

It says it learned that in 2020-- in July, actually, so just recently, they said they got an anonymous tip that led to evidence of three additional sexual relationships that Easterbrook had with employees. He said that it includes dozens of nude, partially nude, or sexually explicit-- explicit photographs and videos of various women, including photographs of the McDonald's employees that Easterbrook had sent as attachments to messages from the company's email account to his personal account.

So the company is saying that there is a ton of evidence they have. Of course, these are all unproven allegations at this point. But they are looking to get back that money, that agreement that they entered into with him, according to his termination with the company.

ZACK GUZMAN: Yeah, very interesting case here, especially as we talk about the Me Too movement and more added pressure for companies, after even parting ways with a former CEO, doing due diligence to discuss and dig into what was actually done there and clawing back some of that severance there. Alexis Keenan, appreciate the--