February 8, 2023

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Ex-McDonald’s CEO to repay $105 million, settle lawsuit

The lawsuit lets McDonald’s close a painful chapter and keep legal proceedings from dragging on, Chairman Rick Hernandez told employees and franchisees in a memo seen by Bloomberg. The board initially became aware of the situation because a worker “had the courage to speak up,” he said.

“Even as we move forward, there are lessons that cannot be forgotten, including the importance of continuing to foster a culture where the expectation is that people will speak up in response to wrongdoing,” Hernandez said.

Some shareholders have criticized Hernandez and other board members for paying Easterbrook severance, only to file suit to claw it back later after concluding they had been misled about the extent of Easterbrook’s misbehavior. But Hernandez was re-elected by investors in the annual meeting in May.

Under current CEO Chris Kempczinski, McDonald’s has made changes to improve its corporate culture, including tying executive pay to diversity and rolling out anti-harassment training at its stores. Amid his effort to restore the company’s image, Kempczinski sparked a new uproar this year when a private text message surfaced in which he appeared to cast blame on the parents of two children killed in Chicago-area shootings. He apologized.

While Easterbrook left a tarnished legacy at McDonald’s, during his 4 1/2-year tenure he pushed for technological changes, mobile ordering and delivery services that ultimately helped the company weather the pandemic when stores were forced to halt indoor dining. The shares have gained about 37% since his firing, compared with a 54% gain in the S&P 500 index.

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—Bloomberg News


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