McDonald’s Investigates Allegation Ex-CEO Covered for Others (1)

McDonald’s Corp., in an ongoing investigation into former Chief Executive Officer Steve Easterbrook’s behavior, is looking into whether he covered up improprieties by other McDonald’s employees, according to a company executive.

The board is working with outside counsel to investigate an allegation the ousted chief may have helped conceal other employees’ behavior, said the McDonald’s executive, who isn’t authorized to speak publicly. It’s also looking more broadly into the company’s human resources department, the executive said. Easterbrook’s attorney didn’t reply to requests for comment.

Steve Easterbrook

Photographer: Joshua Lott/Bloomberg

Easterbrook was fired in November over a consensual relationship with an employee, but the company received a tip months later that he had been involved in multiple affairs with workers. After concluding Easterbrook had lied and concealed evidence in the initial investigation, the fast-food giant sued to claw back his severance. He has denied the claims, contending McDonald’s had the information about his relationships with employees when it negotiated his separation agreement. The board has continued to investigate the matter in the meantime.

McDonald’s board “will follow the facts wherever they may lead,” the company said in an emailed statement, noting that CEO Chris Kempczinski has appointed a new head of HR and “announced refreshed values with input from employees around the world.”

“We will continue to make changes, where necessary, to support all parts of our organization,” the company said.

The HR department at McDonald’s has been under an internal review since April led by former Boeing Co. executive Heidi B. Capozzi, who stepped into the department’s top slot that month. The board’s look at the HR department is concurrent with the review led by Capozzi, which examines hiring practices, performance evaluations and how employee concerns are handled.

Capozzi replaced McDonald’s former top human resources manager, David Fairhurst, who departed the company the day after Easterbrook’s exit was announced in November. The company gave no reason for his exit at the time, but the company said Tuesday Fairhurst had been terminated for cause related to his own conduct inconsistent with McDonald’s values. Fairhurst couldn’t be reached for comment.

As part of her HR review started in April, Capozzi sent an email to employees earlier this month, after the lawsuit against Easterbrook was filed, about how the company needs to better understand the “bright spots and blind spots we have around our values” at McDonald’s. The chain has partnered with a third party to do global surveys and “listening sessions” with employees around those issues, she said in the internal email.

The results of those employee surveys and sessions, which begin next month, will be released in November.

(Updates with statement in fourth paragraph. An earlier version of this story was corrected to reflect that allegations are part of ongoing investigation and not an expanded probe.)

To contact the reporters on this story:
Ed Ludlow in San Francisco at eludlow2@bloomberg.net;
Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editors responsible for this story:
Crayton Harrison at tharrison5@bloomberg.net

Anne Riley Moffat

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