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McDonald’s Advances Effort to Claw Back Millions From Ex-CEO

Feb. 2, 2021, 9:23 PM

McDonald’s Corp. can advance its lawsuit seeking to claw back $37 million in severance it paid ex-CEO Stephen J. Easterbrook after he was forced out over four alleged affairs with subordinates, a Delaware Chancery Court judge ruled Tuesday.

Vice Chancellor Joseph R. Slights III let the company move forward with fiduciary breach claims, including allegations that Easterbrook “orchestrated a substantial grant of equity to one of the employees with whom he was having a sexual relationship.”

The judge dismissed the argument that McDonald’s forfeited the right to pursue legal claims against Easterbrook when it agreed to a voluntary separation agreement instead of firing him for cause, saying the agreement “is not so broad that it would deny McDonald’s the right to hold its former CEO” accountable.

“Easterbrook’s argument to the contrary is difficult to follow and, in any event, not even remotely supported by our law,” Slights wrote. The separation agreement “will not defuse this court’s abhorrence of fraud,” he added.

Slights also rejected the idea that McDonald’s had agreed to litigate any dispute with Easterbrook in Illinois.

The case is .McDonald’s Corp. v. Easterbrook, Del. Ch., No. 2020-0658, 2/2/21

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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