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McDonald’s Calls Out Ex-CEO in $37 Million Clawback Case (2)

Aug. 31, 2020, 1:05 PM

McDonald’s Corp. told a judge that ex-CEO Steve Easterbrook lied about four alleged sexual relationships with subordinates to dupe directors into letting him leave with stock awards as part of his severance.

The fast food company, which is seeking to claw back at least $37 million from Easterbrook, urged the judge not to dismiss the case in a filing Monday in Delaware Chancery Court.

“If the independent directors had known the full extent of this misconduct, they would not have approved the separation agreement and would have terminated Easterbrook” in a way that denied him the grants, McDonald’s argued.

The fight over Easterbrook’s compensation has become one of the highest-profile examples of a corporation grappling with the #MeToo era. The filing comes in response to the former chief executive officer’s own, in which he claimed that McDonald’s had any information it needed when it negotiated his separation agreement. He contends the stock grants require all litigation over them to be tried in state court in Illinois.

Daniel Herr, a Wilmington, Delaware-based lawyer representing Easterbrook, didn’t immediately return a call and an email Monday, outside normal business hours, seeking comment on Monday’s filing.

Read More: Ex-McDonald’s CEO Goes After Chain’s Effort to Strip Pay

McDonald’s says Easterbrook, whom it fired in November took extensive steps to cover up the alleged relationships by “deleting evidence from his phone” and lied to investigators asking if he’d had sexual relations with subordinates beyond the consensual relationship they initially uncovered. It said his counterclaims amount to a “brazen attempt at table-turning” that doesn’t justify dismissal of the case.

The company, second in the world in number of global locations only to Subway Restaurants, says its bylaws require that claims against executives and directors be heard in Delaware, the corporate home to more than 60% of Fortune 500 companies. Chancery court is the nation’s prime venue for the resolution of high-profile corporate disputes.

Bloomberg News reported earlier this month that the chain is investigating whether Easterbrook covered up improprieties by other McDonald’s employees during his tenure of more than four years.

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

(Updates with details of filing in second section)

To contact the reporter on this story:
Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net

To contact the editors responsible for this story:
David Glovin at dglovin@bloomberg.net

Peter Jeffrey, Richard Clough

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

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