Ronn Torossian, CEO, 5WPR
Last year was not a good one for Steve Easterbrook. The former CEO of McDonald’s was fired by the company after reports surfaced that he engaged in “inappropriate relationships” with staff members then lied about these relationships. At the time, Easterbrook said the relationship was consensual, and he was given an outgoing paycheck for roughly $40 million.
Now, Easterbrook is back in the news because his former employer is looking to recover that payout after it has been reported that Easterbrook actually had multiple “inappropriate” relationships with staff members, about which he lied to the board. While these employees were all of age to consent, McDonald’s has a strict policy against “any kind of intimate relationship between employees in a direct or indirect reporting relationship…”
The reason for the initial payout was that, at the time, the company says it only had evidence of one “non-physical, consensual relationship, consisting of intimate text messages and video calls…” This led to the termination of Easterbrook’s contract “without cause” so as to avoid both a lengthy court battle and the accompanying media scrutiny.
Then came a tip that sparked a second investigation. This second investigation, reports say, revealed “indisputable evidence” that Easterbrook engaged in much more than a single non-physical relationship. One of the most headline-grabbing allegations is that Easterbrook “approved a grant of company shares worth hundreds of thousands of dollars to (one of the employees) … shortly after their first sexual encounter…”
McDonald’s says if the company had that information at the time, Easterbrook would not have been granted the multi-million-dollar settlement. Further, company spokesmen said Easterbrook violated his duty to the company when he misled investigators about the nature of his relationships with employees. He did so, they allege, to secure a larger severance offer, which, the company contends, was an “act of fraud.”
While the legal issues will be decided by the system, the issue drags Easterbrook back into a harsh spotlight, dredging up negative PR that he likely believed well in the rearview. At the time of his dismissal, Easterbrook said, “it was time to move on” as the values of the company did not align with his “mistake.”
The ignoble departure and, now, additional negative headlines put an asterisk next to what was, for Easterbrook, a solid term at McDonald’s. He is largely credited with updating the company’s menus, improving the quality of the food by using better ingredients and investing in updating the look of the stores. These improvements contributed to an over doubling of McDonald’s share price during his term as CEO.
As this issue is now back in the spotlight, with more salacious details coming out in the press, both McDonald’s and Easterbrook will have to address media questions that pertain to their brand awareness in the consumer public. And, unlike last time, the issue may not be settled quickly.
About the Author: Ronn Torossian is CEO of 5WPR, leading PR agency.