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Steve Easterbrook could lose up to $57 million as McDonald's claims the ex-CEO lied about multiple affairs with employees

Áine Cain   

Steve Easterbrook could lose up to $57 million as McDonald's claims the ex-CEO lied about multiple affairs with employees
  • McDonald's is suing its ex-chief executive Steve Easterbrook over his multi-million dollar severance agreement.
  • The fast-food giant alleges Easterbrook lied about having consensual relationships with multiple employees, and that the former CEO destroyed evidence.
  • McDonald's fired Easterbrook in November 2019 for having a consensual relationship with an employee.
  • Executive compensation tracking firm Equilar estimates that Easterbrook's severance package is now worth around $57.3 million.
  • In November 2019, Equilar placed the value of the ousted CEO's severance deal around $41 million, according to Inc.
  • In the complaint McDonald's filed Monday, the fast-food giant asked that Easterbrook be required to "return all cash and stock awards" from the severance deal.

Former McDonald's CEO Steve Easterbrook received a multi-million dollar severance deal after being fired from the fast-food giant on November 1, 2019. But now, the Golden Arches is suing to retroactively cut the strings on its former chief executive's golden parachute.

On Monday, McDonald's filed a complaint alleging that Easterbrook sent nudes from his work email, and then attempted to delete the photos before turning his phone over to investigators. McDonald's' lawyers wrote that the former CEO lied about his multiple affairs with employees, in order to trick McDonald's to agree to a severance agreement "on terms more favorable than the truth would have warranted."

Executive compensation tracking firm Equilar previously estimated that the severance agreement was worth over $41 million, according to a November 2019 article in Inc. Courtney Yu, the director of research at Equilar, told Business Insider that the value of Easterbrook's severance package has risen since his firing. Now, Equilar estimates that the package is worth $57,319,352 altogether based on the stocks included in the initial severance agreement. That's $3,763,872 in cash, and $53,555,480 in equity.

In the company's complaint to Delaware's Court of Chancery, McDonald's attorneys wrote that McDonald's first became aware of allegations that Easterbrook was engaging "in an inappropriate personal relationship with a McDonald's employee" in October 2019. In the ensuing investigation, the company's board found that its CEO had engaged in a "non-physical, consensual relationship involving texting and video calls" with a company employee.

The complaint alleges that Easterbrook told investigators that the relationship was non-sexual and "the only one of an intimate nature he had ever had with a McDonald's employee." The board then came to an agreement with its CEO that he would be terminated "without cause," so that he would earn "substantial severance benefits."

"Had Easterbrook been candid with McDonald's investigators and not concealed evidence, McDonald's would have known that it had legal cause to terminate him in 2019 and would not have agreed that his termination was 'without cause,' McDonald's' lawyers wrote.

Now that McDonald's is suing over the agreement, Yu said that Easterbrook could stand to lose out more due to the stock-heavy nature of his severance.

"Some things have changed but for the most part he still stands to lose a good chunk of his severance because a lot of it was based on equity," Yu told Business Insider.

McDonald's and Steve Easterbrook's attorney did not immediately respond to Business Insider's request for comment.

McDonald's has not specified the amount it is asking for in damages. Instead, the fast-food company asked that the court award it "compensatory damages" and fees for attorneys, accountants, and experts. As an alternative route, McDonald's asked the court order "Easterbrook to return all cash and stock awards granted pursuant" his severance agreement.