It’s not every day that a blue chip company decides to sue a former executive, let alone its erstwhile CEO, but this is exactly what McDonald’s did by suing Steve Easterbrook, who had been fired last year for inappropriate conduct, specifically, sexting with an employee. Easterbrook, who received his severance payment after being cleared by an internal investigation of any additional wrongdoing, was accused by another employee last month of carrying on a sexual relationship with them during Easterbrook’s tenure at McDonald’s.
Under other circumstances, this might not have resulted in a lawsuit from McDonald’s, but the company alleges in the suit that Easterbrook concealed evidence of this relationship during the company’s original investigation last year. He is also accused of lying and compensating at least one person with whom he had a relationship with company stock, which McDonald’s wants back.
After the initial investigation, McDonald’s decided, as is common among large companies, to fire Easterbrook with as little fanfare as possible. This included providing Easterbrook with his severance and stock options. However, a clause in his contract stipulated that if McDonald’s later determined that Easterbrook should have been fired “with cause” then it would be open season on these payments. And, with the new revelations this summer, this is exactly what McDonald’s has chosen to do.
While the public way in which this is playing out is uncommon, this series of events is not and we think it is a good example of one of things we often counsel clients on: when you’re being investigated, the cover up may be worse than the crime itself.
