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McDonald & # 39; s is suing CEO for $ 40 million farewell package back


Stephen Easterbrook was ousted by McDonald & # 39; s last November after admitting sharing videos and text messages with an employee

McDonald & # 39; s is suing its sacked CEO Stephen Easterbrook for tens of millions of dollars in severance pay and benefits after alleging he covered up sexual relationships with three employees and destroyed evidence to keep him out of being caught.

The 53-year-old was fired from his $ 16 million job last November after admitting he had an inappropriate relationship with an employee with whom he exchanged videos and text messages.

He actually had relationships with three employees. Only one of them was named; PR manager Denise Paleothodoros.

As part of his no-cause severance pay agreement, Easterbrook was allowed to keep approximately $ 40 million in stock-based benefits and six months' salary, which equated to roughly $ 670,000 in compensation after insisting there were no similar cases.

In a lawsuit filed in Delaware on Monday, McDonald & # 39; s said that an investigation was reopened last month after receiving an anonymous tip the year before he was fired to discover sexual relationships between Easterbrook and three other employees led.

The company has argued that Easterbrook, a divorced father of three from Watford, UK, no longer deserves the payout because of his "silence and lies".

In its complaint, McDonald & # 39; s said it found dozens of nude or sexually explicit photos of women, including the three employees that Easterbrook sent from his corporate email account to his personal email account.

McDonald & # 39; s has accused Easterbrook of deleting the emails and attached photos from his company-issued phone just before he was ousted to prevent investigators from finding out before his dismissal.

The deleted emails and photos sent in late 2018 and early 2019 remained on a company server that was unknown to him, the lawsuit said.

McDonald & # 39; s also claims that Easterbrook agreed to an "exceptional" stock grant worth hundreds of thousands of dollars to one of these employees during their sexual relationship.

After being fired last year, it was found that Easterbrook had previously escaped criticism for another office romance. It turns out that Easterbrook had been dating Denise Paleothodoros, 46 when she was assigned to McDonald's account by her PR firm

After being fired last year, it was found that Easterbrook had previously escaped criticism for another office romance. It turns out that Easterbrook had been dating Denise Paleothodoros, 46 when she was assigned to McDonald's account by her PR firm

Easterbrook (above with Chrissy Teigen in 2017), a divorced father of three from Watford, United Kingdom, joined the company in 1993 and has been Managing Director since March 2015. Under his leadership, the company's shares doubled while sales at its US locations nearly stagnated

Easterbrook (above with Chrissy Teigen in 2017), a divorced father of three from Watford, United Kingdom, joined the company in 1993 and has been Managing Director since March 2015. Under his leadership, the company's shares doubled while sales at its US locations nearly stagnated

Steve Easterbrook, then CEO of McDonald & # 39; s UK, with Alesha Dixon and Lord Coe at the London 2012 Olympics

He separated and divorced from his British wife Susie about four years ago

Easterbrook pictured with Alesha Dixon and Lord Coe at the London 2012 Olympics (left), separated and divorced from his British wife Susie (right) about four years ago

Steve Easterbrook was seen for the first time since he was fired by McDonald & # 39; s in November

Steve Easterbrook was seen for the first time since he was fired by McDonald & # 39; s in November

Their three daughters stayed with their mother Susie, a part-time real estate agent and former PwC Head of Training, in the £ 1.3 million ($ 1.67 million) single family home in Gerrards Cross, Buckinghamshire (pictured).

Their three daughters stayed with their mother Susie, a part-time real estate agent and former PwC Head of Training, in the £ 1.3 million ($ 1.67 million) single family home in Gerrards Cross, Buckinghamshire (pictured).

"This evidence consisted of dozens of nude, partially nude, or sexually explicit photos and videos of various women, including photos of these company employees, which Easterbrook attached to messages from his company email account to his personal email account had sent. " Lawsuit says.

The lawsuit also alleges that Easterbrook lied to investigators by denying any physical sexual relationship with employees.

The Briton has been credited with turning McDonald's fortune over after profits plummeted

Steve Easterbrook took the helm of McDonald & # 39; s in March 2015 and quickly got to work trying to save the company after a 15 percent decline in profits the previous year.

Easterbrook helped increase the company's profit margin by more than 12 percent in the first nine months of its acquisition, and boost the margin from 13.62 percent to over 25 percent. During his tenure, he also doubled the company's shares.

During the first three months of his tenure as CEO, Easterbrook grouped and consolidated the market segment on a demand rather than a geographic basis. He created four market segments for the company – the US, lead international markets, high-growth markets, and basic markets.

For example, the markets in China and South Korea have been removed from the Asia / Pacific / Middle East / Africa region and placed in the “high-growth” category.

Improving food quality was a top priority for Easterbrook.

Easterbrook cut off several McDonald's products – including a deluxe quarter pounder burger and six chicken sandwiches. He let the chain take out ingredients that were difficult to pronounce and announced the limited edition sirloin Third Pounder.

In the first half of 2016, sales rose by more than 5.7 percent. Easterbrook was also a key proponent of using fresh beef in the company's burger, a move McDonald & # 39; s took in 2017.

The CEO managed to get McDonald & # 39; s to increase its share of franchises from 81 percent to 91 percent in less than three years, surpassing its goal of closing 4,000 franchises by 2019. This was largely due to a deal to sell 2,740 restaurants in Hong Kong and China to Citic and the Carlyle Group.

Easterbrook made a name for himself more than two decades before he became CEO of the company.

He moved to London in 1993 as financial reporting manager before taking over the management of all McDonald's in the south of the UK.

In 2006 he was selected to run all operations in the UK, but in less than a year he would manage the entire Northern Europe region (approximately 1,800 restaurants).

After a brief hiatus from the company, Easterbrook returned in 2013 as Senior Executive Vice President and Chief Brand Officer.

Easterbrook worked to repair McDonald's reputation in China after a sketchy meat scandal in 2014. He helped launch bespoke hamburgers in Australia and the US. He also helped implement a two-lane drive-thru in the restaurant and the popular all-day breakfast menu.

McDonald & # 39; s said in the lawsuit that the severance agreement approved by Easterbrook's board of directors was based on what the company knew at the time. The lawsuit says McDonald & # 39; s Easterbrook would not have quit for no reason if it had known of the additional relationships.

Easterbrook's silence and lies – a clear breach of the duty to be open – should cause the company to part with him on terms much more favorable to him than those the company would have offered and agreed to if it had been told the full truth known of his behavior, "said McDonald & # 39; s on the file.

"Had Easterbrook been open to McDonald & # 39; s investigators and hadn't withheld any evidence, McDonald & # 39; s would have known there was a legal reason to terminate him in 2019."

Easterbrook joined the company in 1993 and has been Managing Director since March 2015.

He and his wife Susie divorced in 2015 – that same year he moved to Chicago to become McDonald's CEO. He was previously based in the UK, where he served as the company's head for Northern Europe.

Under his leadership, the value of the company's shares nearly doubled, while sales at the US locations stagnated.

He was credited with modernizing the chain, introducing touchscreen kiosks and introducing an all-day breakfast menu.

At the time he was evicted, McDonald & # 39; s said Easterbrook violated company policies by entering into a friendly relationship with an employee. McDonald & # 39; s prohibits managers from romantic relationships with direct or indirect subordinates.

In an email to the then employee, Easterbrook admitted he had a relationship with an employee and said it was a mistake.

"Given the company's values, I agree with the board of directors that it is time for me to move on," Easterbrook said in the email at the time.

At the time of his release, lawyers for McDonald & # 39; s had viewed messages on Easterbrook's corporate phone but had not thoroughly searched his email records.

The second and more in-depth investigation launched last month uncovered deleted emails.

It's not yet clear why a thorough search wasn't done the first time.

At the time of his layoff, the company stated that Easterbrook was entitled to a six-month severance payment that would have been $ 675,000. He was also eligible for a prorated payment to meet 2019 performance targets.

Under McDonald’s severance pay plans, the company has the right to reclaim payouts if it determines that employees have been dishonest and there is evidence that they may have been fired for cause.

McDonald & # 39; s said that clause in the agreement also applies to Easterbrook.

The company is now trying to prevent Easterbrook from exercising its stock options and is demanding damages.

Easterbrook has been replaced by Chris Kempczinski, who joined McDonald & # 39; s in October 2015 after having held a senior strategic position at Kraft Foods and previously at PepsiCo.

The day after Easterbrook's departure, McDonald & # 39; s announced that its chief human resources officer, David Fairhurst, who joined McDonald & # 39; s in 2005 and was named chief people officer of the restaurant chain, had also left.

In an employee memo on Monday, Kempczinski said McDonald & # 39; s will not tolerate behavior that is inconsistent with its values ​​and that Easterbrook's behavior "deviated from our values ​​in other and far more broad ways" than is known.

Pictured from left to right: Aviv & # 39; Vivi & # 39; Nivo, venture capitalist and major shareholder of Time Warner; Jack Dorsey, co-founder and chief executive officer of Twitter; and Steve Easterbrook, president and chief executive officer of McDonalds

Pictured from left to right: Aviv & # 39; Vivi & # 39; Nivo, venture capitalist and major shareholder of Time Warner; Jack Dorsey, co-founder and chief executive officer of Twitter; and Steve Easterbrook, president and chief executive officer of McDonalds

Easterbrook could not be immediately reached for comment.

After being fired last year, it was found that Easterbrook had previously escaped criticism for another office romance.

It turns out that Easterbrook had been dating Denise Paleothodoros, 46 when she was assigned to McDonald's account by her PR firm.

Easterbrook was replaced by Chris Kempczinski

Easterbrook was replaced by Chris Kempczinski

The two-year affair became known in 2015, but McDonald & # 39; s concluded that the relationship was not against its guidelines.

Paleothodoros was removed from McDonald & # 39; s account at this point to "avoid any conflict of interest".

Easterbook joined the company in 1993 as a branch manager. After working his way up to British Chef in 2006, he became President of Northern European Business and ran 1,800 restaurants.

In 2011 he became head of Pizza Express and then Wagamama in the UK returned to McDonald & # 39; s as Chief Brand Office in 2013.

He then became boss in 2015 and ran the company from its $ 250 million headquarters in Chicago, making $ 16 million a year (£ 12 million).

He was married to British wife Susie and the couple have three children. It is not known when they split, but they are believed to have divorced since he moved to the US.

Under his leadership, the value of the company's shares nearly doubled, while sales at the US locations stagnated.

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