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Thanks to @JenLovesHistory and @superguppy for linking me to McDonald's 8-K filing from today, which has a copy and paste of the actual lawsuit.
What a little pickle for the McDonald's Board of Directors!
Shall we dive in? https://twitter.com/davidenrich/status/1292809491348705284
What a little pickle for the McDonald's Board of Directors!
Shall we dive in? https://twitter.com/davidenrich/status/1292809491348705284
McDonald's fired then-CEO Steve Easterbrook last year after he admitted to a consensual relationship with a subordinate.
McDs designated his termination without cause, gave him severance, and apparently let him keep some equity awards. I've seen numbers of $40M-$57M in payout.
McDs designated his termination without cause, gave him severance, and apparently let him keep some equity awards. I've seen numbers of $40M-$57M in payout.
Now McD's is going to try and claw all that back. Today's filing sheds some light on the initial investigation and termination decision.
Here's the link, btw, before people start yelling at me. http://d18rn0p25nwr6d.cloudfront.net/CIK-0000063908/296a6275-d7d6-4392-8bdd-a7aacb333959.pdf
Here's the link, btw, before people start yelling at me. http://d18rn0p25nwr6d.cloudfront.net/CIK-0000063908/296a6275-d7d6-4392-8bdd-a7aacb333959.pdf
When the Board learned of an allegation that its CEO had an inappropriate relationship with an employee, it hired outside counsel to investigate. That's good!
Easterbrook confessed and super duper pinky swear promised this was the ONLY verboten relationship he'd had.
Easterbrook confessed and super duper pinky swear promised this was the ONLY verboten relationship he'd had.
He also SUPER serious promised that he absolutely cross my heart hope to die never had a *physical* relationship with a McDonald's employee, which I infer from the complaint the BOD found significant.
So on 11/1/19, the BOD decides to fire Easterbrook bc they determine his conduct isn't compatible with the standards of professionalism and integrity McDonald's requires of its employees.
But instead of just kicking his ass to the curb, the BOD decides to negotiate a separation agreement. "Based on the information available to it."
...
...
"After carefully weighing the alternatives" -- I thought, oh, right, the BOD is trying to insulate itself against claims that the directors violated their fiduciary duties with a slapdash investigation that let a lecherous CEO walk away with tens of millions of dollars.
Come to find out-- while the outside counsel investigators reviewed materials on Easterbrook's cell phone, which he voluntarily turned over, McD's apparently did not search Easterbrook's e-mails on the company server.
IT FURTHER TURNS OUT that Easterbrook, despite totally swearing to outside counsel that it was only this one time, might not have been 100% candid about a matter that undoubtedly would get him fired and cost him tens of millions of dollars.
Oh, also, despite dead serious promising he didn't do a Rull Big Bad to outside counsel in 2019, come to find out Easterbrook also approved a stock grant worth HUNDREDS OF THOUSANDS OF DOLLARS to an EE after their 1st sexual encounter "and within days of their 2nd."
Y'all.
Y'ALL.
I just.
Y'ALL.
I just.
Brief interlude to ask, as a matter of corporate governance, why a CEO is able to randomly award an employee stock worth hundreds of thousands of dollars just bc???
And did nobody think to, like, bubble this up to the BOD during the 2019 investigation?
And did nobody think to, like, bubble this up to the BOD during the 2019 investigation?
Sorry, I'm still having an out of body experience that this (a) just happened and (b) either wasn't brought to the BOD's attention during the 2019 investigation or WAS, and they were like, "Checks out."
Anyway, so the BOD didn't find any of this out until after they'd agreed to let this guy walk with TENS OF MILLIONS OF DOLLARS bc he'd deleted the incriminating goodies off his cell phone.
Here's my speculation regarding the e-mail search. It's *such* a gigantic and obvious miss, and I really cannot bring myself to believe that McD's outside counsel seriously consider it or recommend it.
This is so, so stupid, but you'd be surprised how the sausage is made (or not) at even very large companies.
My theory is that McD's couldn't search e-mail without involving IT or other in-house parties that the BOD/GC thought couldn't be trusted with such a sensitive matter.
My theory is that McD's couldn't search e-mail without involving IT or other in-house parties that the BOD/GC thought couldn't be trusted with such a sensitive matter.
What's the saying? You're only as strong as your weakest link?
How do you search your CEO's e-mail for newds when you know the only person in IT who knows how to make your fucking outdated, clumsy search software work also LOVES to spread around the hot goss?
How do you search your CEO's e-mail for newds when you know the only person in IT who knows how to make your fucking outdated, clumsy search software work also LOVES to spread around the hot goss?
My alternative theory is that there was an element of, "Wasn't it humiliating enough for Steve to have to tell outside counsel about this explicit affair and turn over his cell phone? Haven't we put him through enough?"
Poor Steve.
Poor Steve.
Live shot of McD's outside counsel. "We told you to search the fucking e-mail."
And point taken. Another possibility is that they DID search, but it was narrow and/or crappy. https://twitter.com/InHouseSecret/status/1293020241514106881
Yep. It is actually incredibly amazing what just being a white dude will get you, if 2016-2020 haven't clued you into that already.
https://twitter.com/J_Dot_J/status/1293022413467324416
https://twitter.com/J_Dot_J/status/1293022413467324416
So, anyway, that was just the most gigantic miss. And I assume we'll learn more about it in this suit or when McDonald's directors get sued for violating their fiduciary duties.
Which brings me to my other high level takeaway, which is the lawsuit has a few goals...
Which brings me to my other high level takeaway, which is the lawsuit has a few goals...
(1) Obviously, get our fucking money back from Steve, that rat bastard.
(2) Pls don't sue us directors who oversaw this debacle pls
To that end, we learn that in 2017, the BOD "emphasized to management" that all employees, including executives, should undergo the most current anti-harassment training.
In March 2019, McDonald's instituted mandatory live training for all corporate HQ staff (interestingly, the allegations do not address whether Easterbrook attended/completed the training).
Also getting a whiff of throwing HR under the bus? Why is it worth pointing out that the HR department got additional training in investigating sexual harassment / discrimination claims?
Was an HR Manager investigating the CEO's sexual dalliances & not the independent directors?
Was an HR Manager investigating the CEO's sexual dalliances & not the independent directors?
