Abu Dhabi, UAETuesday 12 November 2019

McDonald's CEO Steve Easterbrook dismissed over relationship with employee

The board found that Easterbrook had 'demonstrated poor judgment' involving the consensual relationship

Steve Easterbrook, CEO of McDonald's. EPA
Steve Easterbrook, CEO of McDonald's. EPA

McDonald's dismissed chief executive Steve Easterbrook over a recent consensual relationship with an employee, which the board determined breached company policy, the fast-food company said on Sunday.

The board found that Mr Easterbrook, 52, who had led McDonald's since 2015, had "demonstrated poor judgment" involving the relationship, McDonald's said. Mr Easterbrook relinquished his seat on the company's board as well.

"This was a mistake," Mr Easterbrook said of the relationship in an email to employees on Sunday. "Given the values of the company, I agree with the board that it is time for me to move on."

His departure was among the most significant in corporate America in the past several years over relationships deemed inappropriate.

Scrutiny of executives and their treatment of employees has intensified amid the #MeToo social media movement, which highlighted instances of sexual harassment in the workplace.

In June 2018, Intel chief executive Brian Krzanich resigned after an investigation found he had a consensual relationship with an employee that breached company policy.

Chris Kempczinski, 51, most recently president of McDonald's USA, was named the company's new chief executive, effective immediately. He also joined the McDonald's board.

In his own message to employees, Mr Kempczinski thanked Mr Easterbrook for recruiting him to McDonald's and said he expected the company to continue its customer-focused growth plan. McDonald's chairman Enrique Hernandez Jr called Mr Kempczinski "instrumental" in developing the company's strategic plan.

Chicago-based McDonald's, one of the world's most recognisable brands, recently celebrated the 40th anniversary of its Happy Meal for children and is known for its family-friendly reputation.

The company did not provide further details on the circumstances surrounding Mr Easterbrook's departure. McDonald's is expected to disclose financial information related to Mr Easterbrook's dismissal in a securities filing as soon as Monday, the company said.

The company named Joe Erlinger, who has been president of international operated markets, as president of McDonald's USA, succeeding Mr Kempczinski.

"While clearly a loss, McDonald's maintains one of the deepest and longest-tenured management teams, which should help provide some stability through this unexpected transition," Raymond James analyst Brian Vaccaro said in a research note about Mr Easterbrook's exit.

Following the disclosure of Mr Easterbrook's departure, a labour movement advocating a $15-an-hour minimum wage and union rights on behalf of fast-food workers, alleged McDonald's had failed to address a sexual harassment problem at the company.

"McDonald’s needs to sit down with worker-survivors and put them at the centre of any solution," Fight for $15said. "And the company needs to be completely transparent about Easterbrook's firing and any other executive departures related to these issues.”

McDonald's had no immediate comment on the group's statement.

The company has faced allegations in the past year of condoning sexual harassment in the workplace and retaliating against employees who spoke up about it.

In September, scores of local government officials from 31 US states pressured McDonald’s to do a better job protecting workers from groping, obscene comments and other forms of sexual harassment, adding their voices to an employee-led campaign that has led to walkouts at several stores.

McDonald's pointed then to an August announcement of a new training programme for safe workplaces supported by more than 2,000 franchisees.

Mr Kempczinski said at the time that he company and franchisees "have a responsibility to take action on this issue and are committed to promoting positive change".

Updated: November 4, 2019 08:47 AM

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