(Bloomberg) — Some McDonald’s Corp. investors criticized the fast-food chain for agreeing to allow former Chief Executive Officer Steve Easterbrook’s to return $105 million in compensation following his ouster over sexual relations with subordinates, saying the company should have gotten more.
Most Read from Bloomberg
Easterbrook, who was fired in 2019 after four years in the top job, reached a settlement last month with the company, which had sued to claw back the compensation. A trio of pension funds tied to the Teamsters’ union said in court filings that McDonald’s also should have demanded reimbursement for millions in legal fees spent litigating his ouster.
According to an amended complaint filed Friday in Delaware Chancery Court, the investors want McDonald’s directors held liable for failing to properly investigate Easterbrook’s wrongdoing and allowing him to leave with a $37 million severance package. They contend he and the board allowed an improper culture of sexual harassment to flourish.
Board members weren’t acting in the best interest of shareholders by keeping “secret such salacious misconduct and paying Easterbrook a lavish severance package to quietly leave the company,” the investors said in the court filing.
The McDonald’s board will fight the request, its lawyer said Monday. “Plaintiffs’ allegations do not support a derivative claim, and the board will move to dismiss the case,” Ron Olson said in an emailed statement.
The disgruntled shareholders criticized McDonald’s Chairman Rick Hernandez and other board members last year for paying the Easterbrook severance and then deciding to sue only after concluding they’d been misled about the extent of his misbehavior. But Hernandez won an investor vote at the company’s annual meeting in May.
Chicago-based McDonald’s sued Easterbrook in Delaware, where it is incorporated. In court papers, the company accused the former CEO of lying about his sexual liaisons with underlings and sending dozens of sexually explicit pictures of women via his work email.
The company originally sought to recoup his severance package, which it valued at $37 million. In the settlement, it didn’t breakdown specifically what the $105 million covered. But McDonald’s officials said last month the accord represents the compensation Easterbrook would have forfeited had he been truthful about his dalliances when he was ousted.
Any recovery from the shareholder suit — which would likely come from the chain’s insurance covering board members — would go back to the company.
The case is In RE McDonald’s Corp. Stockholder Derivative Litigation, No. 2021-0324, Delaware Chancery Court (Wilmington)
Most Read from Bloomberg Businessweek
(C)2022 Bloomberg L.P.