McScandal; McDonald’s CEO fired over relationship with employee

By Nick Hall | 05 Nov 2019 View comments

In a major blow to the global fast-food giant, McDonald’s CEO Steve Easterbrook has been pushed out of the company after engaging in a consensual relationship with an employee.

According to McDonald’s Corporation, the US arm of the iconic burger business, Easterbrook had demonstrated poor judgment, and violated company policy forbidding managers from having romantic relationships with direct or indirect subordinates.

In an email to employees, Easterbrook acknowledged he had a relationship with an employee and said it was a mistake.

“Given the values of the company, I agree with the board that it is time for me to move on,” Easterbrook said in the email.

McDonald’s tough year

It’s been a difficult year for the US McDonald’s CEO, following reports of franchisee unrest and growing network dissatisfaction. The chain has struggled with the rapid mobilisation of a McDonald’s union workforce demanding increases in minimum wage, improved franchisee conditions and harassment prevention.

In May, McDonald’s said it was enhancing training and offering a new hotline for workers after a labour group filed dozens of sexual harassment charges against the company.

Fight for $15, the group which filed the charges, said McDonald’s response to its sexual harassment complaints has been inadequate, and “the company needs to be completely transparent about Easterbrook’s firing and any other executive departures related to these issues.”

The latest relationship scandal comes at an inopportune time for the chain, however the response has been swift.

McDonald’s CEO severance

For Easterbrook, who netted a whopping USD$15.9m salary last year, the relationship could prove costly, but not as costly as first thought.

According to Business Insider, the outgoing McDonald’s CEO is set to receive at least USD$675,000 in severance pay, and will continue to be eligible for benefits, bringing his total package to over USD$700,000.

Easterbrook has served McDonald’s CEO since 2015, most recently overseeing the chain’s re-franchising program, however his exit from McDonald’s also marks an exit from the burger business. Under the severance package, the outgoing CEO is unable to work for any of McDonald’s competitors in the next two years or disparage the company in any way.

Chris Kempczinski, who recently served as president of McDonald’s USA has been appointed by the board of directors as new president and CEO.

McDonald’s Corporation future

While McDonald’s decision to axe Easterbrook has little impact on the Australian operation, it does serves as a stark global reminder that even high profile leaders are not immune to workplace laws.

In the #MeToo era, corporate and workplace relationships are under the microscope. McDonald’s decision to act not only reinforces the importance of company policy, but signals a progressive move towards workplace reform.

Carl Tobias, a law professor at the University of Richmond told AAP that the issue is not exclusive to McDonald’s.

“Other companies don’t always act on that kind of information or fire their CEO for that, and so it seems like they trying to enforce a pretty strict policy in this situation,” Tobias said.

In a reportedly unrelated move, McDonald’s chief people office David Fairhurst has also departed the company, effective immediately.

Fairhust had been part of the company since 2005, heading up the global human resources department since 2015.

Additional reporting: AAP