Former CEO of McDonald’s repays company $105 million
Former McDonald’s CEO Steve Easterbrook, who was ousted by the company in 2019 for having an inappropriate relationship with a subordinate, has returned $105 million in cash and stock to the company in one of the largest clawbacks in the history of corporate America.
Easterbrook has been engaged in a contentious battle with McDonald’s for the past year, after the company sued him for lying to investigators at the time of his dismissal. As part of the deal announced Thursday, McDonald’s agreed to drop its lawsuit against Easterbrook.
In a message to employees, Enrique Hernandez Jr., the McDonald’s chairman, said that the company wanted to hold Easterbrook “accountable for his lies and misconduct, including the way in which he exploited his position as CEO,” and that this settlement achieved that goal.
Easterbrook initially decided to fight the lawsuit and his attorneys filed a motion to dismiss, calling it “meritless and misleading.”
But with his agreement to return the huge sum of cash and stock to the company, Easterbrook has effectively conceded what was shaping up to be a long and costly legal battle. Easterbrook apologized in a statement released by the company.
“During my tenure as CEO, I failed at times to uphold McDonald’s values and fulfill certain of my responsibilities as a leader of the company,” he said. “I apologize to my former co-workers, the board and the company’s franchisees and suppliers for doing so.”
On Thursday, the company said that “Mr. Easterbrook would return equity awards and cash, with a current value of more than $105 million, which he would have forfeited had he been truthful at the time of his termination and, as a result, been terminated for cause.”
The clawback of his compensation, while large, is not the biggest in corporate history, although many earlier situations involved allegations of financial or accounting fraud. In 2007, the Securities and Exchange Commission recovered more than $400 million in profits made by William McGuire, the former CEO of United Health, to settle claims related to a scheme involving the backdating of options. Later, Tyco International sued former CEO Dennis Kozlowski, who had been convicted of looting the company, in an effort to collect $500 million he had received in compensation and benefits.