McDonald’s:
Clawing back a CEO’s severance
McDonald’s ignited a “rare public war” with its former CEO Steve Easterbrook, said David Enrich and Rachel Abrams in The New York Times. Departing from corporate America’s “traditional disclose-it-and-move-on decorum,” the fast-food giant sued Easterbrook last week to recoup the $40 million compensation package he kept after he was fired for having a consensual relationship with a subordinate. At the time, the company said it was not firing Easterbrook for cause. But new allegations surfaced last month; the company found Easterbrook had tried to delete sexually explicit pictures of several employees he had “sent to his personal Hotmail account.”
The McDonald’s board is doing the right thing now, said Jennifer Saba in BreakingViews.com, but “Easterbrook’s earlier escape shouldn’t have been so easy.” Last fall, directors chose to skirt the issue of cause because they feared if they paid Easterbrook “a bag of nothing-burgers he would fight back in court.” Instead, they gave him such a generous severance package that one major shareholder urged other McDonald’s investors to vote against management’s pay plans. It’s reasonable now to wonder whether the initial investigation went deep enough, and McDonald’s will probably have to rethink how it defines “cause” for fired executives.