McDonald & # 39; s chief executive Steve Easterbrook was fired and barred from working at a rival restaurant chain for two years after the fast-food giant's board of directors found that he "showed bad judgment" in a consensual relationship with an employee.
The Easterbrook separation agreement prevents him from working for "any restaurant business (informal or ready to eat) that competes with McDonald's business" within two years, including big names outside fast food like Starbucks and 7-Eleven.
He will receive 26 weeks of compensation, but the value of the compensation package was not immediately clear. Easterbrook earned nearly $ 16 million (NZ $ 25 million) in 2018, including a base salary of $ 1.35 million.
The board voted on Friday to expel Easterbrook after a review, concluding that it violated the company's policy against relations with managers with direct or indirect reports, the company said. Easterbrook has been replaced by Chris Kempczinski, formerly president of McDonald's.
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Easterbrook called his recent relationship with an employee "an error" in an email to McDonald's employees.
"Given the company's values, I agree with the advice that it's time to move on," he wrote.
Desiree Moore, a Chicago lawyer who serves as Easterbrook's spokeswoman, said in a statement that she was "deeply grateful for her time at McDonald's."
"He acknowledges his misjudgment and supports the company's decision," Moore said, adding that Easterbrook will no longer be commenting.
Details of the Easterbrook severance package will be disclosed in a federal file, the company said.
McDonald's did not share further details of the relationship that led to the dismissal. Easterbrook, former head of the company's UK operations, is divorced, according to the Sunday Times.
He joins a growing list of chief executives forced to relate to employees as more companies implement rules against dating subordinates in the #MeToo era.
"We are seeing substantially greater interest" in these policies, said Jonathan Segal, a Philadelphia employment lawyer, The Washington Post last year after Intel's president stepped down for violating his company's rules with a consensual relationship.
"I'm seeing more companies asking about them," Segal said. "I'm seeing more companies adding them to their anti-harassment policies. I've seen more companies reviewing them in their codes of conduct."
Easterbrook became chief executive in 2015, while McDonald's struggled to retain its customers. After the network announced a drop in US sales and a 33% drop in global profits in the first quarter of that year, it promised a plan to "better meet current consumer needs, expectations and the competitive market."
McDonald's shares rose under Easterbrook's leadership, and the company retains its place at the top of fast-food sales in the US, even as the industry faces challenges. Last year, Easterbrook – who is also on Walmart's board – received $ 15.9 million in payment.
Easterbrook pushed McDonald's forward through a difficult time, said Jonathan Maze, editor of the Restaurant business. It has improved sales – still up this year – and restructured the company, speeding decision making and cutting hundreds of millions in overhead costs, Maze said.
It also embraced technology in the form of in-store kiosks, online order delivery and, in March, an initial $ 300 million acquisition to accelerate McDonald's drive-through services.
"It's been pretty consistent," said Maze, who considers the dismissal of Easterbrook as part of a tendency for companies to take relationship policy violations "much more seriously" than they used to.
Kempczinski became head of McDonald & # 39; s USA in 2016. Easterbrook told the team that Kempczinski was "an important partner for me in the last four years and … the ideal person to take over as CEO."
McDonald's also praised Kempczinski's contributions. The company will pay Kempczinski a base salary of $ 1.25 million. He could earn up to $ 2.1 million in annual bonuses, according to the Securities and Exchange Commission records.
"Chris was instrumental in developing the company's strategic plan, which enabled global growth and leadership, and oversaw the most comprehensive US business transformation in McDonald's history," said Enrique Hernandez Jr, chairman of the board. from jail. in a statement.
In an interview with the Wall Street Journal, Kempczinski said he will continue to invest in Easterbrook technology and is eager to discuss franchisees' concerns.
"There will be no radical and strategic change," he told the daily on Sunday. "The plan is working."