Dive Brief:
- A pension fund, an institutional investor and an individual stockholder have requested that a Delaware state court force McDonald's to share records related to the termination of former human resources chief David Fairhurst and former CEO Steve Easterbrook, according to a lawsuit made public Friday. The stockholders argue the board should have led a thorough investigation of Easterbrook's behavior before granting his exit package.
- "McDonald's has fully satisfied our obligations to the stockholders who had requested records. The claims that we haven't are meritless," McDonald's said in an emailed statement.
- This complaint comes about a week after a similar suit against the Golden Arches and law firm Morgan Lewis & Bockius was made public. That suit argues Morgan Lewis rushed its investigation of Easterbrook and created "an information vacuum" that led to problems at the company.
Dive Insight:
The brevity of McDonald's initial investigation of Easterbrook's sexual misconduct, which concluded after eight days, continues to haunt the chain years later.
Workplace misconduct experts posit this timeline suggests the company prioritized the recovery of its stock more than addressing systemic issues of harassment and inappropriate behavior at the chain.
The stockholders argue Fairhurst "also exhibited sexually inappropriate conduct at several corporate events in the years before he and Easterbrook were fired," and that this suggests a culture of misconduct, rather than one-off infractions.
"The long history of sexual harassment and racial discrimination raises questions as to the effectiveness of the Company's corporate governance and risk management practices, as well as the Board's oversight of these matters," the stockholders said in the suit.
In April, teamsters also filed a suit against the burger giant claiming McDonald's paid off Easterbrook with a multimillion-dollar severance package to minimize reputational fallout rather than "face the consequences for the leniency they long exhibited." Both this lawsuit and the complaint against McDonald's and Morgan Lewis argue that the company breached its fiduciary duty.
McDonald's is still litigating a lawsuit it filed against Easterbrook last summer in an attempt to claw back the 26 weeks of severance benefits and stock options he was granted in a separation agreement. As this drags on and complaints about the company's response to executives' inappropriate conduct continue to pile up, McDonald's could risk permanent damage to its reputation even if it manages to recoup Easterbrook's exit package.
