But in October 2019, the company was notified that Mr. Easterbrook had engaged in an inappropriate relationship with a McDonald’s employee. Mr. Easterbrook and the employee, who has not been publicly identified, told the company that the relationship was consensual and was not physical; it consisted of text messages and videos. Mr. Easterbrook assured the company’s outside investigators that he had never engaged in a sexual relationship with an employee.
The board of directors nonetheless decided to fire him. The question that the directors considered was whether he would be fired “for cause” — in other words, for an offense such as dishonesty or committing a crime. It was a crucial determination. If Mr. Easterbrook was fired for cause, he would have to relinquish previously awarded compensation, including stock options that he was not yet eligible to cash in.
McDonald’s said in its lawsuit on Monday that its board had feared that trying to fire Mr. Easterbrook for cause would be “certain to embroil the company in a lengthy dispute with him.” Instead, the board opted to ease Mr. Easterbrook out “with as little disruption as possible.”
The company allowed Mr. Easterbrook to keep his stock options and other compensation.
But McDonald’s severance plan, which the company said applied to Mr. Easterbrook, contained an important clause: If, in the future, McDonald’s determined that an employee was dishonest and actually deserved to be fired for cause, the company had the right to recoup the severance payouts.
Last month, after McDonald’s received the anonymous tip alleging that Mr. Easterbrook had had a sexual relationship with another employee, the company opened a new investigation.
In its review last fall, McDonald’s did not thoroughly search through Mr. Easterbrook’s email account; the company’s outside lawyers had only looked at messages that were on his company-issued mobile phone. And Mr. Easterbrook, according to McDonald’s lawsuit, had deleted certain emails from his phone.
This time, McDonald’s said, its investigators conducted a more detailed search, and in Mr. Easterbrook’s email account they found evidence of him carrying on sexual relationships with three employees in the year before his firing.