By Ellyn Fritz || Contributing Writer
On Sunday, November 3rd, McDonald’s announced the abrupt firing of their chief executive officer, Steve Easterbrook. During his time at McDonald’s, Easterbrook changed the trajectory of the company’s performance by restructuring the corporate structure, speeding up decision-making, cutting hundreds of millions in overhead costs, and emphasizing technological innovation – in particular, by striking food-delivery deals with the third-party apps like UberEats and DoorDash.
In a statement announcing the firing, McDonald’s board said that Easterbrook had “demonstrated poor judgment” when engaging in a consensual relationship with an employee. Easterbrook acknowledged his fault in an email to his employees. “This was a mistake,” he wrote. “Given the values of the company, I agree with the board that it is time for me to move on.” McDonald’s standards of business conduct prohibit employees from “dating or having a sexual relationship.” with a member of the company with “a direct or indirect reporting relationship” to them. As the policy elaborates, “It is not appropriate to show favoritism or make business decisions based on emotions or friendships rather than on the best interests of the company.” It is unclear what business decisions, if any, were impacted by this relationship.
According to an analysis by executive-compensation experts at Equilar, Steve Easterbrook’s exit package totals $41.8 million, including six months of severance pay, shares he can cash out in the future, and other equity. That $41.8 million is also in addition to the $23.8 in stock options that Easterbrook can exercise now. In 2018, Easterbrook made $15.9 million. In contrast, according to Glassdoor, the average McDonald’s worker in the United States makes $9 an hour. To some onlookers, Easterbrook’s exit package exemplifies the severe income inequality between the top 1% and the remainder of the population.
Easterbrook presided over the companies as it faced allegations of rampant sexual harassment of female employees by male-workers and managers. Within recent years, dozens of McDonald’s workers have filed sexual harassment complaints, alleging everything from lewd comments to groping. Workers also began to experience retaliation by losing hours, shifts, and jobs.
The former CEO’s departure over what McDonald’s described as a “recent consensual relationship” is seen as a reflection of the changing attitudes of romance in the workplace, but also a reflection of the culture within McDonald’s. Tanya Harrell, a McDonald’s worker in New Orleans who has helped lead the campaign for a $15 minimum wage, said workers had filed dozens of complaints with McDonald’s demanding that the company take action to address sexual harassment. As Ms. Harrell reported to the New York Times, McDonald’s has ignored the demands, Ms. Harrell said, including requests to sit down with workers to discuss the issue. “With the firing of Steve Easterbrook, we now know why,” she said. “It’s clear McDonald’s culture is rotten from top to bottom. McDonald’s needs to sit down with worker-survivors and put them at the center of any solution.”
Chris Kempczinski, previously the president of McDonald’s USA, will be taking over the position of Chief Executive Officer. Kempczinski has acquired the position of CEO at a time when the underbelly of a quintessentially American brand has been exposed and when the broader fast-food industry faces significant headwinds, as Americans turn to healthier options and a tight labor market making hiring difficult.
As for Steve Easterbrook, his separation agreement temporarily prohibits him from working for such competitors as Burger King, Yum Brands, and Starbucks, as well as convenience store giants such as 7-Eleven and Wawa, meaning that McDonald’s has prevented additional competition by ensuring Easterbrook will not be the new leader of a rival.
Sophomore Ellyn Fritz is a contributing writer. Her email is email@example.com.