The board of McDonald’s kinda, sorta did an investigation into the conduct of their then CEO, Steve Easterbrook, in November 2019. The board concluded that they did not have enough evidence to show that Easterbrook’s behavior (sending sexually explicit text messages, photographs, and engaging in FaceTime calls with an employee) involved “dishonesty, fraud, illegality or moral turpitude.” Those were the four grounds for termination in the Easterbrook contract. Instead, not finding a breach of terms, they sent Mr. Easterbrook away with a severance package of $700,000 in cash, and $17.4 million in stock grants. Various reports put the value of the package at $40 million.
Now come the results of a real investigation. After another employee disclosed that she had a sexual relationship with Mr. Easterbrook (something Mr. Easterbrook denied to the board in the first investigation), presumably new investigators searched the company e-mails under the employee’s name and found e-mails that Easterbrook sent from the company e-mail to his Hotmail account. And, well, as it turns out, the photographs as well as the e-mails to which they were attached were indeed hot. Easterbrook had deleted the e-mails from his phone. However, company e-mails are backed up; it just turns out that the original crackerjack investigators, treading lightly, only investigated the e-mail misconduct but did not take the time to go through the rest of the treasure trove of Easterbrook e-mails on the company server.
The board made it all this public. Good thing. A company trying to change a culture with new leadership cannot move on unless it acknowledges the reality of what was going on with its former CEO. How demoralizing it must have been to employees who knew the truth to witness the November result. The guy who did something wrong walked away with $40 million and probably lied to get that. The irony of the past few months of moralizing statements, pledges of zero tolerance, andforces of change from new leaders must have brought some chuckles.
Now the board looks silly. McDonald’s is back to square one in changing its culture, and the lawsuit will drag this all out for months. Is it any wonder we question the wisdom, depth,and backbone of corporate boards? And one last thing for CEOs everywhere: How many times must we go through this scenario before you surrender and find something else to do? One more thing: your e-mail is discoverable, sooner or later (depending on the quality of the investigation).