Staffing

McDonald's investor group ousting board chair?

Photo: iStock.

December 18, 2020

Investors, who hold less than 1% of McDonald's shares, are calling for the resignation of the chain's board chair as well as the compensation committee chair in regard to alleged mishandling of an investigation into the actions of former CEO Steve Easterbrook, according to Bloomberg.

The investors, organized by CtW Investment Group, sent a letter to the company demanding that Chairman Enrique Hernandez and Compensation Committee Chair Richard Lenny be replaced for allegedly mishandling the Easterbrook investigation and the board's initial decision to pay him severance, which McDonald's is now contesting in court.

The group holds about 4.5 million McDonald's shares, but the New York City Comptroller and Connecticut Treasurer, who oversee each region's retirement systems, also signed the letter.

Former CEO Steve Easterbrook was terminated in late 2019 after he said he had a consensual relationship with an employee, though the company said later it learned that Easterbrook had several affairs with employees during his tenure.

The company then said he concealed evidence from independent counsel and sued to get the severance pay back, though Easterbrook has said the company knew about those other relationships when negotiating his severance.

In a statement sent to QSRweb this morning, McDonald's said:

"This year, under new leadership, we have renewed our commitment to values and launched a holistic business plan to drive our future growth. We are making strategic investments and have seen a strong recovery, as evidenced by our third quarter results. In a challenging year, and with the board of directors' guidance, McDonald's business has proven resilient.

"The board maintains an active and engaged dialogue with our shareholders and other stakeholders. The board believes that there should be a balance of institutional knowledge and fresh perspectives among its directors and remains committed to ongoing board refreshment. With the help of outside counsel, the board is fully investigating all allegations of misconduct by Mr. Easterbrook, including his lies and deceptions, and has taken swift and unprecedented actions to address them."

Aside from allegations that the investigation and related actions have been mishandled by McDonald's board leaders, CtW advised other investors in April to vote down Easterbrook's pay package.

The group wants the company to announce by year's end that Hernandez and Lenny would not be up for re-election next year.

McDonald's provided no further response regarding the letter and its demands.