Zero Tolerance/Zero Reward
Executives should not receive millions in severance in cases of sexual misconduct
If you are a McDonald’s shareholder, we urge you to Vote NO on Directors Enrique Hernandez, Jr. and Richard Lenny at the McDonald’s Corp the Annual Meeting on May 20, 2021.
Background
November 2019: Termination and “Golden Goodbye” Severance. McDonald’s former CEO Steve Easterbrook was terminated from McDonald’s for fraternizing with a subordinate. Due to what has now clearly been proven to be a lack of a thoroughness in their initial investigation, the directors failed to discover readily available information, which enabled them to justify terminating Easterbrook “without cause” instead of “for cause.” As a direct result, Easterbrook received a “golden goodbye” in the form of a multi-million dollar severance package – more than $44 million in equity and over $675,000 in cash severance. Messrs. Hernandez and Lenny are directly responsible for the poor decisions made in connection to Easterbrook and his excessive severance package.
August 2020: Lawsuit and Attempt to Clawback Severance. The McDonald’s Board sued Mr. Easterbrook to claw back his severance, claiming it was misled as new information regarding sexual relationships with additional employees came to light. The revelations call into question the robustness of the Board’s initial investigation, resulting in a costly legal fight with Mr. Easterbrook.
The Board’s costly failure to terminate Easterbrook “for cause,” despite an explicit violation of Company policy, was the result of a series of poor decisions and inadequate risk oversight. Among its costly missteps, the Board:
Readily accepted Easterbrook’s own explanations regarding the violation, rather than performing proper due diligence.
Set a poor “tone at the top” that fostered a workplace culture permissive of inappropriate behavior and violations of Company policy.
Inadequately refreshed itself, leaving a board that lacked the necessary skills and experience to oversee the Company’s material risks.
Failed to terminate Easterbrook “for cause” despite an explicit violation of the Company’s Standards of Business Conduct.
Long History of Shareholder Engagement with McDonald’s
We have repeatedly engaged McDonalds’ Board over the years in an attempt to bring shareholder concerns to their attention and take action, but to no avail. Below are our prior letters to the company:
Read our November 2019 joint-sign on letter where we initially expressed concern with Mr. Easterbrook’s severance:
Read our April 2020 Vote No letter calling for a vote against the company’s Say on Pay proposal as well as against Board Chair Enrique Hernandez Jr and Compensation Committee Chair Richard Lenny:
Read our December 2020 joint sign-on letter addressed to McDonald’s Director White highlighting McDonald’s botched investigation and renewing our demand for Board Chair Enrique Hernandez Jr and Compensation Committee Chair Richard Lenny to step down: