McDonald’s ousts CEO over consensual relationship with an employee

McDonald’s ousts CEO over consensual relationship with an employee

McDonald’s Corp disregarded Chief Executive Steve Easterbrook over a New consensual relationship with an employee, which the board decided violated company policy, the fast-food giant said on Sunday

The board found that Easterbrook, 52, who had led McDonald’s because 2015, had”demonstrated poor judgment” between the relationship, McDonald’s said in a news release. Easterbrook relinquished his seat on the company’s board also.

McDonald’s Corp dismissed Chief Executive Steve Easterbrook: Credit Resource Reuters

“This was a mistake,” Easterbrook said of the relationship in an email to employees on Sunday published by the business. “Given the worth of the business, I agree with the board that it is time for me to proceed.”

His departure was among the most significant in corporate America in the last several years over connections deemed inappropriate.

Scrutiny of executives and their treatment of workers has intensified amid the #MeToo social media movement, which emphasized instances of sexual harassment in the workplace. In June 2018, Intel Corp CEO Brian Krzanich resigned after an investigation found he had a consensual relationship with an employee that violated company policy.

Chris Kempczinski, 51, most recently president of McDonald’s USA, was named the corporation’s new CEO, effective immediately. He also joined the McDonald’s board.

In his message to employees, Kempczinski thanked Easterbrook for recruiting him to McDonald’s and said he expected the company to continue its customer-focused growth plan. McDonald’s Chairman Enrique Hernandez Jr. called Kempczinski”instrumental” in developing the corporation’s strategic plan.

Chicago-based McDonald’s, among the world’s most recognizable brands, recently celebrated the 40th anniversary of its Happy Meal for kids and is known for its family-friendly reputation.

The company did not provide further details about the circumstances surrounding Easterbrook’s passing. McDonald’s is expected to disclose financial information related to Easterbrook’s dismissal in a securities filing as soon as Monday, the company said.

The business called Joe Erlinger, who was president of global operated markets, as president of McDonald’s USA, succeeding Kempczinski.

“While clearly a reduction, McDonald’s maintains one of the deepest and longest-tenured management teams, which should help provide some stability through this unexpected transition,” Raymond James analyst Brian Vaccaro said in a research note about Easterbrook’s exit.

RIVALS CHALLENGE DOMINANCE

McDonald’s shares roughly doubled during Easterbrook’s tenure. However, the chain in October missed Wall Street profit estimates for the first time in two years as it spent money remodeling U.S. restaurants and speeding up service to tackle decreasing customer visits.

Rival fast-food chains in america have challenged McDonald’s dominance with value meals and new menu items, including plant-based burgers and meat substitutes launched by competitions including Restaurant Brands International Inc’s Burger King and Yum Brands Inc’s KFC. McDonald’s is seen late in reintroducing chicken sandwiches and rival Wendys Co has started serving breakfast.

The remodeling of the company’s 14,000 U.S. restaurants comprises introducing electronic ordering kiosks, mobile ordering and pay-and-pickup solutions, while partnering with app-based delivery services GrubHub Inc, Uber Eats and DoorDash.

Easterbrook turned around McDonald’s operations in the UK, where he was born, by refocusing on burgers and burnishing the brand with an ad campaign that sought to debunk unflattering rumors about its food.

A cricket enthusiast who earned a reputation among former UK colleagues for being funny, fair and a lover of simplicity, Easterbrook was also the rare McDonald’s CEO with experience running other restaurant chains.

HARASSMENT COMPLAINTS

Following the disclosure of Easterbrook’s ouster, a labor movement advocating for a $15-an-hour minimum wage and union rights on behalf of fast-food workers, alleged McDonald’s had failed to deal with a sexual harassment problem at the company.

“McDonald’s needs to sit down with worker-survivors and set them at the center of any solution,” the group, the Fight for $15 and a Union, said in a statement. “And the company has to be entirely transparent about Easterbrook’s firing and any other executive departures related to these issues.”

McDonald’s had no immediate comment on the group’s announcement.

McDonald’s has faced allegations in the past year of condoning sexual harassment at work and retaliating against workers who spoke up about it.

In September, scores of local government officials from 31 U.S. states forced McDonald’s to do a better job of protecting workers from groping, obscene comments and other forms of sexual harassment, including their voices to an employee-led effort which has seen walkouts at several shops.

McDonald’s pointed then to an August announcement of a new training program for safe workplaces supported by over 2,000 franchisees. Kempczinski said at the time that the company and franchisees”have a duty to take action on this issue and are committed to promoting positive change.”

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