Steve Easterbrook, the British former chief executive of McDonald’s, is being sued by the fast food company.
The chain is suing to recover his pay-off, reportedly worth $40m (£35m) after new allegations of sexual misconduct have led the company to believe he withheld information that could have prevented him collecting it.
But this is not really about the $40m. It is about something much more important and current.
Mr Easterbrook is certainly not the first chief executive to be fired for inappropriate relationships with members of company staff and he won’t be the last but this case stands out in one potentially very important way.
‘Under the carpet’
Normally in cases like this, the board of directors is keen to move on as quickly as possible, say that lessons have been learned, let the executive disappear into the sunset with a ton of cash – but basically pretend it never happened and hope not to have to talk about it ever again.
They do this “under the carpet” treatment to protect the company from any brand and reputational damage that might accumulate by ongoing associations with scandal.
Actively pursuing a former executive through the courts is a departure from this boardroom norm. The new chief executive Chris Kempczinski noted in his memo to staff: “As we recommit to our values, now, more than ever, is the time to lean in to what we stand for and act as a positive force for change.”
McDonald’s has clearly decided there is a reputational win to be had here.
McDonald’s has itself been the subject of dozens of allegations of sexual harassment in the US and saw staff around the world walk out last year over pay so it makes particular sense perhaps for the company to use this as an opportunity to show it is putting its own house in order.
The firm has said it is “committed” to addressing all harassment claims.
“McDonald’s has always been committed to ensuring that our employees are able to work in an environment that is free from all forms of discrimination and harassment,” it said earlier this year.
But the wider corporate world is also under new pressure to adhere to higher ethical standards in relation to its employees, customers, society and the environment.
“Business with purpose”, “capitalism 2.0” whichever phrase you recognise, the Easterbrook case is perhaps an example of it in action.
There are doubtless many chief executives who have been comforted by historical precedent that ultimately if it all goes wrong, a golden parachute will always be there to help ease their fall from grace.
This case sends a clear message that poor behaviour can punch a big hole in that parachute.
It will be interesting to see whether McDonald’s has helped set a new benchmark for corporate pay-offs.