A lawsuit between McDonald's and its former CEO Steve Easterbrook has now come to an end with a spectacular settlement: Easterbrook, who was accused of having had sexual relations with several colleagues, has agreed to repay the severance payment he received got his release almost two years ago in the form of shares and cash.

Roland Lindner

Business correspondent in New York.

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McDonald's puts the present value of this severance payment at $ 105 million.

This is likely to be one of the largest sums a company has ever been able to recoup from a previous manager.

Easterbrook also issued an apology in a statement, saying he has at times violated the "values" of his former employer.

Enrique Hernandez, McDonald's chairman of the board of directors, said Easterbrook had "taken advantage of" his position as chief executive officer and was now being held accountable with the settlement.

End of a protracted legal battle

The agreement marks the end of an unusually bitter and public dispute between a company and its former CEO. McDonald's had dismissed Easterbrook in 2019 with reference to a "friendly relationship" with an employee who had violated company guidelines. The dismissal was "without cause," a phrase that expresses that McDonald's did not consider Easterbrook's behavior serious enough to withhold severance pay.

At the end of 2020, however, the group started a legal dispute and raised new allegations against Easterbrook. Regardless of the relationship he stumbled upon, he had had sexual relationships with three employees in the year before his release. An investigation triggered by an anonymous tip revealed various pieces of evidence, including explicit photos and videos of the employees that Easterbrook had sent from his professional to his private email address. He also approved an "extraordinary package of shares" worth several hundred thousand dollars for one of these colleagues.

Easterbrook lied about these circumstances.

If the company had known this at the time of the dismissal, it would not have parted with Easterbrook "without cause" and withheld the severance payment.

Easterbrook initially resisted and dismissed the lawsuit as "irrelevant and misleading", but has now given in.

In doing so, he avoids legal proceedings that were scheduled to begin next May.