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McDonald's Easterbrook Makes Dumbest CEO Move of the Decade

Douglas A. McIntyre

Published: November 4, 2019 6:15 am

Last Updated: January 30, 2020 1:39 pm

Former McDonald’s Corp. (NYSE: MCD) CEO Steve Easterbrook had one of the best corporate jobs in American, overseeing one of the world’s most iconic brands, and admired for a turnaround of the company. He was “separated” from McDonald’s for a violation of the public corporation’s policies, which in his case was a “consensual relationship with an employee.” He must have known the odds were high that he would be caught, or he must have been delusional.

Easterbrook must have known he lives in a day and age in which inappropriate relationships are no longer even remotely acceptable. The ability of people to discover bad behavior is at an all-time high as well. Boards are particularly sensitive to allowing such behavior to pass without being shamed themselves, publicly, and suffering permanent damage to their own reputations. McDonald’s Non-Executive Chair Enrique Hernandez Jr. is a director of Chevron and on the board of trustees of Notre Dame. Another board member, Miles D. White, is board chair and chief executive officer of Abbott Laboratories. McDonald’s other board members have equally impressive credentials. No matter how good a job Easterbrook had, he didn’t have a chance.

Easterbrook also lives in a world of appropriate whistleblowing and easy surveillance. It would be extraordinary for anyone as visible as a huge company CEO to avoid detection for a violation of corporate ethics.

What could have been on Easterbrook’s mind? Perhaps he thought his powerful position would get him a level of leniency. Perhaps he was in love. Perhaps he believed that if he were discrete enough no one would notice, except one employee in all of McDonald’s took its ethics code seriously, or disliked Easterbrook and the employee who was in the relationship with him. Based on these measures, he faced dozens of risks.

Easterbrook could have kept his job for years, perhaps another decade. McDonald’s stock is up 18% over the past two years, which matches the S&P 500. The company has bought back billions of dollars in stock over the past several years. It boasts a 2.54% dividend yield and is among the safest large company stocks an investor can hold.

Easterbrook made $37 million over the past two years. He could have had a relationship with someone outside McDonald’s. Instead, he made a wildly inappropriate choice.