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McDonald & # 39; s is suing former CEO Easterbrook, claiming he lied about its employee relationships

Steve Easterbrook, CEO of McDonald & # 39; s Corp., speaks during the opening of the company's new headquarters in Chicago, Illinois, the United States, on Monday, June 4, 2018.

Joshua Lott | Bloomberg | Getty Images

McDonald & # 39; s seek back millions of dollars in compensation paid to former CEO Steve Easterbrook by suing him for allegedly guilty of fraud and lied to his conduct during the company's internal investigation. This emerges from a notification with the Securities and Exchange Commission.

The fast-food chain's board announced in November that it had fired Easterbrook because of a friendly relationship with an employee and that it had chosen Chris Kempczinski as his successor.

"McDonald & # 39; s will not tolerate behavior by employees who do not conform to our values," wrote Kempczinski in a letter to the McDonald & # 39; s system about the lawsuit. "These measures reflect a continued demonstration of this commitment."

McDonald & # 39; s now claims that new information emerged in July about Easterbrook's actions which led to further investigations by the company. An investigation allegedly found that Easterbrook lied to the company and destroyed information about his inappropriate behavior, including three alleged additional sexual relationships with employees prior to his firing. None of the employees were named.

The complaint alleges that Easterbrook told investigators in October that he only had a relationship with one employee.

The newly uncovered evidence includes dozens of nude or sexually explicit photos and videos of women – including pictures of female employees – taken in late 2018 or early 2019 and attached to his personal email account, according to the lawsuit Email were sent. Easterbrook allegedly deleted these photos and emails from his phone before they were searched by an outside investigator.

Easterbrook also approved "an extraordinary stock award valued at hundreds of thousands of dollars" to one of its employees while they were in a sexual relationship, according to the complaint. An anonymous report of an alleged relationship between Easterbrook and this employee sparked the July investigation.

The board said it would not have signed a separation agreement with Easterbrook if it had known of this alleged behavior. Instead, it fired him for no reason in the hope of avoiding a protracted legal battle with him over whether his behavior turned into "dishonesty, fraud, illegality or moral rejection".

McDonald & # 39; s is suing him in Delaware state court to reclaim the compensation and severance pay he received under the severance agreement. The company said it had also taken steps to prevent him from exercising stock options or selling shares from outstanding stock awards.

At the time of Easterbrook's firing, he emailed employees as a condition of his separation agreement saying the relationship was a "mistake".

The agreement also included a severance pay of 26 weeks. In 2018, Easterbrook earned total compensation of $ 15.9 million, including a base salary of $ 1.3 million. He was eligible for a prorated payment to meet the 2019 performance goals. Equilar, who tracks executive compensation, estimated the value of its severance package at nearly $ 42 million.

CNBC asked Easterbrook for comment.

During his tenure as chief executive at McDonald & # 39; s, the company sold many of its proprietary businesses to franchisees, which helped profits but led to declining sales due to differences in accounting. The all-day breakfast menu and tech-focused restaurant renovations also began during his tenure.

McDonald & # 39; s shares fell less than 1% in morning trade. The stock, valued at $ 157 billion, is up 4% since Easterbrook's fall.

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