Business|McDonald’s CEO Fired Over a Relationship That’s Becoming Taboo
Steve Easterbrook violated policy, the company said. He’s not the first chief executive to be ousted over a consensual relationship with an employee.
The #MeToo era has brought new scrutiny to a wide range of workplace misconduct – from discrimination to sexual harassment to assault – that was ignored, tolerated or even covered up in some corners of corporate America.
Now, the abrupt firing of McDonald’schief executive, Steve Easterbrook, over the weekend highlights how even consensual relationships between managers and subordinates are drawing greater scrutiny.
Many of the circumstances of Mr. Easterbrook’s dismissal remain unclear, but McDonald’s said on Sunday that its board had determined he engaged in a relationship that violated company policy. Itsstandards of business conductprohibit employees with “a direct or indirect reporting relationship” from “dating or having a sexual relationship.”
“It is not appropriate to show favoritism or make business decisions based on emotions or friendships rather than on the best interests of the company, ”the policy states.
In a regulatory filing on Monday, McDonald’s said Mr. Easterbrook would receive six months ofseverancepay. That is likely to be around $ 675, 00 0, or about half his base salary last year, according to the company’s 2018 severance guidelines. In the coming years, however, he stands to receive a total of more than $ 40 million in compensation, including stock options , according to an estimate by Equilar, an executive compensation consulting firm.
The mere fact that a successful executive was fired because of what McDonald’s described as a “recent consensual relationship” changing changing attitudes about romance in the workplace, employment lawyers and other experts said.
“It’s a sign of the times,” said Wendy Patrick, a business ethics lecturer at San Diego State University. “You’re under a microscope in a way today that you never were before, simply because our awareness has been raised as to the problems that could potentially cause.”
Those problems include conflicts of interest, as well as the potential for a relationship that ends badly to result in harassment and retaliation.
Since announcing the leadership change on Sunday afternoon, McDonald’s has declined to reveal further details about Easterbrook’s relationship, including the employee’s position in the company, how the board found out about the relationship and how long it had lasted.
On Monday, McDonald’s human-resources chief, David Fairhurst, left the company. A spokeswoman for the fast-food chain wouldn’t say if the exit was linked to the investigation into Mr. Easterbrook’s relationship.
In recent years, other companies have taken similar actions penalizing workplace relationships. Last year, Intel’s chief executive, Brian Krzanich, resigned after the company discovered that he’d had arelationship with an employee– a violation of Intel’s “nonfraternization policy,” which applies to all managers.
“There has been a definite trend in the direction of written policies prohibiting romantic relationships between executives and their subordinates,” said Mark Spund, an employment lawyer in New York.
The policies can take a variety of forms. For example, many companies permit midlevel managers to have relationships with employees as long as they report the relationship. The rules for executives tend to be stricter.
“Companies in the aftermath of #MeToo have really understood that there’s an inherent power differential and what’s perceived to be consensual in the eyes of the executive may not be with the subordinate , ”Said Debra Katz, an employment attorney in Washington who has dealt extensively withworkplace sexual harassment.
Still, sensitivity about workplace relationships – especially those involving a power imbalance – existed long before the #MeToo movement focused national attention on the misbehavior of men in power, shaking the entertainment, media and technology industries, among many others.
In 2012, Best Buy’s chief executive, Brian Dunn, resigned after engaging in what the company described as “an extremely close personal relationship with a female employee.”
Dunn and the employee claimed that the relationship was not romantic. But an investigation by Best Buy found that Mr. Dunn had given the employee tickets to sporting events and concerts and that the pair had exchanged numerous phone calls and texts, some of which contained“messages expressing affection.”
And in 2005 , Boeing’s chief executive, Harry Stonecipher, wasforced to resignafter he had a relationship with an employee.
The decision to fire Mr. Easterbrook may also reflect the specific pressures facing McDonald’s, which has been criticized recently for sexual harassment at the franchise level. Several Democratic presidential candidates this year have joined striking workers in demandingbetter protection from harassment, as well as union rights and a $ 15 minimum wage.
McDonald’s may want to “send a message to their employees that any kind of power-driven relationship is out of bounds, ”said Eric Schiffer, an expert on reputation management.
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