Published: Tue, November 05, 2019
Money | By Ethel Goodwin

McDonald's CEO Steve Easterbrook Steps Down After Relationship With Employee

McDonald's CEO Steve Easterbrook Steps Down After Relationship With Employee

David Fairhurst, who carried the title of global chief people officer, left the company, according to an internal memo sent Monday (Nov 4) by newly-minted CEO Chris Kempczinski, who assumed the role vacated by Steve Easterbrook.

McDonald's shares sank 2.3% in premarket at 10 am in London (5 am ET), which would wipe about $3.4 billion off the company's value.

In a statement on Sunday, the fast-food restaurant chain pointed out that company policy forbids managers from having romantic relationships with more junior members of staff.

"Beyond this, I hope you can respect my desire to maintain my privacy", Easterbrook, who became the chief executive in March, said in an email, according to reports.

Given the fact Easterbrook was CEO, the board appears to have argued that everyone in the company was some kind of direct or indirect employee, making this one pretty clear-cut. "According to the headline, former CEO Steve Easterbrook was sacked after admitting to a "'consensual" affair with an employee that "violated company policy.'" And by the looks of the lead image, Teigen is seemingly in the middle of it.

Chris Kempczinski, previously serving as head of McDonald's US business, is stepping into the president and CEO role, effective immediately. McDonald's Chairman Enrique Hernandez Jr. called Kempczinski "instrumental" in developing the company's strategic plan.

Mr Kempczinski joined McDonald's in 2015.

McDonald's is reckoning with challenges reverberating throughout the food industry from meat producers to supermarkets as consumers switch to products that they view as more healthful and big companies sacrifice profit for technological upgrades and delivery. We also believe Kempczinski's focus on menu innovation, restaurant operations, and global expertise (from his time at Kraft) make him a strong CEO candidate. The value of its shares more than doubled during his tenure.

While admitting that he erred, Easterbrook also noted that his stint as CEO has been one of the most fulfilling years of his working life.

However, he cited Kempczinski's established relationship with franchisees and past involvement in strategy and development as a positive for the incoming leader. Last year, Easterbrook - who is also on the board of Walmart - received US$15.9m in pay.

Joe Erlinger, who joined the company in 2002, will become president of the United States business.

Chris Kempczinski took over as president of McDonald's, replacing Easterbrook.

Earlier this year and following an inquiry from U.S. Senator Tammy Duckworth, McDonald's said it was training workers to deal with harassment and starting a hotline for victims.

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