CEO Firing: McDonald’s Investigation Commenced Weeks Before

November 11, 2019 | ESG and Sustainability, News

Governance counts and ‘skirt-chasers’ will now get short shrift.

McDonald’s became aware of CEO Steve Easterbrook’s relationship with a female employee two weeks before his firing on November 1. According to the Wall Street Journal, the company’s general counsel Jerry Krulewitch conducted an internal investigation and informed its board. The company appointed an NYC law firm to assess the risks.

The board found the relationship to be “short-term and consensual.” However, it could not ignore its implications for Easterbrook’s corporate conduct and his personal judgment.

Giant burger chain McDonald’s has very strict rules against relationships at all levels.

ESG and ‘G’overnance: McDonald’s and Easterbrook

The New York Times pointed to a significant shift in the attitudes of US corporate boards towards sexual relationships in the workplace. Consensual or otherwise, boards were developing ‘zero-tolerance’ for such behavior.

It said corporate governance experts observed this shift after the Harvey Weinstein incident in 2017 that fueled the #MeToo movement. Boards no longer turned a Nelson’s eye to so-called ‘skirt-chasers’ in their company.

Corporate governance was becoming tighter and quicker on the draw at disciplining employees, at whatever level, who violated rules.

ESG and ‘S’ocial Responsibility

Loyola University Quinlan School of Business Professor Seth Green also remarked on this trend. He said the decision by McDonald’s Board to sack Easterbrook showed that companies were growing conscious of social responsibility. The incident also proved this emphasis was commensurate with the importance they assigned to shareholders.

Boards waking up, but what about company culture?

There may be a change in attitudes of senior management, but the organization “Fight for $15” accuses McDonald’s of a toxic culture. It says lower-level workers have often complained of sexual advances, groping and lewd comments. Also, managers mock, fire, or otherwise take action against victims of sexual harassment, it alleges.

The new incumbent in the top seat at McDonald’s has an opportunity to change this environment.

[Related Story: Invesco Report: Sovereign Funds Adopting ESG Standards Quickly ]

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