November 4, 2019 / 7:56 PM / 17 days ago

Breakingviews - McDonald’s CEO ouster sends clear #MeToo message

A McDonald's restaurant sign is seen in San Diego, California March 31, 2015. REUTERS/Mike Blake

NEW YORK (Reuters Breakingviews) - McDonald’s is sticking to a basic formula. The $144 billion fast-food giant has ousted Chief Executive Steve Easterbrook for breaking company rules by having a consensual relationship with an employee. It’s a simple policy, and applied so clearly at the top it’s also a useful signal that worse behavior won’t be tolerated either.

The company said on Sunday that Easterbrook had violated its policies and “demonstrated poor judgement.” The board replaced him with Chris Kempczinski. Easterbrook walks away with 26 weeks of severance and a briefcase full of non-compete and non-disparagement agreements. Last year, his total compensation package was worth $15.9 million.

It’s easy to see how quickly things can get messy when a chief executive becomes involved with an employee. Even if it’s consensual, questions of conflict of interest and favoritism come up. At McDonald’s, the company’s code of conduct applies to all staff, prohibiting workers who have a direct or indirect reporting line from dating. That should also help avoid harassment and non-consensual incidents, something that company employees much lower down the food chain have protested about as part of the broader #MeToo movement.

Boards can be reluctant to act so decisively, especially if a CEO has delivered decent financial performance. McDonald’s shares have more than doubled since Easterbrook took the job in 2015. The company’s directors have also mostly been around a long time – Chairman Enrique Hernandez, for instance, has been a director since 1996. Entrenched board members of media group CBS, for example, protected Les Moonves from allegations of much worse behavior before he was finally pushed out.

From the outside at least, there was no such delay at McDonald’s. Perhaps that’s partly because Easterbrook’s smiling face adorns the standards of business conduct espoused by the company. Although a consensual romance is not the same as sexual harassment, the power dynamics of a boss and a subordinate underlie much of the behavior that sparked the #MeToo movement. Chipmaker Intel also replaced its boss last year over a similar consensual relationship. Perhaps the message is starting to seep through.

Breakingviews

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