McDonald’s Fairhurst resigns; stock falls

More fallout from McDonald’s CEO,  Stephen Easterbrook ouster as multiple outlets now confirm David Fairhurst, who had been installed as Chief People Officer, has left the company.

Fairhurst’s departure was announced in an internal memo signed by new CEO Chris Kempczinksi, who replaced Easterbrook after his firing, Bloomberg reported.

No reason for his departure was given and the company said it did not comment on personnel matters.

Forbes reports that Senior VP, Mason Smoot, who also served as Easterbrook’s chief of staff, will take Fairhurst’s place on an interim basis.

Sunday,  Easterbrook, 52, was fired by the fast food giant’s board of directors for having a “consensual” relationship with an employee. McDonald’s guidelines forbid anyone in management to have romantic relationships team members.

While romantic relationships between managers and employees relationships are not illegal, many companies have no-dating policies to avoid allegations of preferential treatment or lawsuits arising from unwanted advances or sexual harassment.

Easterbrook is divorced.

Easterbrook’s Payout

Easterbrook’s termination was categorized as “without cause,” signaling that the transgression wasn’t severe enough to bar him from receiving exit payments.

His health insurance benefits will continue for 18 months. He was allowed to keep unvested stock options worth more than $37 million as well as $675,000 severance.

Bloomberg reports that he could possibly benefit from grants of restricted shares tied to the company’s performance that are worth roughly $13.8 million at their target payouts.  He’s also eligible for a pro-rated bonus for his work in fiscal 2019.

ALSO READ: McDonald’s Easterbrook fired over employee relationship

As part of his separation agreement, Easterbrook promised to cooperate with the company in future investigations and legal matters, and to refrain from working for a direct competitor for two years.

Easterbrook’s successor, Chris Kempczinski, enters the job with a $1.25 million salary and annual target bonus of $2.13 million, according to the filing.  Easterbrook’s annual salary was $1.35 million.

McDonald’s Stock Drops

According to cnbc, McDonald’s stock, which has a market value of $149 billion, was trading down more than 2% Monday.

It had slid as much as 3.1% in the premarket. Shares of the Dow component are now down more than 11% since the Dow’s July 15th record close, putting it among the biggest laggards in the index.

It ranks third from the bottom, ahead of Cisco Systems and Travelers.

Under Easterbrook, McDonald’s increasingly turned its attention to technology. U.S. locations have been receiving tech-focused upgrades, like self-order kiosks and digital menu boards.

The company also acquired two companies this year that are trying to use artificial intelligence in drive-thrus.

While not confirmed as a contributing factor to Easterbrook’s firing, the company has been the target of activists seeking a $15 minimum wage across the country, and McDonald’s HR department has been accused of failing to prevent sexual harassment at its restaurants.

In response, Easterbrook, started a complaint hotline for front-line employees and revamped training.

SOURCE: Bloomberg, Forbes