Comptroller Stringer and CtW Investment Group to Shareholders: Vote Against McDonald’s Executives for Failing to Enforce “Zero Reward” Policy in Cases of Sexual Misconduct

(New York, NY) – Today, in a letter to shareowners filed with the U.S. Securities and Exchange Commission, New York City Comptroller Scott M. Stringer and CtW Investment Group urged McDonald’s (NYSE:MCD) shareholders to vote against the election of Board Chairman Enrique Hernandez, Jr. and Compensation Committee Chair Richard Lenny at the Company’s May 20, 2021 annual meeting after they failed to enforce a “zero reward” policy in cases of sexual misconduct. The letter explains that these directors are most responsible for the Board’s flawed and mismanaged investigation into former CEO Steve Easterbrook’s misconduct that led to the Board’s ill-fated decision to terminate him “without cause” in November 2019 for fraternizing with a subordinate, despite the Board also determining that Easterbrook had violated Company policy and demonstrated poor judgment.

The Board’s “without cause” determination allowed Mr. Easterbrook to retain more than $44 million in severance pay, ensnared McDonald’s in a costly legal battle to recoup these severance payments, and set a poor “tone at the top” that fosters a workplace culture permissive of inappropriate behavior.

“It’s been more than a year since we called on McDonald’s to hold its executives accountable for misconduct by enforcing robust clawback policies, and they have failed to do so,” said Comptroller Stringer. “That’s why we’re urging shareholders to vote against the directors most responsible for protecting Mr. Easterbrook from the consequences of his unethical actions– because accountability matters. McDonald’s must remove these directors in order to protect investors and set a strong tone at the top that misconduct and inappropriate behavior will not be tolerated.”

“The McDonald’s board members who are primarily responsible for the mismanaged investigation into former CEO Steve Easterbrook must be held accountable for their poor decisions,” said Dieter Waizenegger, Executive Director of the CtW Investment Group. “It is inexcusable that the Board just accepted Easterbrook’s false claims, despite a prior violation of company policy. Instead of properly investigating the situation, the Board let him walk away with a lavish severance package. We are urging McDonald’s shareholders to send a message in support of a ‘zero reward’ policy in cases of sexual misconduct, and vote against Directors Hernandez and Lenny.”

The Board’s costly failure to terminate Easterbrook “for cause,” despite an explicit violation of Company policy, was the result of a series of poor decisions and inadequate risk oversight that Comptroller Stringer and CtW Investment Group identified. In particular, the Board:

1. Readily accepted Easterbrook’s own explanations regarding the violation, rather than performing proper due diligence.
2. Set a poor “tone at the top” that fostered a workplace culture permissive of inappropriate behavior and violations of Company policy.
3. Inadequately refreshed itself, leaving a board absent the necessary skills and experience to oversee the Company’s material risks.  
4. Failed to terminate Easterbrook “for cause” despite an explicit violation of the Company’s Standards of Business Conduct—there should be “zero reward” in such situations.

In 2019, Comptroller Stringer and other institutional investors called on the McDonald’s Corporation Board of Directors to implement robust clawback provisions in light of the termination of former McDonald’s CEO Steven Easterbrook. In light of the board’s unresponsiveness, and new information regarding the Board’s gross mishandling of Easterbrook’s termination, the investors in a December 2020 letter to Board members requested that directors Hernandez and Lenny not stand for re-election in 2021, a request the board failed to heed prompting the current effort to oppose the two directors’ election.

To view the letter to McDonald’s shareholders, click here.

###