The Hamburger Giant, McDonald’s fired its most successful CEO on last Sunday over having a “Consensual Relationship” with another employee. McDonald’s CEO Steve Easterbrook emailed McDonald’s employees saying “This was a mistake, given the values of the company, I agree with the board that it is time for me to move on.” While the company didn’t disclose who he was having an affair with, the board took a decision to let him go. And McDonald’s board made this transition really smooth by giving Easterbrook a huge pile of money as the severance package rounding up to $70 Million.
Who is Easterbrook?
This 52 years old business executive was born & raised in Watford. He trained with Price Waterhouse as an accountant and worked as a manager in McDonald’s, London. He worked as the CEO in PizzaExpress from 2011 and then Wagamama.
- 2013 – Easterbrook returned to McDonald’s as its Global Chief Brand Officer.
- 2015 – Appointed as the CEO of McDonald’s, overseeing around 14,000 restaurants in USA.
- Just after several months of his appointment Easterbrook made massive changes including switching the restaurant to cage-free eggs, antibiotic-free chicken and hormone-free milk.
- He raised the employees’ pay above minimum wage.
- During his time, Company’s shares nearly doubled in value.
McDonald’s CEO’s Pay
While we don’t have the latest insights on Easterbrook’s pay in 2019, McDonald’s paid him $21.8 Million in 2017. It included an incentive of $9.1 Million. Latest McDonald’s reports show that McDonald’s CEO’s pay in 2018 was $15.9 Million. This is more than 2124 times of an average employee pay of McDonald’s. An average McDonald’s employee has to save more than 02 months pay to buy a Motorola Razr 2019 flip phone.
Easterbrook’s Severance Package
This fired McDonald’s CEO will be going home with $70 Million worth of stock and other options in compensation. This number will increase up to $85 Million if the company meets a certain financial growth within next 03 years. Typically it’s unusual for a fired CEO to get a severance package. But McDonald’s board decided to label Easterbrook’s termination as “without a course” which allows him to get a severance. We believe McDonald’s board decided this to avoid a potential lawsuit.
Increasing Limelight on Pay Gap
This $70 Million worth severance package is causing a huge scene with several groups, lobbies & other relevant parties. Many of them are concerned about the widening pay gap between the top and the bottom of the corporate ladder.
In 2015, UC Berkeley Center for Labor Research and Education carried out research and found that more than half of fast-food workers rely on public assistance programs like food stamps. Stewart Schwab, a Cornell Law School professor says “Wow, he is walking away with a lot of money”. Further, he said, “1% gets a lot more money than the rest of the workers in this economy.”
New McDonald’s CEO – Chris Kempczinski
Kempczinski replaced Steve Easterbrook as the new CEO of McDonald’s after Easterbrook’s termination though he doesn’t own a single share of the company. McDonald’s rules need him to purchase shares worth $7.5 Million by October 2020. According to regulatory filings, Chris Kempczinski sold his McDonald’s shares worth $4.4 Million last May. However, Kempczinski also likely to receive share rewards in his new role.
Kempczinski is a Harvard Business School MBA Graduate (1997) and Bachelor’s Degree holder from Duke University. He has worked at Procter & Gamble Co, PepsiCo Inc & Kraft Foods. In 2015, Kempczinski joined McDonald’s Global Strategy team & promoted as the president of McDonald’s USA within 18 months.
Kempczinski is notorious for his practices to push expensive initiatives when franchisees struggle with insufficient cash flow. However, he was given the role of CEO, because of improving financials over the past year & to protect the future of McDonald’s.