McDonald’s HR boss to leave along with chief
The head of human resources at McDonald’s became the second senior executive to leave the company on Monday, one day after the fast-food chain fired chief executive Steve Easterbrook over a relationship with an employee that breached company policies.
The departure of David Fairhurst, who had been installed as chief people officer by Mr Easterbrook when he took the top job in 2015, was confirmed by a person familiar with the move. No reason for the departure was given and the company said it did not comment on personnel matters.
McDonald’s announced the exit of Mr Easterbrook on Sunday, saying he had “violated company policy and demonstrated poor judgment involving a recent consensual relationship with an employee”.
But the company said on Monday that it is treating the matter as a termination “without cause”, allowing Mr Easterbrook to receive severance benefits in return for him agreeing not to work for rivals such as Burger King and Starbucks for the next two years or disparage McDonald’s on Twitter or Facebook.
The company has agreed to pay Mr Easterbrook six months’ salary and allow him to cash in most of the shares and options it had granted him.
The exit package includes half his $1.34m base salary in six months, a prorated share of any incentive plan payment paid to executives this year, the right to exercise any options that were due to vest in the next three years and a share of the restricted stock units the board had granted him.
For the next five years, a filing with the Securities and Exchange Commission disclosed on Monday, he may not write a book about the company or grant interviews about his time there without the agreement of McDonald’s general counsel.
Mr Easterbrook’s total compensation added up to $15.9m last year, including $254,000 for his personal use of the corporate jet, for which he was required to reimburse the company.
Chris Kempczinski, the former McDonald’s US president who was promoted to chief executive on Sunday, will earn an annual salary of $1.25m, up from $725,000 last year, with a target annual bonus of more than $2.1m. Both sums are slightly below the amounts Mr Easterbrook earned last year.
McDonald’s market capitalisation had almost doubled under Mr Easterbrook, and news of his firing unnerved investors, knocking the $140bn company’s shares by close to 3 per cent in Monday morning trading.
The news was “a clear short-term negative”, said John Glass, a Morgan Stanley analyst, although he noted that the company had thrived after abrupt management changes in the past, such as the resignation of Jack Greenberg as chief executive in 2002 and the death of his successor Jim Cantalupo 16 months later.
Mr Kempczinski faces the challenge of reversing a long-term decline in traffic to McDonald’s US restaurants, while keeping pace with competitors in areas such as plant-based burgers and striking what Mr Easterbrook called the “delicate balance” between modernising the company’s menu and technology while not unsettling franchisees.
Analysts broadly echoed the message from the company that there would be little change of strategy under Mr Kempczinski, a former Kraft executive who worked with Mr Easterbrook on the strategy under which it has franchised more of its US outlets and invested in home delivery, mobile ordering and dynamic digital display technology.
Barclays analysts said that Mr Kempczinski had built “strong relationships” with US franchisees since joining the company in 2015 and pointed to his record of producing 11 straight quarters of progress in the 14,000-outlet domestic business, where the company makes 45 per cent of its profits. The 5 per cent increase in US same-store sales for the year to date is McDonald’s strongest performance over three quarters since 2011, they said.
“We see the McDonald’s train continuing to chug along on the tracks laid out by [Mr Easterbrook],” added Jon Tower of Wells Fargo.