Second McDonald's Executive Out After CEO Fired

Nov 4, 2019

McDonald's has lost another top executive. The Chicago-based burger giant confirmed Monday that Chief People Officer David Fairhurst has left the company, effective immediately.

McDonald's wouldn't say whether Fairhurst's departure was connected to the firing of CEO Steve Easterbrook. The company announced Sunday that Easterbrook was fired for violating company policy by having a consensual relationship with an employee.

In a filing with the U.S. Securities and Exchange Commission, McDonald's said Easterbrook will receive 26 weeks of pay but forfeit millions in unvested stock options as part of his severance agreement.

Easterbrook's 2018 compensation totaled $15.9 million. That included $1.3 million in salary and the rest in stock options and incentive payments.

Under his severance agreement, Easterbrook will be eligible for a prorated incentive payment for the 2019 fiscal year. He can also exercise stock options that have vested or will vest within three years.

At the end of 2018, Easterbrook had unvested options worth $21.8 million.

Easterbrook is also forbidden from working for a competitor for two years.

McDonald's board named Chris Kempczinski as the company's new president and CEO. Kempczinski most recently served as president of McDonald's U.S. division.

McDonald's said Monday that Kempczinski's base salary will be $1.25 million, or 58% higher than his 2018 compensation.

Analysts said Monday that Kempczinski — who joined McDonald's from Kraft in 2015 — will likely follow the path laid out by Easterbrook, including redesigning U.S. stores to make them more digitally savvy and testing voice-based technology at drive-thrus.

"We believe these initiatives will continue largely unchanged and Mr. Kempczinski's legacy will hinge on his ability to generate traffic growth in the U.S., which neither of his two predecessors were able to achieve," BTIG Managing Director Peter Saleh said in a note to investors.

McDonald' shares fell 3% to $188.72 in early afternoon trading.

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