Former McDonald's CEO calls company's clawback lawsuit 'meritless' and 'misleading'

Key Points
  • Former McDonald's CEO Steve Easterbrook responded to the company's lawsuit against him, calling it "meritless and misleading."
  • McDonald's sued Easterbrook last week, seeking to claw back an estimated $42 million it paid out in compensation as part of his separation agreement.
  • Easterbrook's lawyers are seeking a dismissal of McDonald's suit.
Steve Easterbrook, president and chief executive officer of McDonald's Corp., walks the grounds after a morning session during the Allen & Co. Media and Technology conference in Sun Valley, Idaho, U.S., on Wednesday, July 12, 2017.
David Paul Morris | Bloomberg | Getty Images

Steve Easterbrook, McDonald's former CEO, shot back at the fast-food giant, saying the company's lawsuit accusing him of fraud and trying to claw back an estimated $42 million of his compensation was "meritless" and "misleading," according to a new court filing.

McDonald's sued Easterbrook last week, months after its board fired him for having a relationship with an employee. The lawsuit filed in Delaware state court alleges that Easterbrook committed fraud and lied during the company's probe into a relationship he had with an employee. The company said it found three alleged additional relationships with employees he did not disclose before his firing. McDonald's is seeking to recover the compensation he received as part of his separation agreement.

In Friday court filings, Easterbrook requested to dismiss the case against him, claiming that the equity award agreement mandates litigation in DuPage County, Illinois, and that there is language in the separation agreement barring the company from reversing it. 

McDonald's said in a statement to CNBC that it stands by its complaint, including both the factual assertions and the court in which it was filed. The company said it's incorporated in Delaware, and its bylaws require the lawsuit to be filed in the state. 

Easterbrook also argues that the new information McDonald's cited in bringing forward its suit — emails that were allegedly deleted from his phone but still available on the company's server — was available to the company prior to the separation agreement being signed.

"McDonald's – a sophisticated entity represented by numerous internal and external experts when it entered into the Separation Agreement – is aware that it cannot credibly allege a breach of contract claim," Easterbrook's lawyers said in the filings. "Instead, it improperly seeks to manufacture claims for a breach of fiduciary duty or fraud."

The separation agreement included a nondisparagement clause, which makes Easterbrook "essentially unable to make any public comment."

In McDonald's lawsuit against Easterbrook, the complaint alleges that Easterbrook approved "an extraordinary stock grant, worth hundreds of thousands of dollars" for one of the employees while they were involved in a sexual relationship. Easterbrook's response notes that the board reviewed and approved the employee equity award.

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