Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

Shareholders can sue McDonald's ex-executive in landmark ruling

Stock Markets Jan 26, 2023 01:07PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: The seal of the Court of Chancery for the State of Delaware is seen on the Sussex County Court of Chancery in Georgetown, Delaware, U.S., June 9, 2021. REUTERS/Andrew Kelly
 
MCD
-0.82%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Tom Hals

WILMINGTON, Del. (Reuters) - Shareholders can sue McDonald Corp's former global chief people officer for the damage they claim he caused to the restaurant chain by allegedly allowing a culture of sexual harassment to flourish, according to a groundbreaking legal ruling.

The decision marks the first time the influential Delaware Court of Chancery has recognized that corporate officers owe the company a legal duty of oversight, which has traditionally been an obligation solely of directors.

The decision by Vice Chancellor Travis Laster allows McDonald's (NYSE:MCD) shareholders to proceed to trial to try to prove that David Fairhurst, global chief people officer from 2015 to 2019, breached his oversight duties by allegedly acting in bad faith and ignoring signs of a toxic culture.

Fairhurst had argued he could not be sued because Delaware judges had always held that oversight obligations sit with the board of directors, who monitor the officers.

Laster said that much of the day-to-day operations of a company are carried out by its officers and that arguing they have no oversight obligations would produce almost illogical outcomes.

"It would seem hard to argue that, simply by virtue of being an officer, the chief compliance officer could not owe a duty of oversight," Laster wrote.

An attorney for shareholders declined to comment and McDonald's did not immediately respond to a request for comment.

Shareholders are suing Fairhurst on behalf of McDonald's in what is known as a derivative lawsuit. Any damages that are awarded are paid to the company and might include clawing back Fairhurst's remuneration or compensation for damage done to McDonald's reputation, which will be determined at trial.

Fairhurst became the global chief people officer soon after Stephen Easterbrook was named chief executive officer.

Both were fired in 2019 in the wake of allegations of personal sexual misconduct.

Easterbrook agreed in December to pay the company $105 million to settle allegations that he lied to cover up sexual relationships with employees. As a result, he was dismissed from the shareholder lawsuit.

Shareholders can sue McDonald's ex-executive in landmark ruling
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Stephen Fa
Stephen Fa Jan 26, 2023 9:25AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This is a dangerous governance precedence. I could see a civil suit against the harasser defendant by the harassed plaintiff, but this action goes beyond accountability for personal responsibilities.
Ernie Keebler
Ernie Keebler Jan 26, 2023 9:07AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Why are executive officers hired or even paid if they are not responsible for their corporate actions or inactions, might as well hire chimps - they probably would do a better job and not squander all the riches they get. Corporate America is ridiculous
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email