McDonald’s (NYSE:MCD) Filed Lawsuit Against Former CEO Steve Easterbrook

McDonald’s (NYSE:MCD) Filed Lawsuit Against Former CEO Steve Easterbrook

$MCD #McDonalds #USA #NYSE #SteveEasterbrook #Stocks #Trading

McDonald’s
Ticker: NYSE:MCD
Price: $206.02

Company News

On this story there would be no Friday afternoon news dump—the preferred modus operandi of companies trying to hide the likes of bad earnings or legal proceedings.

Instead, McDonald’s filed its lawsuit against former CEO Steve Easterbrook first thing on Monday morning. Those fishing around for the complaint, filed in Delaware state court, did not even have to look very hard: McDonald’s included it as part of its filing with the SEC. 

The suit alleges that Easterbrook, who was fired for sexting with a subordinate, did far more than that. The complaint claims that “recently identified evidence shows that Easterbrook had physical sexual relationships with three McDonald’s employees in the year before his termination; that he approved an extraordinary stock grant, worth hundreds of thousands of dollars, for one of those employees in the midst of their sexual relationship; and that he was knowingly untruthful with McDonald’s investigators in 2019.”

With these alleged new revelations, McDonald’s is now arguing that it had cause to fire Easterbrook and in turn wants him to repay his severance, which the New York Times has reported is valued at more than $40 million. 

It’s highly unusual for a company to opt for such a public airing of its dirty laundry. And there’s plenty of it here. The suit alleges that newly discovered evidence “consisted of dozens of nude, partially nude, or sexually explicit photographs and videos of various women, including photographs of these Company employees, that Easterbrook had sent as attachments to messages from his Company email account to his personal email account.” The complaint also claims that Easterbrook deleted this evidence from his phone “with the intention of concealing their existence.”

To be sure, McDonald’s has received plenty of bad press in recent years related to the working environment in its stores, with numerous lawsuits accusing the company of failing to respond to a culture of sexual harassment.

An article in The Nation from late July, for example, cited a poll conducted by a coalition of U.S. labor unions, with three-quarters of respondents saying they had experienced sexual harassment on the job. Two-thirds said they had experienced multiple forms of harassment. Nearly 30% had been asked to have sex with a coworker, and 12% said they were sexually assaulted or raped. (McDonald’s responded by saying the survey represented less than 0.1% of employees in its U.S. restaurants.)

In April, two McDonald’s store employees filed a $500 million class action lawsuit accusing the company of creating an environment of rampant sexual harassment. The suit is backed by Time’s Up Legal Defense Fund, which pays legal fees for victims of sexual assault and harassment and is not the only one the organization is funding against McDonald’s. 

When Easterbrook was fired last year, it was easier for critics to make the argument that the tone was set from the top. Now with its suit against its former CEO, McDonald’s is effectively distancing itself from Easterbrook and his alleged bad behavior. It’s a chance to show how seriously the company takes the improper conduct of its employees—even those at the highest level.

In addition to making its case against Easterbrook, the complaint filed on Monday spends just as much time stressing the importance of the company’s ethics and values.

For example, the suit says that in 2017 the board “emphasized to management that all employees, including top executives, should undergo the most current anti-harassment training.” The suit claims that management, including Easterbrook, “assured the directors that the senior leadership team was receiving such training and that the Company was implementing enhanced safe and respectful workplace training throughout the organization.”

The complaint also notes that the company revised its anti-harassment policy in 2019 after input from nonprofit organizations, to more clearly inform employees of their rights and more clearly define unacceptable behavior and how to report it. 

But with its lawsuit, the company is attempting to make the case that it’s Easterbrook’s problem, not McDonald’s.

Business Summary

McDonald’s Corporation (McDonald’s) operates and franchises McDonald’s restaurants.

The Company’s restaurants serve a locally relevant menu of food and drinks sold at various price points in over 100 countries.

The Company’s segments include U.S., International Lead Markets, High Growth Markets, and Foundational Markets and Corporate.

The U.S. segment focuses on offering a platform for authentic ingredients that allows customers to customize their sandwiches.

Its High Growth Markets segment includes its operations in markets, such as China, Italy, Korea, Poland, Russia, Spain, Switzerland, the Netherlands and related markets.

The International Lead markets segment includes the Company’s operations in various markets, such as Australia, Canada, France, Germany, the United Kingdom and related markets.

The Foundational markets and Corporate segment is engaged in operating restaurants and increasing convenience to customers, including through drive-thru and delivery.

Price Performance

Relative Valuation

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 193.00.

The projected upper bound is: 214.81.

The projected lower bound is: 197.97.

The projected closing price is: 206.39.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 3 black candles for a net of 3 white candles. During the past 50 bars, there have been 23 white candles and 26 black candles for a net of 3 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 83.3219. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 11 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 70.82. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 11 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 124.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 11 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 4 period(s) ago.

Rex Takasugi – TD Profile

MCDONALD’S CORP closed up 1.020 at 206.020. Volume was 34% below average (neutral) and Bollinger Bands were 22% narrower than normal.

Open     High      Low      Close      Volume
206.860  207.390   205.420  206.020    712,151
Technical Outlook
Short Term:        Overbought
Intermediate Term: Bullish
Long Term:         Bullish
Moving Averages: 10-period      50-period      200-period
Close:           200.56         192.39         191.78
Volatility:      18             28             53
Volume:          836,545        976,314        1,213,021

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

MCDONALD’S CORP is currently 7.4% above its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods.

Our volume indicators reflect volume flowing into and out of MCD.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on MCD.N and have had this outlook for the last 15 periods. Our momentum oscillator is currently indicating that MCD.N is currently in an overbought condition.

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